Wednesday, May 31, 2017

Does Avik Roy want to preserve or privatize the Medicaid expansion?

Conservative healthcare wonk Avik Roy, unlike Republicans in Congress, wants health insurance to be affordable for all Americans. But his proposal for an amended AHCA has an enormous hole in it: Medicaid.

Roy favors income-adjusted tax credits, which the AHCA maintains on an interim basis until 2020, with age-based adjustments to the ACA schedule. In 2020, a credit that adjusts only for age (and not sufficiently for that) takes over. Here's Roy's suggested amendment:
If the Senate were simply to remove the House bill’s uniform tax credit and continue the hybrid model past 2019 through 2020 and beyond, the bill would most likely get a better coverage score from the C.B.O. The Senate would be able to direct more financial assistance to those who need it, whether because of old age, ill health or low income. Indeed, the Senate could tweak the exact formulas for age and income adjustment, to maximize the number of people with health insurance in the most cost-effective way.
Under the 2018-19 subsidy schedule that Roy wants to make permanent, enrollees with incomes "up to" 133% of the Federal Poverty Level pay 2% of their income for a benchmark plan.The ACA specifies, however, that eligibility for credits begins at 100% FPL -- and the AHCA does not repeal that provision (and uses the same "up to 133" language in its subsidy schedule).. In states that accepted the ACA Medicaid expansion (after the Supreme Court made it optional for states in 2012), adults with incomes under 133% FPL (138% FPL in practice, because of a 5% deduction), are eligible for Medicaid. What happens to them under Roy's plan? Or to those with incomes under 100% FPL in non-expansion states, who currently are left out in the cold?
Here's a hint that doesn't quite add up:
The Republican bill is supposed to “repeal and replace.” But for older individuals newly enrolled in Medicaid because of the A.C.A., the House bill’s replacement is virtually useless.

Republicans routinely ask the poor to work harder to lift themselves out of poverty. But under the A.H.C.A., those who work longer hours or earn a raise or take a second job to cross the poverty line will be slapped with a gigantic health insurance tab. For those in their 60s, the cost of crossing the poverty line could exceed $10,000 a year.
Roy appears to assume that those who don't "cross the poverty line" will have access to Medicaid. But the AHCA repeals the federal government's enhanced funding for new applicants made eligible by the ACA expansion as of 2020 - the same year the flat subsidy structure for private plans kicks in. Since states can't afford to maintain the expansion without the enhanced federal match, the cutoff effectively ends the expansion pretty quickly: CBO forecasts that fewer than one third of those enrolled as of December 31, 2019 would have maintained continuous coverage two years later, and just 5% by 2024.

Is Roy proposing extending private market subsidies to applicants with incomes below 100% FPL? That would require further amendment to the ACA (or AHCA), and would effectively privatize the ACA Medicaid expansion. That would be...expensive. CBO forecasts outlays for the Medicaid expansion to total $998 billion over the next 10 years under current law. The AHCA cuts $834 billion in Medicaid spending over the next tens years. according to CBO.

[Update: Roy responds to a query:
I await an explanation of how that may come about.

Presumably, Roy would also permanently extend the ACA's Cost Sharing Reduction (CSR) subsidies, which are maintained in the AHCA's interim period. CBO estimates that under Ryan's flat subsidies, private plans under the AHCA would carry an average actuarial value (AV) of 65%, which means that they would cover 65% of the average enrollees medical costs, as measured by a fixed formula. CSR boosts the AV of a benchmark silver plan from a baseline of AV 70% to AV 94% for those with incomes up to 150% FPL,  to 87% for those in the 150-200% FPL range, and to 73% for those between 200 and 250% FPL. At AV 94%, deductibles are typically $0-250; at AV 87%, $500-1000; at AV 65%, they'd likely be over $5000. If  CSR is not maintained, actual healthcare will remain unaffordable for low income enrollees.

The AHCA's interim subsidy structure is not radically different from the ACA's. It would appear Roy does not have much substantive beef with the ACA marketplace structure after all.

The proposed fix ignores the manifest purpose of the AHCA: to cut taxes for the wealthy and for healthcare companies, reducing revenue by nearly $874 billion over ten years by CBO's estimate (counting revenue lost from the repealed individual and employer mandates) and to eviscerate Medicaid by repealing the ACA expansion and imposing per capita caps on the federal contribution, reducing spending by $834 billion over ten years. If he wants to preserve or privatize the expansion, he should say so.

For the record, even the high-AV private coverage offered to the ACA marketplace's lowest-income enrollees (AV 94% for a premium constituting 2% of income) provides less appropriate coverage for those below or near the poverty line than does Medicaid. Enrollee surveys and focus groups by the Kaiser Family Foundation and the Commonwealth Club show higher satisfaction for beneficiaries of the Medicaid expansion than for subsidized marketplace enrollees, who report considerable difficulty and frustration with deductibles, copays and other private plan rules and features.

1 comment:

  1. did you see this?