Both substantively and procedurally, the Republican health care bill that’s being railroaded through the House of Representatives is a monstrosity. Even the stark reductions in resultant insurance coverage projected by the bipartisan Congressional Budget Office don’t begin to capture the full magnitude of the atrocities that will be perpetrated, especially on older, poorer people who will be most hurt.
It’s true that the bill grants them a two-year reprieve from the axing of the subsidies that have made health insurance affordable to them under the Affordable Care Act since 2014. But beginning in 2020, there would no longer be any income-based affordability standards for premium tax credits, which would become purely based instead on age and be applicable to households with higher incomes. Nor would these new credits make any allowance for big differences in the cost of health care (and resultant insurance costs) in different parts of the country.
For a 60-year-old couple with a $25,000 income, the Kaiser Family Foundation estimates that the national average tax credits would shrink from $20,606 to $8,000. (Note: Knox County costs are some 20 percent above the national average so the affordability shortfall would be even greater here.) And these differentials don’t take into account additional ACA cost reductions to help cover deductibles and co-pays for people with incomes of less than 250 percent of FPL that would also disappear in 2020.
Yet the Trump administration’s secretary of Health and Human Services, Tom Price, had the temerity to proclaim on NBC’s Meet the Press that, “I firmly believe that nobody will be worse off financially in the process that we’re going through.” Just as preposterously, Price went on to say that, “I’ll tell you right now, there are a lot of people that are worse off right now when they’re paying for health care and they aren’t getting the care that they need. Again, the premiums are up and the deductibles are up.”
In fact, the vast majority of the some 12 million people who are getting coverage on the ACA exchanges have been insulated from any premium increases over the past three years. That’s because the tax credits are constructed so that they cover the full amount by which insurance costs, including any increases, exceed a scaled percentage of recipient income.
The House Republican bill also repeals, effective immediately, a key provision of the ACA that was intended to hold down costs. That’s the mandate for nearly all individuals to be insured or pay a penalty. But not enough younger, healthier people have bought in. And the older, sicker mix of people who have selected coverage are adversely pushing premiums (before tax credits) up at double-digit rates.
Of the 14 million people whom the CBO foresees becoming uninsured next year, most are expected to be younger people who drop their coverage (not just on the exchange) when the mandate goes away. As a result, the CBO predicts a further 15 percent to 20 percent premium increase next year as the pool of exchange enrollees becomes even more adversely selected.
House Speaker Paul Ryan likes to talk about a “death spiral” afflicting the ACA, but he seemingly wants to accelerate it rather than reverse it. Fortunately, wiser heads in the Senate don’t share this destructive bent. Our own Sen. Lamar Alexander chairs the Senate committee with health care jurisdiction, and his take has been that, “I think of it as a collapsing bridge….You send in a rescue team and you go to work to repair it and you start to build a new bridge, and only when that new bridge is completed and people can drive safely across it do you close the old bridge.”
A panel assembled at a committee hearing to address repairs included Tennessee Insurance Commissioner Julie Mix McPeak who has warned that the state’s exchange is “very near collapse.” That’s because most of the insurers who had been offering coverage have pulled out after incurring losses, leaving only Blue Cross in large parts of the state. And even it has pulled out of the Knoxville, Memphis, and Nashville markets, leaving a total void in Knoxville for 2018 after Humana announced that it would be withdrawing at the end of this year.
Most of the prospective fixes are too technical to describe within the space constraints of this column. But two that stand out are: (1) to widen the unduly narrow (from an actuarial standpoint) three-to-one differential in premiums based on age that the ACA presently allows; and (2) to ease the very stringent set of Essential Health Benefits that it presently imposes on all insurance offerings.
Yet under the cockamamie set of procedures under which Ryan and the Trump administration are trying to whisk through ACA repeal, such changes in its underpinnings probably aren’t allowable. To avoid having to get an unobtainable 60 votes to break a filibuster in the Senate, they are resorting to a process known as “reconciliation,” which is really the antithesis of same. It allows legislation that solely deals with revenues and/or expenditures to be adopted with a simple majority vote. But changing things like premium age bands and insurance benefit requirements don’t fit. And in any event, a much more deliberative process is needed before Congress fundamentally changes the nation’s health care structure.
One element of the House Republican bill that actually does have merit and could clearly be enacted via reconciliation provides for the creation of a $100 billion (over nine years) Patient and State Stability Fund. This fund would go for things like reinsurance to insulate insurers from the humongous claims of the catastrophically ill. Tennessee would get on the order of $330 million a year from this fund, which should go a long way toward restoring stability to the insurance exchange and bringing carriers back to Knoxville.
The Republican whackers can toot over the CBO’s finding that their bill would reduce the federal deficit by $337 billion over the next decade, but this is false economy. It very nearly equals the difference between a $673 billion cost of the existing income-based premium subsidies and the $361 billion cost of the new age-based tax credits (all per CBO estimates). That difference is just about covered by the ACA surtaxes on households with incomes in excess of $250,000 that would be repealed.
I’m not a big fan of Nancy Pelosi, but speaking as someone who has been pleased to pay tens of thousands of dollars a year in such taxes, I concur with her assessment that this is a “reverse Robin Hood stunt.”
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