Tuesday, September 26, 2017

What might moderate Republicans do to the ACA?

From the release of the AHCA on March 4 to Sunday night's amendments to Graham-Cassidy, Republican repeal bills have got ten worse and worse -- more conducive to individual market chaos, more draconian in Medicaid expansion rollback and per capita capping of federal medicaid payments. All of the bills would reduce the ranks of the insured by more than 20 million. Which suggests a question: what would a "good" partial repeal bill look like?

To some extent that's a nonsense question. The ACA embodies a Democratic concession to a core conservative concept: That there's inherent virtue in establishing a competitive insurance market, that doing so will drive down costs and improve healthcare quality (i.e., that insurers can make providers deliver better care more cheaply). The ACA's flaws are in any case all in a conservative direction. Real fixes would include bigger subsidies, including via reinsurance; some means of capping the rates insurers pay providers, as in Medicare Advantage or Medicaid managed care; rules more or less compelling providers to accept the insurance (i.e., if they accept Medicare); and strong incentives for insurers to participate in the market (tied to their eligibility to participate in managed Medicaid or Medicare Advantage markets).

A genuinely moderate Republican would not accept such changes but would seek to amend rather than repeal/replace the ACA -- not just in the short term, as Lamar Alexander has called for, but for the long term, as Susan Collins would probably like to do  There's no shortage of proposed conservative tweaks that might do minimal harm and in some cases perhaps even some good. Yevgeniy Feyman and Paul Howard could write such a bill. Here's my sense of what concessions might be won from Democrats in exchange for CSR and reinsurance funding.

Loosen the guardrails in ACA Section 1332 innovation waivers. Under Sect. 1332, states can seek waivers to change or eliminate almost every feature of the ACA marketplace except guaranteed issue and community rating. But they must prove via actuarial and economic analysis that the proposed scheme will cover as many people, with coverage as comprehensive and affordable as that provided by the ACA default scheme, and without increasing the deficit.  In the recent HELP Committee hearings, some proposed tweaks -- mostly to current HHS guidance rather than the current statutory language -- were a matter of near-consensus. These included allowing states to combine Medicaid and CHIP waivers with Sect 1332 waivers and use savings in one to offset increased spending in others; requiring deficit neutrality over the life of the waiver rather than in each year; and speeding up the approval timeline. A more controversial "loosening" would be to roll back or moderate the current administrative requirement that a waiver show that no vulnerable subpopulation be hurt by the waiver proposal; that is, require only that a waiver "demonstrate each of the guardrails are met in aggregate for the market" as Tammy Tomczyk of Oliver Wyman proposed in HELP testimony. (More on that here.)

Encourage HDHPs linked to HSAs in the ACA marketplace. Make it clear that employers can contribute to HSAs linked to marketplace accounts -- as small employers now can contribute to HRAs used to pay premiums in the individual market, enabled by the CURES Act in late 2016.

Create "copper" plans that could be obtained with ACA subsidies. To get skimpier than current bronze plans, you'd have to increase the out-of-pocket maximum beyond what the ACA currently allows. Word is that Patty Murray was willing to concede this before Alexander scuttled HELP Committee negotiations last week.

Repeal the employer mandate.  Progressive healthcare scholars including Linda Blumberg and Austin Frakt agree that the mandate is unnecessary and ineffective, and employers hate it, as it imposes onerous reporting requirements. Repeal of this mandate is probably the easiest headline concession for Democrats. The  Problem Solvers, a House caucus committed to bipartisanship, included near-repeal of the employer mandate in its compromise package of market stabilization proposals. The Problem Solvers proposed that it apply only to companies with more than 500 employees, almost all of which offer health insurance.

Cut this or that tax.  The Problem Solvers put the medical device tax on the block -- a relatively small hit, and one sought by Democrats including Elizabeth Warren and Al Franken, in whose states the industry has a strong presence.. Providing more tax breaks for HSAs, as all the repeal bills did, costs real money. Cut other healthcare industry taxes and you either run up the deficit substantially or have to cut substantially into ACA benefits, which means uninsuring people. But Republicans would doubtless feel compelled to take some kind of bite out of ACA taxes.

Allow states to expand Medicaid to adults with incomes up to 100% FPL rather than 138% FPL. Urban Institute scholars Linda Blumberg and John Holahan included this option in a compromise package they proposed this January. There are real costs here -- financial, as private coverage costs more than Medicaid, and to quality of service as well, as low income enrollees express more satisfaction with Medicaid than with private coverage. But people in the 100-138% FPL income bracket have enrolled in large numbers in marketplace plans in nonexpansion states -- usually in silver plans with an actuarial value of 94% as enhanced by Cost Sharing Reduction subsidies. AV 94% is actually probably too low for people at this income level, who are often deterred from seeking needed care by relatively modest cost-sharing.  But allowing expansion to just 100% FPL might entice some of the 19 nonexpansion states to expand.

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Increase flexibility for states. Promote "consumer-driven healthcare." Relieve the regulatory burden on employers. Shift people from public to private coverage. These measures probably wouldn't improve healthcare delivery or access. But they would please Republican constituencies and advance Republican principles.

What about a relatively moderate partial repeal/replace bill -- a less destructive version of the AHCA or BCRA? That's a counterfactual, impossible for today's Republicans.  In fact it's almost conceptually impossible: you could not improve healthcare access for anyone in this country by spending less on ACA programs and redesigning them in a conservative direction. The implicit goal of such legislation would be to minimize damage in service of cutting taxes to greater or lesser extent.

On the other hand...one striking feature of Republicans' long quest for repeal is that they gave up in stages on repealing most of the ACA's taxes. At the BCRA stage they decided that cutting taxes on wealthy individuals while also cutting benefits was too politically toxic -- while cutting taxes on healthcare industries could be justified as a means to reduce premiums. Graham-Cassidy, holding to a stated preference of Cassidy's dating back to at least to January, maintained most of the ACA's taxes (while bizarrely zeroing out benefits in 2027).  One can just imagine a "repeal" bill that leaves most ACA revenue intact, does not touch Medicaid outside the expansion, cuts the expansion to 100% FPL but maintains the enhanced federal match to that level,  replaces the individual mandate with a late enrollment penalty or waiting period, provides flat subsidies over 200% FPL but maintains Cost Sharing Reduction below that level, allows subsidies for plans with AV as low as 50% and for compliant plans sold outside the marketplace, and and and....

I can't see it. It seems more plausible either that Republicans will eventually pass some ruinous bill along AHCA/BCRA lines or that the ACA will limp along until Democrats take further reform in a different direction.

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