12 March 2017

Replace the Affordable Care Act?

I'm sharing perspectives on some of key provisions of the House of Representatives' proposed legislation to replace The Affordable Care Act ("Obamacare").  Thanks to my dad for the terrific insights and perspective based on his many years dealing with insurers and those they insure.

As you may be able to see by the comments, I'm not a fan of the proposed legislation.  I come to this issue with a bit of experience - seeing people who were totally uninsurable 5 years ago now being treated for major health conditions that would have shortened their lives or left them with significant impairment now being able to be cared for as a result of The Affordable Care Act.  I also have seen insurance premiums increasing over the last several years at the lowest average percentage than I had in the 5 years before The Affordable Care Act came into being.

There is much to dislike about The Affordable Care Act… it needs modifications.  The act left many people in a bind - unable to afford health insurance but not poor enough to qualify for premium subsidies - because their particular state didn't expand Medicaid coverage as those drafting the bill thought every state would.  Texas, a state that didn't expand Medicaid for example, leaves many people without coverage because there's no way they can afford health insurance, but they make too much money to qualify for financial assistance.  They have to make a choice each month between paying the rent or paying for food or trying to buy health insurance.  So many with dire health conditions go without coverage, without medications, and without treatment of their health problems.  But amendments to The Affordable Care Act could correct its faults.  A whole new plan isn't necessary.

The House bill being proposed is being sold as a plan that puts health care back in the hands of doctors and patients and takes health care decisions away from the Federal government.  Health care decisions are NOT being made by the Federal government.  The Federal government legislation in effect right now DOES mandate that everyone buy insurance or pay a penalty.  That puts more people in the purchasing pool, and it helps to keep premiums lower than they would be otherwise.  The GOP has blasted the insurance purchasing co-ops - low cost programs funded by The Affordable Care Act to provide alternative methods of health care delivery and reduce overall costs.  The GOP shouts that most of the co-ops have closed.  But they don't announce that the co-ops have closed mostly as a result of funding cuts made in the last several years because Republican sponsored legislation.   The GOP has been sabotaging the co-op's operational budgets.

My views on just a few key provisions of the House bill are below.  I hope you'll take some time to read over the summary and give some thought to how you feel about the legislation.  I'm sure not everyone receiving this note will agree with me that the bill is a step backwards and will end up costing us all more.  But I'm hoping that - whichever side you're on in the discussion - you'll get involved.  Let your legislators know your position so that whatever comes out of Congress at the end of this process actually does serve the needs of the broadest segment of society.

The House bill requires that no person with a pre-existing condition will be turned away from getting insurance coverage.

HOWEVER: There is no mandate that everyone must purchase insurance or pay a penalty so the pool of healthy people purchasing insurance will be smaller. A person with a pre-existing condition won't be required to purchase insurance so can go without coverage until the health condition requires treatment. Then, if the person purchases at that time - outside of open
enrollment - a 30% penalty is added to his or her premium.

If the person with the pre-existing condition can't afford the premium or chooses not to buy insurance, he can still resort to the old way of doing things...show up at the hospital emergency room, get whatever necessary treatment to keep him alive, and walk off without paying a penny. Who do you think pays for the costs of uninsured people getting expensive treatment at hospitals? We all know that the costs are passed along to those WITH insurance...our premiums are higher to cover the costs of care of the uninsured.

The House bill will reduce funding for Medicaid - a program that provides health care for those at or below the poverty level of income - which will save the federal government millions of dollars.

HOWEVER: By phasing out the additional federal funding that provided for the expansion of Medicaid (MediCal in California), millions of people who now get health insurance through that program will lose it.

Funding for Medicaid will change from a system that reimburses states for the cost of care provided to Medicaid recipients to a program that gives states a flat amount of funding each year - a "per capita" system. So when those on Medicaid run up significant medical expenses and the funding exceeds the amount allotted by the federal government, the cost of care will be passed along to the states. SOMEONE will pay - either the federal government or the state government. No savings are likely to occur UNLESS - as expected - the states significantly cut back on eligibility for coverage. In states that have not expanded Medicaid as allowed under The Affordable Care Act we already have a large group of people not eligible for Medicaid (because they are at the top end of the poverty scale) and not eligible for premium payment assistance because they make too much money to qualify. So most of these people who can't afford insurance are not covered, and their unpaid medical expenses are passed along to the rest of us in the form of higher insurance premiums and higher medical care costs.

The House bill provides income tax credits to help people afford to buy health insurance in place of the premium subsidies available through The Affordable Care Act.

HOWEVER: The income tax credits will be available at the end of the year when someone files their income taxes. During the year - as premiums are due - they get no help at all. So if premiums are unaffordable on a month-to-month basis, many people will not buy insurance at all, and they won't qualify for the income tax credits.

The tax credits available to a single person age 27 and making only $20,000 per year will be $2,000. That sounds generous except that under The Affordable Care Act, that person would qualify for a premium subsidy of $3,940 per year - paid to the insurance company in monthly installments of about $328 to help the person purchase insurance.

Making $20,000, it's unlikely that the person will even purchase health insurance if he has to wait until the end of the year to get his income tax subsidy.

A 40 year old person making $20,000 per year would have a 40% reduction in assistance with the tax credit being $3,000 versus a $5,000 amount of premium assistance.

The winners under the House plan are those making higher incomes who currently get no premium assistance under The Affordable Care Act. At incomes of $40,000, $50,000, or $75,000 per year, a 40 year old qualifies for a $3,000 per year income tax credit if he has maintained health insurance coverage for the entire year. There's no argument that this credit is welcome news with insurance premiums being at their current level; but the legislation provides this credit to those in the middle and upper income levels by essentially taking insurance funding away from those at poverty level.

This bill is being touted as only the first step in a three step process of repealing and replacing The Affordable Care Act. This first step is likely to lead to millions of people who currently have insurance losing that essential coverage. This is a life-threatening bill.

One of the next steps planned is to introduce legislation that will allow people to buy insurance across state lines. The purpose? To allow someone to purchase coverage at a lower premium in a different state that doesn't mandate as comprehensive coverage as the home state. So -for example - if one lives in California that mandates free pregnancy visits for low income people, and that person buys a plan from another state at a lower premium because that provision isn't included, the person will be saving premium dollars. However, when faced with the condition that ISN'T covered by the cheap policy, the person may not get the health care needed. Or, perhaps, the health care will be provided - once again - at the local emergency room, be unreimbursed by the insurance plan, and the costs - once again - passed along to the rest of us in higher health care costs and higher insurance premiums on the QUALITY health insurance plans.