What the ACA Replacement Bills Could Mean for People with Serious Illness

By Stacie Sinclair, MPP, LSWA, Center to Advance Palliative Care

Introduction
On March 6, 2017, two committees in the U.S. House of Representatives – Energy and Commerce (E&C) and Ways and Means (W&M) – introduced bills to “repeal and replace” the Affordable Care Act (ACA). Collectively referred to as the American Health Care Act (AHCA), these bills represented an “opening bid” for lawmakers to negotiate what parts of the ACA would stay and what would go. These negotiations began two days later as committee members discussed their drafts, along with dozens of amendments for consideration (“markup”); the W&M committee approved its version after 18 hours of debate, while the E&C committee approved its version after 27 hours of debate. The bills then went to the House Budget Committee on March 16, where they were compiled into one reconciliation package. This package was then sent to the House Rules Committee, where a hearing is now being scheduled.

 

With the initial introduction now complete, it is worth noting that the process of passing an ACA replacement is going to be long, passionate, and bruising. Ideological divisions between Republicans and Democrats (and within the parties themselves) about whether and how health care should be paid for, the best options for individuals without employer-based coverage, how to balance protections for patients with burdens on payers and providers, and – most critically – the role that the federal government should play in these decisions have been defining battles for years. And with health care spending occupying an ever-increasing share of the federal budget (currently 17.8 percent of the U.S. GDP and growing), this issue is more urgent than ever.

No doubt that many of you are drowning in the deluge of coverage from major news sources and health policy experts about what the bills do and do not include (links to some of the best ones we have seen are at the bottom of this blog). Therefore, we thought it best to pause and consider the key question for the palliative care audience: If passed into law today, what would the bills mean for people with serious illness?

Implications of the AHCA for Seriously Ill Patients
The good news (for now) is that the bills do not touch most of the policies and programs that directly affect our patients. Due to the budget resolution passed in the Senate that started the reconciliation process (a complicated process that allows a bill to pass the Senate with a simple majority as long as it follows certain rules), legislators were limited in what they could include. These limits, along with political pressure from core constituencies (including AARP and health care providers), have meant that the bills do not make significant changes to Medicare or mention things like the Center for Medicare and Medicaid Innovation or the Patient-Centered Outcomes Research Institute. Thus, much of the infrastructure that supports the transition to value-based payment – which we have argued is a prime opportunity for palliative care – would remain if the current bills are passed into law.

But there are also some troubling provisions in the bills, many of which are related to health care coverage. With the stated aim of “Deliver[ing] Relief,” these bills cut most of the taxes and mandates that were originally developed to pay for “Vital Patient Protections” (e.g., coverage for patients with pre-existing conditions, no lifetime limits). Yet, without a dedicated revenue source to pay for these protections, legislators must find a place to cut spending – and currently, Medicaid is the primary target. Starting in 2019, some of the bills’ provisions include:

  • phasing out Medicaid expansion for those above 100 percent of the federal poverty level (FPL), including reverting seriously ill children who are above this threshold back to the Children’s Health Insurance Program (i.e., imposing new co-payments for low-income families);
  • increasing scrutiny over Medicaid eligibility determinations; and,
  • transitioning Medicaid funding to a per capita cap.

While a per capita cap is marginally less rigid than straight block granting the program (since the lump sum payment would at least factor in the number of Medicaid enrollees), it would still significantly reduce the amount of federal funding provided to states. States would feel the impact most acutely in their care of seriously ill beneficiaries, including older adults who rely on Medicaid for long-term services and supports and children with life-limiting illness, since a per capita cap would not account for higher costs in these populations. This would put states that are already facing budgetary pressure in the difficult position of having to modify or even eliminate certain benefits for vulnerable patients if there are not enough resources to care for everyone who is entitled to Medicaid coverage.

In addition to the Medicaid changes, other provisions that could negatively impact health care coverage for people with serious illness include: repealing the premium tax credit and cost-sharing subsidies calculated based on income, and replacing them with refundable tax credits that are adjusted by age NOT income; instituting a 30 percent penalty for health insurance applicants on top of their premium if they have a gap in coverage for more than 63 days; and adjusting the age band rating so that insurers can charge older adults (aged 50-64) up to five times what younger individuals would pay.[i] While there is much debate around the best way to attract younger, healthier people into the individual markets while keeping coverage affordable for older adults who are not yet eligible for Medicare, analysis suggests that loosening the age rating restrictions will increase premiums for adults in the age 50-64 group more than it will reduce premiums for young adults – and the new tax credits will mean less federal support to offset those increases.

Taken together, these provisions in the AHCA have the potential to threaten seriously ill patients’ access to health care coverage and, in turn, their ability to receive the care they need. If you are interested in learning more about how other provisions in these bills stack up against those in the ACA and previously introduced “repeal and replace” legislation, make sure to check out the Kaiser Family Foundation’s comparison tool:

Source: The Henry J. Kaiser Family Foundation

What Comes Next?
At the time of publication, the House Rules Committee was planning to markup the bill on Wednesday, March 22, with a floor vote expected on Thursday. In the meantime, Republican leadership has been trying to overcome opposition on a number of fronts, going beyond the anticipated Democrat resistance to include influential groups such as the AMA and AARP as well as some of the party’s own members. The Republican Study Committee met on March 17 and agreed on several amendments to the final bill that could appease this latter contingent (e.g., providing states with the option to fully block grant Medicaid, implementing work requirements). Yet these changes are unlikely to mollify those concerned with the Congressional Budget Office’s estimates that the AHCA would result in 24 million fewer people being insured by 2026.[ii] Some have suggested that the combined package could make it through the House; however, it may have a difficult time passing in the Senate (even under reconciliation) absent major changes.

Number of uninsured if the current health law is not repealed

Source: New York Times, Congressional Budget Office

 

Meanwhile, as Congressman Paul Ryan explained, passing the AHCA using the reconciliation process is just one of three strategies that Republicans will be implementing in their efforts to repeal and replace the ACA. The second is administrative action in which Secretary of Health and Human Services, Tom Price, can make significant changes through the rulemaking and other processes (generally with an emphasis on “reducing regulatory burden” or “weakening protections” depending on one’s frame); and the third is additional legislation, in which elected officials can introduce new policies and programs, although these would be  subject to the standard challenges of trying to get a bill through the Senate without a filibuster-proof majority . . . but that is for another day.

For now, we encourage you to continue following the AHCA as it makes its way through the House and into the Senate. Sources such as the Health Affairs Blog (with an honorable mention to Timothy Jost), the Kaiser Family Foundation,  the Commonwealth Fund, and others provide comprehensive, understandable, just-in-time coverage. And feel free to share any observations or questions you have in the comments section below!


[i] People aged 65+ and enrolled in Medicare are unlikely to be affected by the AHCA’s age band rating adjustment, as the relevant section of the ACA (which is modified by the AHCA) specifies health insurance offered in the individual or small group market (Section 2701).
[ii] The CBO also estimated that the AHCA would reduce federal deficits by $337 billion over the next ten years, and the Tax Policy Center predicted tax cuts for various income groups by the following amounts: lowest income households – $150 (about 0.9 percent of after-tax income); middle income households – $300 (about 0.5 percent); highest income households – $37,000 (about 2.1 percent). The tax cut for the top 0.1 percent, i.e., those making more than ~$3.7 million, would be $207,000 (about 2.6 percent).

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