As Republican moderates cave on Medicaid cuts, what can Dems do?

As I feared back in March, the "moderate" Republicans in the Senate who profess concern about plans to repeal the ACA Medicaid expansion and impose per capita caps on federal funding for Medicaid are going squish. They'll settle for slowing repeal of the expansion rather than stopping it, and perhaps for some partial easing of the per capita caps, such as exempting coverage for the disabled.

Now as in March, Republican senators in states that have benefited from the expansion speak as if repeal of the expansion and a steady erosion in federal funding for all Medicaid programs is a natural disaster that they must help their constituents cope with, rather than their own free choice to inflict suffering on vulnerable people to fund tax cuts for the wealthy.

Here's Bill Cassidy of Louisiana, until now the strongest defender among Republican senators of maintaining ACA-level funding, speaking to Matt Fuller and Sam Stein of the Huffington Post. Over 300,000 Louisianians have gained Medicaid coverage since incoming governor John Bel Edwards implemented the expansion, beginning July 1, 2016.

CBO: Some states will kill protections for those with pre-existing conditions -- and oh yes, the AHCA still eviscerates Medicaid

In late April, Matthew Fiedler explained in a Brookings brief that the MacArthur amendment to the AHCA, which allowed states to subject people who fail to maintain continuous coverage to medical underwriting, would not just affect those who fail to maintain continuous coverage. Fiedler's summary:

...the framework created by the waiver would allow states to effectively eliminate community rating protections for all people seeking individual market coverage, including people who had maintained continuous coverage.

In brief, healthy people would have a strong incentive to “opt out” of the community-rated pool and instead pay a premium based on health status. With healthy enrollees opting out of the community-rated pool, community-rated premiums would need to be extremely high, forcing sicker individuals—including those with continuous coverage—to choose between paying the extremely high community-rated premium or being underwritten themselves. Either way, people with serious health conditions would face prohibitively high premiums. As a result, community rating would be eviscerated—and with it any meaningful guarantee that seriously ill people can access coverage.

The CBO analysis of the amended AHCA released yesterday reproduces this argument:

Tom MacArthur's faith-based waiver for the AHCA

Representative Tom MacArthur, R-NJ, has taken the lead in advancing amendments to the AHCA designed to bring both the Freedom Caucus and the moderate Tuesday Group aboard.  For the moderates, MacArthur writes that there will be an additional $160 billion in funding over 10 years to increase tax credits for older buyers and preserve Medicaid coverage for new mothers (was that on the block?!) and addiction treatment. For the conservatives, an amendment has been published  that would allow states to opt out of prohibiting medical underwriting or requiring insurers to cover the ACA's Essential Health Benefits.

Actually, the amendment begins by purporting to restore EHBs, community rating and guaranteed issue, the prohibition on denying coverage or charging more to people with pre-existing conditions. But it then tacks round and enables states to seek "limited waivers" to amend the EHBs, community rating -- and medical underwriting, if the state establishes a high risk pool.

How are those waivers limited? There's the rub. Beginning in 2017, the Affordable Care Act enables states to seek waivers to change the structure of their ACA marketplaces, but requires that the state's alternative plan "provide coverage that is at least as comprehensive and affordable, to at least a comparable number of residents, as this title would provide; and that it will not increase the Federal deficit."

If King is upheld, what will Congress do?

Congressional Republicans, who have promised and failed to come up with a legislative alternative to the Affordable Care Act for five years, are now promising that they will have a replacement ready in case the Supreme Court upholds the plaintiffs  this June in King v. Burwell.  Here's Reuters:

Representative Tom Price, Republican chairman of the House Budget Committee, told a conservative forum that the high court's anticipated ruling in the case known as King v. Burwell could cause President Barack Obama's signature domestic policy to unravel quickly.

"We need to be ready, willing and able to move forward," said Price, a leading Obamacare critic who replaced Wisconsin Republican Paul Ryan as House Budget Committee chairman earlier this year.

“We believe we are going to get to that point. I believe the president is actually going to be open to a better way,” he added.

A ruling for the plaintiff in King would leave the body of the law intact, albeit in a vegetative state. The exchanges would still exist, though they would be completely dysfunctional in the states covered by Healthcare.gov. Governors and legislatures in those states would be responsible either for finding a way to continue to subsidize the premiums of tens or hundreds of thousands of state residents who have accessed coverage through Healthcare.gov, or for justifying the denial of subsidies to those residents.

Because the law would still be on the books, there is nothing to force the administration to negotiate a full "replacement" that would entail repeal (as in "repeal and replace"). That leaves the question: Are there possible amendments that would meet Republicans' alleged policy goals without shredding the ACA's coverage grant?  Under pressure of abruptly withdrawing coverage from 8 million Americans, is compromise conceivable?

Hey, red state governors: here's an ACA "repeal and replace" plan to protect the rate-shocked

Guaranteed issue -- the guarantee that one's health or medical history won't be factored into the cost of health insurance bought on the individual market -- is one of the most popular features of the ACA. Many Republicans vowing to "repeal and replace" the law promise to keep it. But maybe they shouldn't.

Guaranteed issue is also the primary driver of the rise in health insurance premiums triggered by the ACA (the base price, that is, offset for most consumers by government subsidies). Benefits consultant Milliman estimated in March 2013 that guaranteed issue would drive the cost of insurance in California up 26.5%.  More recently, with the data for the ACA's first open season in, a NBER study by a team of health economists led by the Wharton School's Mark Pauly identified it as the primary cause of cost increases averaging 14 to 28% in 24 states. 

The rise in insurance premiums for the unsubsidized, leading to "rate shock" for some who were already buyers in  the pre-ACA individual market and earned too much to qualify for subsidies, has been Republicans' most potent attack point against the ACA. Rhetorically, they like to pin the price hike on the "essential health benefits" (EHBs) that all policies must provide under the ACA -- e.g., childbirth and mental health coverage. But the price impact of EHBs is dwarfed by guaranteed issue. Some Republicans and conservatives acknowledge this indirectly by touting state-run high risk pools for those with preexisting conditions -- a proposal that implies the end of guaranteed issue.

State high risk pools have been around for some time, and were funded as a temporary measure by the ACA to cover those with pre-existing conditions until the state insurance marketplaces were launched in 2014.  They have generally been underfunded, often prohibitively expensive and/or available to only a fraction of those who needed them.

I have a question for health economists -- or, if you prefer, a modest proposal for red state governors who would like to "repeal and replace" the ACA on a state level -- as the law allows via innovation waivers that empower states to submit plans that would meet the law's goals by alternative means. If feasible, it might be attractive to self-styled champions of the free market -- and of constituents who liked their pre-ACA insurance and couldn't keep it, chiefly because they've been drafted to subsidize insurance for the less healthy.