Wednesday, October 17, 2018

Just two Pinocchios for House Republicans who claim they've protected people with preexisting conditions

I'm going to go contrarian here and suggest that House Republicans who claim that they voted to "protect people with preexisting conditions" when they voted for the House ACA repeal bill, the American Health Care Act, are not flat-out lying. They get, say,  two Pinocchios. By current Republican standards, they've got the gaslight turned low. And the furiously passionate battle over whether they're lying obscures the core damage they attempted to wreak on healthcare access in the U.S. -- and will wreak if they maintain control of Congress.

As originally drafted, the AHCA maintained the ACA's essential health benefits, guaranteed issue and modified community rating (base premiums varying only according to age and geographic location). The AHCA would also have
  • Rolled back federal funding for the ACA Medicaid expansion, reducing Medicaid enrollment nationally by 14 million according to CBO estimate.

  • Imposed "per capita caps" on federal Medicaid spending, likely generating perpetual reductions in federal Medicaid spending that would reach the trillions by the second decade, eroding programs that currently serve 75 million people.
  • Replaced the ACA's income-adjusted subsidies with flat subsidies reaching to higher income levels, rendering coverage unaffordable for many-to-most current subsidized enrollees.

  • Increased age rating -- the degree to which the oldest eligible adults could be charged more than the youngest -- from the ACA's 3-to-1 to 5-to-1, rendering coverage still more unaffordable for many older enrollees.

  • Eliminated Cost Sharing Reduction subsidies, leaving low income enrollees with deductibles likely starting in the $5000 range.
The bill narrowly failed to attract enough votes for passage, and was pulled in late March 2017. It failed chiefly because it wasn't cruel enough for the hard-right Freedom Caucus. AHCA 1.0 was too like the ACA: "government controlled" health insurance that imposed national rules of the road on insurers in the individual market. Enter Tom MacArthur, R-NJ, previously considered a relative moderate. 

The MacArthur Amendment, introduced in mid April 2017, made it easy for states to obtain waivers to scrap the ACA's ten Essential Health Benefits (EHBs) and write their own. States could also replace the AHCA's penalty for going without insurance -- a surcharge if/when one entered the individual market -- by subjecting people who had failed to maintain continuous coverage to medical underwriting -- that is, to premiums that varied according to the applicant's health and medical history. States that exercised this option had to establish some kind of high risk pool or reinsurance program, drawing on inadequate federal funds earmarked for that purpose in the bill.

Critics pointed out that once a state opened up a medically underwritten market, healthy people could choose to enter it -- triggering something like a death spiral for the "guaranteed issue market.  The Congressional Budget Office adopted this argument, stuck a finger to the wind, and estimated that about one sixth of the U.S. population would live in states that would execute waivers that rendered the individual market would become unstable, with premiums in the guaranteed issue market soaring and coverage becoming unaffordable for many with pre-existing conditions. (Another third would live in states that made moderate changes to market regulations.)

That's bad. The ACA's protections for people with preexisting conditions would be significantly compromised. And CBO estimate might have underestimated (or overestimated) the impact. 

To place the forecast harm in perspective, though, there are currently about 14 million enrollees in the individual market  Perhaps 2.3 million enrollees (or potential enrollees) would live in states which drove up premiums in the guaranteed issue market in this way. Perhaps half of them would be priced out.  But CBO also forecast that the AHCA, taken whole would increase the ranks of the uninsured by 23 million compared to current law, i.e. an intact ACA.  Medicaid enrollment would be reduced by 14 million over ten million. Individual market enrollment would be reduced by 6 million -- mainly because of skimpier subsidies*. Employer-sponsored insurance enrollment would shrink by 3 million, because of repeal of the individual mandate to obtain insurance (which Republicans have since repealed in any case).

The primary "preexisting condition" that Republicans attacked in this failed bill  -- and continue to attack, and will successfully attack if they retain control of Congress -- is low income. The AHCA and like measures would devastate access to health insurance and healthcare for Americans with incomes up to twice the Federal Poverty Level in particular, who represent a third of the population, and pre-ACA, about 55% of the uninsured. 14 million, by CBO estimate, would lose access to Medicaid. About 5 million would lose access to the Cost Sharing Reduction (CSR) subsidies that reduce out-of-pocket costs to something at least approaching manageability at incomes in the 100-200% FPL range. Older enrollees with incomes in the 200-400% FPL range would also be hit hard. Mostly younger enrollees at somewhat higher incomes would fare better, since the AHCA extended the flat subsidies further up the income chain. 

Guaranteed issue of insurance policies on equal terms to people with pre-existing conditions is a principle that stirs enormous passion. Any of us could be tossed into the individual market at any time (or choose to toss ourselves in, if it's viable) -- and we know it. Tens of millions of Americans have probably suffered from lack of access, or severely compromised access, to this market.  A significant number are effectively shut out today by the high premiums that people who don't qualify for subsidies often face in the ACA marketplace.

But the Republican assault on healthcare access is essentially financial. The AHCA as passed by the House would have cut a cool trillion dollars in federal healthcare spending over ten years, $834 billion of it in Medicaid. The 2019 House budget resolution calls for $1.5 trillion in Medicaid spending cuts over ten years, along with ACA repeal.  "Pre-existing conditions" is a battlecry and point of contention that potentially engages all of us; the spending cuts primarily though by no means exclusively affect lower income people. But that's the locus of the real war.

As for House Republicans' claims to protect access for people with pre-existing conditions...the bill they passed vitiated existing protections. By enabling states to abrogate the ACA's EHBs, the bill also  potentially weakened protections in the employer market, since the ACA's ban on annual or lifetime coverage caps, and cap on individuals' annual out-of-pocket expenses, apply only to EHBs. 

But the AHCA did not wipe current protections off the map. It cracked the door open for states, and it left a weak doorstop in place, and it exacerbated the harm of higher premiums that the waivers would likely trigger with a flat subsidy structure that would quickly get swamped by such spikes.

Republicans who voted for the AHCA can nonetheless claim that they left some individual market protections for people with preexisting conditions in place. Congratulates! If returned to office, they will likely do worse -- for example, by passing a bill like Graham-Cassidy, which pretty much lets states do whatever they want. So, one or two Pinocchio...for today's Republicans, that's a high truth standard.
Morning after afterthought, 10/18: I don't mean to imply (or shouldn't imply) that Republicans aren't horrifically disingenuous in their profession of commitment to pre-ex protections. The individual market as rejiggered in the ACA repeal bills would never function well or meet the needs of those who need it most. That the level of dishonesty on display here is below the Republican norm is intended as irony. Nor do I think Democrats should stop hammering on this front: pre-ex is the wedge that pushes lack of insurance access (or potential lack) from a low income to a middle class concern, and we all know the political risk in the U.S. of appearing to concentrate tax dollars on programs that primarily serve the lower end of the income distribution. I just can't get past the irony that Republican plans to cut a trillion-plus in federal healthcare spending gets a tiny fraction of the attention that individual market rules get.

* The CBO estimated the impact of the AHCA twice, before and after the MacArthur Amendment was introduced. In the ten-year period forecast, estimates for coverage losses in the individual market  by 2021 were similar for both versions - 9 million for the bill with the Amendment compared to 8 million for the original. By 2026, however, CBO estimated net individual market enrollment losses of 6 million for the amended bill vs. just 2 million under the original AHCA. In the earlier case, CBO forecast that the market would stabilize over time as people got used to the new subsidy structure. Under the amended bill, CBO foresaw that more employers would offer coverage, as the individual market was perceived as less attractive. Net, CBO forecast a reduction of 24 million in the insured population under AHCA 1.0 and 23 million under AHCA 2.0.

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