Wednesday, September 19, 2018

Re-litigating the ACA repeal bills of 2017: Pre-existing conditions and beyond

In House and Senate races across the country, Republicans are being held to account for their support of last year's ACA repeal bills, the American Health Care Act (AHCA), which passed the House on May 4, and to a lesser extent, the parallel Better Care Reconciliation Act, which died in the Senate.

The fight often focuses on whether supporters voted to undermine protections for people with pre-existing conditions. The original AHCA, which never came to a vote because it lacked the votes to pass, maintained the ACA's guaranteed issue, modified community rating and Essential Health Benefits (EHBs). It passed only when Rep. Tom MacArthur, R-NJ3, introduced an amendment that won hard-right support by enabling states to open the door to medical underwriting -- and rewrite the EHBs.

MacArthur and allies argue that the door was only cracked a bit, and that those with pre-existing conditions were protected. Only those who had last been insured in the individual market and who failed to maintain continuous coverage could be subject to medical underwriting -- and the state had to establish a high risk pool or reinsurance program for those so exposed, tapping an $8 billion pool established by the bill.

This defense has been widely debunked, most recently by Washington Post fact-checker Glenn Kessler today. I'll get to that argument in a moment, as I have something to add. First, I want to reiterate that the whole argument is something of a diversion --- and, because Republicans have a superficially credible defense here, the argument serves their purposes.  Oddly, though, it arguably serves Democrats' purposes too, because a) they can win it, and b) the repeal bills' even more egregious outrages are difficult for Dems to spotlight.

The AHCA would have reduced the ranks of insured Americans by 23 million, according to CBO estimate. It would have decimated publicly supported insurance (leaving aside tax subsidization of employer-sponsored insurance) for people with incomes below 200% of the Federal Poverty Level. That's one third of the population -- and, pre-ACA, 55% of the uninsured population.

The AHCA would have
  • Rolled back the ACA Medicaid expansion -- the primary engine of the ACA's reduction in the uninsured population. By CBO estimate, it would have reduced Medicaid enrollment by 14 million over ten years.
  • Imposed per capita caps on federal Medicaid spending, weakening a wide range of Medicaid programs (with the effects varying by state) that collectively insure 75 million Americans, including about 40% of the nation's children and over 60% of those in nursing homes. 
  • Reduced premium subsidies for most ACA marketplace recipients -- and wiped out Cost Sharing Reduction (CSR) subsidies, which make actual care affordable for about 5 million enrollees with incomes up to 200% FPL.  CSR reduces to deductibles roughly to a $0-500 range for enrollees up to 150% FPL and to $500-1000 for those in the 150-200% FPL range.
  • Via a subsidy structure that did not adjust with age, coupled with premiums that rose more steeply with age than under the ACA, rendered coverage unaffordable for low income older enrollees. By CBO's estimate, a 64 year-old with an income of $26,500 (175% FPL) would pay almost ten times as much as under the ACA -- $16,100 annually vs. $1,700. The loss of CSR would boost the average deductible from about $800 to over $5000.
Those were the biggies. The total cuts to Medicaid were estimated at $834 billion over ten years by CBO. Net cuts to marketplace subsidies, including offsetting spending on reinsurance, were about $160 billion in the same period.

Those cuts constituted the primary harm Republicans sought to impose on access to healthcare in the U.S. The provisions allowing states to reintroduce medical underwriting or narrow comprehensive coverage were a bit of gratuitous cruelty tacked on late to win support from right-wing fanatics.

But the spending cuts would have hurt primarily the poor and near-poor, while the possibility of being cut off from access to insurance potentially affects everybody. Through the years when the ACA's approval numbers were under water, Democrats paid in political blood for having transferred enough wealth to provide coverage mainly for those in the lower third of the income distribution (while skimping on subsidies for the middle class). While the fight over repeal last year revealed and/or stimulated a revelatory level of public support for Medicaid, most Democratic congressional candidates prefer talking about protections for people with pre-existing conditions (though governor's races are different). And the rarest bird of all is defense of ACA marketplace subsidies.

All that said, Democrats are right to press the attack on Republicans for undermining the ACA's protections for people with pre-existing conditions.  From the beginning, the ACA flew under the banner of protection for people with pre-existing conditions -- which, by Kaiser Family Foundation estimates, would make it impossible for about a quarter of the U.S. population to buy insurance in the pre-ACA individual market.  While only about 5% of the non-elderly population is currently in the individual market, any of us could be tossed into it at any given moment -- or choose to enter it, if coverage is available and affordable. The issue resonates; three quarters of the respondents to a recent Kaiser poll said that guaranteed issue is "very important" to them. And Trump handed the issue to Democrats by specifically targeting those protections in declining to defend the ACA against the suit by 20 Republican AGs and governors seeking to have the whole law struck down.

Long digression...back to Kessler's fact check of a claim by Rep. Kevin Cramer, R-ND and Senate candidate, that the AHCA effectively barred price discrimination against people with pre-existing conditions. I have a codicil to add.

With respect to the terms under which the MacArthur Amendment allowed states to reintroduce medical underwriting and rewrite EHBs, Kessler summarizes the analysis advanced by CBO on May 24, 2017 (link above), which in turn harks back to an argument posted by the Brookings Institute's Matthew Fiedler five weeks prior. In brief, while the AHCA allowed states to impose medical underwriting only on those who failed to maintain continuous coverage, Fiedler (and CBO after him) argued that a medically underwritten market would entice healthy enrollees to voluntarily subject themselves to medical to it, as premiums for the healthy would be offered at a discount. Their exit from the guaranteed issue market would drive up premiums in that market, rendering coverage unaffordable to those who had nowhere else to go (i.e., those with pre-existing conditions). And the funds allotted by the AHCA for high risk pools to protect such people were inadequate by orders of magnitude, as Fiedler tells Kessler. (The Trump administration has done something similar by promoting an unregulated market in short-term plans; we'll start to learn the effects of that change in 2019.)

Kessler points out that the individual market insurers just 6% of the population in North Dakota (and roughly that in the US as a whole) -- implying that the fight over pre-ex concerns just a sliver of a sliver. To cement that point, he adds an assertion that's contradicted by a separate Fielder analysis: "Someone who got insurance through an employer presumably would not have been affected."

Two days before the House passed the AHCA, Fiedler published a brief arguing that allowing states to scale back the EHBs would undermine ACA protections against catastrophic costs in the employer market:
a single state’s decision to weaken or eliminate its essential health benefit standards could weaken or effectively eliminate the ACA’s guarantee of protection against catastrophic costs for people with coverage through large employer plans in every state. [1] The two affected protections are the ACA’s ban on annual and lifetime limits, as well as the ACA’s requirement that insurance plans cap enrollees’ annual out-of-pocket spending.
Here's how. Under the ACA, large group plans do not have to include the EHBs in their basic coverage grant, though most do. They are obligated, however, to apply to EHBs with respect to the ACA-mandated cap on enrollees' annual out-of-pocket costs. The EHBs also define the scope of coverage not subject to annual or lifetime caps on coverage, which the ACA bans.

An employer, Fiedler notes,  can "apply any state’s definition of essential health benefits for the purposes of determining the scope of the ban on annual and lifetime limits and the requirement to cap out-of-pocket spending." Under the ACA, states have relatively little leeway in defining EHBs. The MacArthur amendment changed that. If a state substantially narrowed them, any large employer could follow suit to define the scope of out-of-pocket maximums and the reach of the ban on coverage caps. If, for example, the EHBs excluded mental healthcare, an individual's costs on that front would not be subject to out-of-pocket maximums -- and any coverage could be subject to caps.

Democrats who engage on the pre-existing conditions issue (hopefully not to the exclusion of the more radical harms Republicans seek to impose) should emphasize this point: Republican-authored bills would weaken protections for the 150 million-odd people insured through their employers.

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