Monday, March 12, 2018

We're not in ACA Repeal-and-Replaceville. We're in Cassidy-Collinstown

Peter Suderman argues that The GOP Accidentally Replaced Obamacare:
Republicans, having failed to repeal Obamacare, have stumbled, almost accidentally, into replacing it. For better and for worse, and with little coherent vision at work, they are making Obamacare their own. And over time, they are likely to embrace it.
There's a good degree of truth in this. Suderman runs through the panoply of Republican legislative and administrative whacks at the ACA's structure and benefits on the federal and state level: individual mandate repeal; creation of a parallel market of non-ACA-compliant plans; regulatory hurdles to Medicaid enrollment aimed particularly at the ACA Medicaid expansion population; repeal of the Independent Payment Advisory Board for Medicare. And Suderman adds a creative future-cast twist: If Democrats take power and pursue a fully or quasi-single payer system, Republicans may end up defending the relatively moderate -- and Republican-moderated (or adulterated) -- status quo, i.e. the ACA.

Suderman's neat conceit leaves a core factor out of the equation, though: funding.

The hot-beating heart of Republican repeal bills was to radically cut the federal funding that underpins the ACA Medicaid expansion and marketplace subsidies -- and also cut all of Medicaid on top of that, via per capita caps on the federal contribution. The mainstream House and Senate bills would also have repealed most of the ACA's taxes on the wealthy and on healthcare companies that provide much of the funding for those benefits -- though the Senate bill, the BCRA, retreated on repeal of the taxes on wealthy individuals.

The repeal bill was not mainly about benefit design. It was about money -- whose money would fund whose benefits.

It's true that Republicans have gotten a good-sized fraction of a loaf on the financing front. They've "saved" $300 billion over ten years by CBO's estimate via individual mandate repeal -- that is, saved federal spending by insuring fewer people. Mandate repeal will also make coverage more expensive per person, by driving up subsidies -- as did the prior act of sabotage, cutoff the federal reimbursement to insurers for the Cost Sharing Reduction subsidies (which, by CBO estimate, will cost the Treasury two thirds as much as much as will be "saved" by mandate repeal). Similarly, the barriers to Medicaid enrollment that red states are throwing up with Trump administration encouragement will "save" money by pushing maybe 20% of red-state Medicaid expansion enrollees (and some other Medicaid enrollees) out of the program.  Republicans also postponed some ACA taxes into likely oblivion.

What remains in place: about 80% of the $1.8 trillion in spending for the marketplace and Medicaid expansion forecast by CBO in Sept. 2017 - with mandate repeal forecast to cut spending on the two programs by $364 billion (Nov. 2017). That leaves out of the equation the effects of setting up lightly regulated short-term plans as an alternative, which will both raise premium subsidies and somewhat reduce the ranks of the subsidized insured (e.g., some younger subsidy-eligible people who may find medically underwritten cheap plans more attractive than lightly subsidized marketplace plans).

In the aftermath of the 2017 assault, the ACA resembles not so much a system established by a mainstream Republican repeal-and-replace bill as it does the kind of compromise that might have emerged from a negotiation over the Cassidy-Collins bill introduced in January 2017, if negotiation over such a plan had been possible (it wasn't, because no more than a handful of Republicans were interested in the bill).

Cassidy-Collins presented states with a choice between maintaining their ACA programs, with a 5% spending haircut, or else embracing an HSA-centric Republican alternative, also funded at 95% of a state's federal funding for the ACA marketplace and Medicaid expansion. States could also opt to do nothing, dropping ACA programs entirely without penalty, or to design their own programs via ACA innovation waivers, which were left standing.

Cassidy-Collins was a hot mess, but it did preserve something approaching ACA funding levels, as well as all of the ACA's tax revenues (and Medicare payment reforms).  It might have been viewed (as I imagined last March) as a negotiating basis for the kind of "superwaiver" compromise that healthcare scholars of the left and right had bruited when funding for premium subsidies in the federal exchange was threatened by the King v. Burwell suit. Such waiver proposals would give states varying degrees of freedom to take ACA funding and design their systems as they see fit -- as CMS administrator Seema Verma suggested last week that Idaho might do, without breaking the law, by shaping short-term plan regulations to create a medically underwritten individual market.  ACA waiver guardrails do remain in place -- even as CMS signposts ways to circumvent them.

Last spring, I for one would have been happy to see a "superwaiver" compromise that preserved the ACA's core programs and funding streams, at least for states that wanted them. Right now, we're in perhaps about as much of a hot mess as we would have been in had something resembling Cassidy-Collins passed, albeit without the defined, extremist high-deductible-plan-plus-HSA-for-all-comers plan set forth in that bill. As long as the funding remains in place,  the mess is ultimately fixable -- or replaceable by something better. It could have been worse.

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