What Still Matters: Healthcare

This week we will be introducing a new bi-weekly post on What Still Matters by Kristin Jackson.  Kristin serves as policy editor for The Policy Circle.  

What Still Matters

Two weeks and three days after the May 4th partisan vote (217-212) to repeal and replace the current healthcare system with the AHCA in the House of Representatives… and here is where I’d focus:


AHCA Misconception:
 
AHCA Reality:
  • Rape and sexual assault will be classified as pre-existing conditions.
               
  • “The AHCA (American Health Care Act) does not specifically address or classify rape or sexual assault as a pre-existing condition.”Washington Post Fact Checker
  • Coverage will be denied to those with pre-existing conditions.
 

 

  • Current leadership wants to cut funding to poor and the elderly.

 

 
  • “Middle and low income Americans will receive monthly, advanceable, and refundable tax credits to help pay for healthcare premiums. Tax credits will range from $2,000 to $14,000 a year and would adjust to make sure older Americans receive proper support.”The White House

 

  • Everyone who just received insurance will be thrown off. More than 11 million newly eligible adults enrolled in Medicaid through March 2016, according to analysis by the Kaiser Family Foundation. USA Today
 
  • The [Medicaid] coverage expansion would stay in place until the end of 2019, but no newly eligible people could be added to [the expanded] Medicaid rolls after that.”(Vox) This works to make Medicaid sustainable, and by January 2020 other reforms will have taken effect to reduce costs and increase affordable options for non-elderly individuals above 138% of the federal poverty level

 

  • Without federal mandates dictating what insurance companies must cover, the coverage you pay for won’t be any good.
 

 

And don’t forget the goal is not partisan, “…[M]ost Democrats and Republicans actually share a common goal – the creation of a high quality, high-performance, high-value health care system. We cannot continue to spend more than $3 trillion a year on healthcare, yet lag behind much of the developed world in overall health outcomes.” (See Tom Daschle and Mike Leavitt’s Morning Consult column). According to the UK-based Telegraph, “The United States spends more per capita on health than any other member of the OECD, according to its June 2016 statistics, and yet the system fails in many key areas.”

 

Key Numbers to Know:

Insurance in the United States in 2015, by-the-numbers, as reported by Kaiser Family Foundation:


ACA and AHCA are focused on improving coverage for the individual, or non-group, market.

“The top 1 percent of health-care spenders use more resources, collectively, than the bottom 75 percent, according to a new study based on national surveys.” The challenge for policymakers: we “need a system that works for people who are ill, but is attractive to those who are healthy and spend little on health care.” (Washington Post)

 

TWO POLICY APPROACHES

Should federal policy create one-size-fits-all solutions or promote solutions through individual choice? Both approaches attempt to create a system that works for the sick and for the healthy but through different methods:

  • “Same for All.”  The Affordable Care Act (ACA) approach mandates the same coverage through a one-size-fits all solution. “The ACA requires everyone in the statewide coverage pool to pay the same rates, spreading the higher cost of sicker enrollees among all plan members.” McClatchy
  • “Individualized.” The American Health Care Act (AHCA) is individualizing care through flexible and competitive plans for the ‘cheaper to insure,’ in addition to government assistance set aside for the ‘more expensive to insure.’ For the more costly and difficult to insure, Oregon Congresswoman Cathy McMorris Rodgers explains that the AHCA “establishes a program to provide federal resources for states to create high-risk pools, reduce out-of-pocket costs or promote better access to services.” Washington Post

 

To Mandate or not Mandate?

While both approaches include some of the same federal mandates (coverage for people with pre-existing conditions, and allowing young adults up to age 26 stay on their parents’ plan), the individualized approach reduces the number of federal mandates on insurers due to the belief that allowing states and insurers more flexibility in coverage design will provide affordable options that meet the goal of fair coverage.

  • Results of ACA approach: the mandatory federal structure reduced competition; prices went up, insurers dropped out, and consumers had a hard time affording premiums and medical costs. As cited in this Policy Circle brief.
  • In an effort to address these challenges: the AHCA allows states to waive additional federally mandated insurance requirements like providing ‘essential health benefits,’ and charging the same price to everyone regardless of their health history, in order to allow additional options and variations. Importantly, in order to be granted a waiver, however, “states must first come up with other ways to insure these sicker plan members.McClatchy

 

How to encourage Continuous Coverage

The ACA created a federal mandate to buy coverage, with individuals facing a tax penalty if they didn’t sign up. The individualized approach of AHCA incentivizes continued coverage by charging a 30% flat surcharge (in the first year of coverage) for those who have a gap in coverage of 63 days or more, which helps cover the costs of care.

 

The question of High-Risk Pools

While the ACA kept everyone in the same pool, the AHCA’s more individualized approach creates a safety net of high-risk pools for the expensive or difficult to insure. High-risk pools have been criticized in the past for not receiving enough government funding to keep the plans affordable. The goal of AHCA is to give states the funding and flexibility to make coverage affordable for vulnerable patients – yet, the question remains as to whether the $138 billion Patient and State Stability Fund included in the House-passed plan is enough.

 

How do plans become Truly Affordable?

“[By] ending taxes on things like prescription drugs, medical devices, health savings, and the health insurance, [AHCA] will drive down the cost of medical care. The AHCA also will help individuals with higher health costs by expanding their ability to use pre-tax dollars through Health Savings Accounts. [“One-size-fits-all mandates will be eliminated to free States to create marketplaces that promote innovation and competition.”The White House] “Taken together with the refundable tax credit, individuals will have access to a wider variety of affordable plans than they do today.” Christopher Del Beccaro, Policy Director National Republican Congressional Committee

 

WHY WILL HEALTHCARE BE IN THE NEWS FOR MONTHS TO COME?

First, we are still early in the process. The Senate has to pass a bill with its stamp of approval. And then “conference” that approach with the House bill for a combined bill that  the House and Senate will then have to pass, again.

And second, it’s political. Our policymakers are up for reelection every two years (House) or every six years (Senate), so reelection stays top-of-mind. Additionally, the 2018 midterm elections offer a check on the current administration’s successes and failures. As a result, targeted Members of Congress will see ads in their districts tying them to the health care debate in ways that help or hurt their prospects of reelection. Find out how your representative is representing you. (enter your zip code to find your representative; click to find your senators)

FOR MORE INFORMATION:

This USA Today Q&A Facts provides a quality rundown of ACA vs AHCA. Read this to see what state innovation could look like. Also, Maine’s successful high-risk pool model. Clarifying pre-existing conditions in the WSJ here. And for those who want to dig deep, check out this Congressional Research Service report.

 

Byline: Kristin is a middle-of-America native with a decade of experience working on policy in our nation’s capitol. She serves as policy editor for The Policy Circle. For Kristin’s biography, click here.