What We Know & Don’t Know About Reconciliation & AHCA

— Vickie Rock

Press Secretary Sean Pricer made a big deal about the size of the American Health Care Act (AHCA) in comparison to the Patient Protection and Affordable Act (PPACA) which is also called the ACA or by its GOP nickname, “Obamacare.”  But he asked people to do was to compare apples to asparagus.  One is an actual healthcare bill, the other is “reconciliation” bill, a gimmick that the Republicans are using to remove revenue and expenses from the original legislation (the one on the right).

So what is “reconciliation”?

Reconciliation is a legislative process of the US Senate which allows consideration of a “budget bill.” The process limits debate to 20 hours and eliminates any opportunity to filibuster the bill. Reconciliation also exists in the US House, but because the House regularly passes rules that constrain debate and amendments, the process has had a less significant impact.

A reconciliation budget resolution directing one or more committees to submit legislation changing existing law in order stated spending and revenue requirements. But most notably, the reconciliation process can only be used to change laws that are scored by the Congressional Budget Office, in other words, those that cost money or are implemented as taxes. And, if you’ll remember, the Supreme Court, on June 28, 2012, ruled that ObamaCare a “tax” and not a mandate, and therefore declared it “constitutional.”

Since the ACA is a “tax” … and since the Republicans control both houses of Congress and the Presidency, they’ve decided to go after the tax and revenue side of ACA using a gimmick that allows them to repeal all of the “money” side of the bill using a simple majority vote and then fight to kill all the provisions that really help Americans using regular legislative bills (hence, their discussions of steps 1, 2, and 3).

They’ve proposed their AHCA reconciliation bill and now the Congressional Budget Office (CBO) has weighed in on the bill with their analysis, albeit a bit light in a few areas of concern.  Here’s what we don’t yet know:

1. The analysis is a bit light on what might happen  regarding employer-based healthcare benefits.  Because the bill would use “age-rating” to set premium costs and allow insurance companies to charge 5-times as much for premiums for older workers as for younger workers, that’s going to make a huge difference to employers as employees age.
  a. Will employers begin dropping healthcare benefits en masse?
  b. Will employers use this as yet another excuse to gouge employees by either ending healthcare benefits without raising their wages/salaries or employing their own age rated cost-sharing schemes?
  c. Will workplace environments become hostile for aging workers as they attempt to force out older “expensive” workers in favor of younger “cheaper” new hires?
  d. Will employers use this as an excuse to drop all healthcare benefits for retirees or price the premium cost-sharing out of their reach?
2. How badly will Rural Hospitals be affected by the capping/cutting of not just Medicaid funding, but the repeal of all funding supporting Rural Hospitals in general? We’ve already seen on rural hospital in Tonopah, NV close its doors.  How many more will follow in their footsteps?

Here’s what we do know:

1. Because this is a ‘reconciliation’ bill, it does nothing to change provisions that have no tax revenue/expense basis.  For example, insurance companies would still  be required to provide coverage to any applicant, would not be able to vary premiums to reflect enrollees’ health status or to limit coverage of preexisting medical conditions, and would be limited in how premiums could vary by age.   Prohibitions on annual and lifetime maximum benefits would still apply. In addition, insurers would also still be required to cover specified categories of health care services, and the amount of costs for covered services that enrollees have to pay out of pocket would remain limited to a specified threshold.
2. Healthcare provider organizations and the medical community as a whole, AARP, American Medical Assoc, American Nurses Assoc, American Hospital Assoc, and National Physicians Alliance have all come out against passage of the AHCA.  On the other hand, a number a “conservative groups” have expressed support:  National Taxpayers Union, Americans for Tax Reform, Center for the American Experiment, Citizens Against Government Waste, Independent Women’s Voice, Institute for Liberty, Log Cabin Republicans, Market Institute, and the Small Business & Entrepreneurship Council, none of which provide an ounce of healthcare to anyone.
3. We know that a large number of rural communities across this nation have just one insurance provider serving their community.  Speaker Ryan has proclaimed this bill will miraculously increase competition throughout the nation.  However, there is absolutely nothing in the reconciliation bill to incentivize corporations to actually do business in Rural America, where they have not created healthcare networks and left millions of Americans will few if any choices for coverage.  The GOP have touted the AHCA has just step #1 in a three step process, but there is absolutely nothing but air with respect to steps #2 and #3, and how those steps would improve or denegrate healthcare choices for coverage even further.
4. Premium costs will still RISE, however, the analysis indicates the ‘average’ premium cost will be 10% less than what the increase would have been under the ACA, once the older, sicker population has been priced out of the market.
5. Medicaid will see some major cuts ( reduction of $880 billion in federal outlays ) and turned into block grants to the states for them to administer.  Specifically, beginning in 2020, the federal government would establish a limit on the amount of reimbursement it provides to states. That limit would be set by calculating the average per-enrollee cost of medical services for most enrollees who received full Medicaid benefits in 2016 for each state.  Given that capping of benefits to the states, we can anticipate those cuts will lead to some serious healthcare rationing, and potentially, “death panels” in various states as those who are sick, but who can’t pay for the care they need, turn to their State’s Medicare program which has insufficient funding to meet demand.
6. Because the reconciliation bill changes the means by which premium rates are structured, premiums for older people can be charged at 5X the rate of premiums charged to younger people.  Faced with the choice between giving their money to insurance companies who need return even less than 60% of their premium payments in the form of actual healthcare reimbursements, lower income older Americans will find themselves driven out of the market altogether when they can no longer pay the rent, put food on the table, pay for utilities, pay for a car and fuel to be able to get to work, AND let the healthcare insurance company suck the life out of them.
   
   
7. Monies withdrawn from support of the Medicaid program, instead of being applied toward reducing our Nation’s national debt  will instead be used to laud massive tax breaks for the upper 2% of the population. In addition, it repeals other provisions that impacted the wealthy:
a. Repealing the surtax on certain high-income taxpayers’ net investment income;
b. Repealing the increase in the Hospital Insurance payroll tax rate for certain high-income taxpayers;
c. Repealing the “cadillac” tax on some health insurance benefits plans
8. The bill creates a new mandate, this time for insurers, requiring them to levy a 30% surcharge on premiums for people who enroll in insurance in the nongroup or small-group markets if they have been uninsured for more than 63 days within the past year.
9. The bill repeals the metal scale [bronze(60%), silver(70%), gold(80%) and platinum(90%)] for insurance policies and will allow insurers to once again provide plans having an actuarial value below 60%. The question then becomes ‘what’ does the GOP have planned for steps #2 and #3.  Since the reconciliation bill is unable to repeal the requirements  to cover 10 categories of health benefits that are defined as “essential” under current law, it would be challenging for insurers to drop actuarial values for what they cover below 60%. Thus, what are their Step#2 and #3 plans to stiff Americans?
10. Buyer BEWARE!  The onus will be shifted to individuals whoare shopping for insurance to pay attention to the details and not look just at the price.  Plans would be harder to compare, making shopping for a plan on the basis of price alone, much more difficult. In addition, with more plans that are eligible for subsidies offered directly from insurers or directly through agents and brokers and not through the marketplaces’ central websites, shopping for and comparing plans could once again become much harder, depending on insurers’ decisions about ‘how’ they choose to market their plans.
11. Currently, premium tax credits vary based on geography (how much services cost in the buyers region) and age for a given income level.   Beginning in 2020, under the legislation, the size of a premium tax credit would vary merely by age, and disregard income and geography.  Such policy would force people to become “under-insured” and once again, potentially increase the volume of health-related bankruptcies, especially for  people living in high-cost areas would be responsible for a larger share of the premium.
12. The GOP who continually rales that Congress should NOT be in the business of picking “Winners and Losers” just did exactly that using the reconciliation bill with which to do that.  They declared Planned Parenthood and the women who seek healthcare at their clinics:  “Losers.”  Planned Parenthood will no longer be permitted to bill Medicaid for the healthcare services they provide to many any low income women across this nation who seek care at their clinics, unless of course, they bow down to Evangelical jihadist demands to never, ever, ever, ever again perform a single solitary abortion in any of their facilities.  So much for separation of Church and State.
 “Planned Parenthood hits the GOP’s bullseye definition in the AHCA of a “nonprofit,” an “essential community provider … primarily engaged in providing family planning and reproductive health services and related medical care,” an abortion care provider, and the fiscal year 2014 recipient of more than $350 million in Medicaid funds that can’t be used for abortion care due to the discriminatory Hyde Amendment.” — Rewire
13. The CBO report anticipates that some employers would choose not to offer coverage and turf their employee base out into the individual market. It also optimistically  anticipates those same employers would instead increase “other forms of compensation” in return. (I’m sorry, but I’m not so optimistic as to those alternative increases.) Additionally, the CBO anticipates the number of people no longer receiving employer-based healthcare will grow from 2 million fewer people in  2020, to 7 million fewer people.
 
14. Who loses if this bill should pass?  Currently, around 9.5 percent of Americans younger than 65 are uninsured  How does that change?  Here’s the bottom line, the CBO report estimates that should this bill be enacted, 48 million people under age 65, or roughly 17 percent of the non-elderly population, would be uninsured in 2020. That figure would grow to 52 million, or roughly 19 percent of the non-elderly population, in 2026.
 
 

 

Those are just a few of the points I gleaned from reading the GOP’s American Health Care Act and the CBO Report.  I encourage you to read them as well and then take action to make sure your members in Congress know where you stand.

Sources and related posts:

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