Taking Pre-Existing Conditions Back to Pre-Existing Times and the Demise of Medicaid

by WBE | 5.30.2017 | In The News, You Should Know

The struggle for Congressional Republicans to repeal and replace the Affordable Care Act (“ACA”) continues. As I reported in my last blog post, Republicans have been scrambling for ways to dismantle the ACA and implement a sufficient replacement. On May 4, 2017, the House of Representatives (“House”) approved a bill[1] called the American Health Care Act (“AHCA”) to replace the ACA. The House’s approval of the AHCA has triggered widespread uproar and has drawn sharp criticism from those concerned about whether the bill adequately addresses the health care needs of Americans. If it becomes law, the AHCA may unravel much of the progress achieved by the ACA and result in throwing the baby out with the bath water.

The version of the AHCA passed by the House makes some sweeping changes to the ACA. Some provisions of the bill include:

Repealing the individual and employer mandate, and the tax penalties associated with both.
Imposing a 30 percent penalty on top of a person’s premium if that person allows his/her health insurance coverage to lapse for more than 63 days.
Replacing ACA income-based tax credits and subsidies with age-based tax credits ranging from $2000 per year for younger adults to $4000 per year for older adults.
Cutting taxes on health insurance companies and medical device companies.
Repealing Medicaid expansion and certain Medicaid provisions (e.g., cutting reimbursement to states when beneficiaries leave the program and prohibiting federal funding for Planned Parenthood).
Converting Medicaid from an entitlement program to a grant program (i.e., by providing states with only a certain amount of money per beneficiary or block grants), which would limit the amount of money going towards the Medicaid program.
Cutting Medicaid spending by $880 billion.[2]
Establishing a Patient and State Stability Fund which purports to provide financial assistance for high-risk individuals, stabilize health insurance premiums in the individual market, promote participation in the individual and small group market, promote access to preventative care, and help reduce out-of-pocket costs.[3]

While the benefits of these provisions remain questionable, perhaps the most concerning part of the bill comes in the form of state waivers. Under the AHCA, states may apply to waive certain ACA requirements. In states that elect waivers, insurers could charge older adults five times more than they charge younger adults for the same health insurance policy. Waivers would also permit insurance companies to exclude “essential health benefits” (e.g., maternity care, inpatient/outpatient care, coverage for prescriptions, and mental health care) from plans.[4] Although the AHCA primarily affects the individual insurance market, employer-based plans may also become costly if states elect waivers. The ACA banned employer-based plans from imposing annual and lifetime limits for essential health benefits only. If a state redefines “essential health benefits” under a waiver, employees who receive health care through their employer may be subject to annual and lifetime limits for care that is currently deemed an essential health benefit.[5] In short, no one would be immune from the AHCA’s reach.

The AHCA would place the heaviest burden on those who have pre-existing conditions, as insurers may charge higher premiums if someone with a pre-existing condition does not maintain continuous coverage.[6] Before the ACA required insurance companies to cover pre-existing conditions, insurance companies commonly refused or charged exorbitant premiums to cover pre-existing conditions like AIDS/HIV, cancer, cerebral palsy, Crohn’s disease, diabetes, pregnancy, stroke, mental disorders, kidney disease, heart conditions, and more.[7] States electing waivers will receive federal funding to create high-risk pools to cover those with pre-existing conditions, but will this funding be enough money to cover the cost of their care?[8] To help defray the cost of insuring those with pre-existing conditions, the bill provides states with federal funding of $138 billion over ten years which can be used to establish high-risk pools among other things.[9] Eight billion dollars of the $138 billion was added through a late amendment and is to be allocated for out-of-pocket costs and premiums for those with pre-existing conditions over a five year period. [10] According to senior fellow, Karen Pollitz, with the Kaiser Family Foundation (a non-partisan organization that regularly reports on health policy), the $8 billion “‘is not a number that bears any resemblance…to what this would cost.’”[11] Larry Levitt, senior vice president of the Kaiser Family Foundation, noted that “it is impossible to anticipate how far the amendment’s money would have to stretch without knowing how many states would try to get rid of the current insurance rules. It is also unclear what would happen once the money was gone in five years.”[12] Levitt also tweeted that “$8 billion could provide coverage to a few hundred thousand high-risk enrollees, out of millions who might need it.”[13] And research from Avalere, a health care consulting company, found that $23 billion set aside specifically to help those with pre-existing conditions will cover only 110,000 people.[14] To put this in perspective, Avalere highlighted that “Texas alone has approximately 190,000 enrollees in its individual market with pre-existing chronic conditions” and Florida has 205,000 – well over the number of people the funding would cover.[15]

Health care provider organizations have voiced dire concerns about how the House bill will affect patients. American Medical Association president, Andrew W. Gurman, M.D., stated that the bill would “result in millions of Americans losing access to quality, affordable health insurance and those with pre-existing health conditions face the possibility of going back to the time when insurers could charge them premiums that made access to coverage out of the question.”[16] The American Congress of Obstetricians and Gynecologists (“ACOG”) also emphasized the House bill’s negative impact on women’s health, stating that the bill “turns back the clock on women’s health, and will threaten the health and well-being of America’s women and families.”[17] ACOG pointed to the bill’s $880 billion in cuts to the Medicaid program and the repeal of Medicaid expansion. If the House bill is signed into law, the repercussions would have a profound impact on women’s health care. Coverage will revert back to the days before the ACA was passed, “when a woman’s maternity and other essential coverage depended on what state she lived in—when only five states required maternity coverage, only 12 percent of individual market plans offered this coverage, and maternity care riders offered little real financial protection.”[18] The AHCA would also eliminate Medicaid coverage for women who depend on Planned Parenthood clinics for primary and preventative care; eliminate Medicaid coverage for new mothers who do not meet a to-be-established work requirement within eight weeks of giving birth; and establish insurance roadblocks to abortion coverage, which ACOG deems to be “political interference in the practice of medicine.”[19] Further, the American Academy of Pediatrics (“AAP”) emphasized that the coverage rate for children is currently at 95 percent and that the AHCA would destroy this progress by capping funding for Medicaid and repealing Medicaid expansion. The AAP estimates that 37 million children on Medicaid would be harmed if that happens.[20] Considering that physicians and other health care providers are in the best position to understand the implications of the AHCA on patients, Congress should strongly consider their input before hastily passing legislation.

What do the overall long-term effects of the bill look like when broken down into numbers? On May 24, 2017, the Congressional Budget Office (“CBO”) and staff of the Joint Committee on Taxation (“JCT”) provided estimates of spending and revenue stemming from the House bill if it were enacted as is. The CBO/JCT estimated that H.R. 1628 would reduce the federal deficit by $119 billion, which is $32 billion less than the CBO’s March 23, 2017 estimate of an earlier iteration of the bill.[21] While the bill may reduce the deficit, the CBO/JCT estimates that in 2018, 14 million more people would be uninsured under H.R. 1628 than under current law, with that number increasing to 19 million in 2020 and 23 million in 2026. By 2026, approximately 51 million people under age 65 would be uninsured under H.R. 1628 (compared with 28 million under current law).[22] And a few million who would use tax credits to buy policies would end up with policies that do not cover “major medical risks.”[23] Premiums and out-of-pocket costs under H.R. 1628 would depend on whether states elected waivers and how the waivers were implemented, but those who have high health care costs would likely see their out-of-pocket payments increase in states that selected waivers for essential health benefits and community rating. The CBO and JCT cautioned that its estimates were uncertain as responses from states, insurers, employers, individuals, hospitals, and other parties are unpredictable.[24]

The bill has now been sent to the U.S. Senate for consideration. Any further legislative attempts to overturn the ACA should carefully assess the financial impact on the most vulnerable among us and ensure that health care is easily accessible for them. And changes to the ACA will not only affect the vulnerable. Considering all Americans will need health care at one point or another, we should be concerned about health care access and affordability, and play an active role in urging our state representatives to craft better solutions. One can only hope that the Senate will closely examine the bill and resolve its major problems (or simply leave the ACA in place without any changes). Ultimately, if the Senate passes the House version of the ACHA, we may return to a time where choosing between paying rent and obtaining health care was a regular occurrence for many.

[1] American Health Care Act, H.R. 1628, 115^th Cong. (2017).

[2] Id.; http://www.npr.org/sections/health-shots/2017/05/04/526887531/heres-whats-in-the-house-approved-health-care-bill; https://www.nytimes.com/2017/05/04/us/politics/major-provisions-republican-health-care-bill.html; https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjGqfqwuPLTAhXJrFQKHWduCO8QFggmMAA&url=http%3A%2F%2Ffiles.kff.org%2Fattachment%2FProposals-to-Replace-the-Affordable-Care-Act-Summary-of-the-American-Health-Care-Act&usg=AFQjCNGZ5sfKdC5RB-COiLYoAadS06pssQ.

[3] H.R. 1628 § 2202.

[4] H.R. 1628; http://www.npr.org/sections/health-shots/2017/05/04/526887531/heres-whats-in-the-house-approved-health-care-bill; https://www.healthcare.gov/glossary/essential-health-benefits/; https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwivofKEpPLTAhXCq1QKHQB5DaIQFggyMAA&url=http%3A%2F%2Ffiles.kff.org%2Fattachment%2FProposals-to-Replace-the-Affordable-Care-Act-Summary-of-the-American-Health-Care-Act&usg=AFQjCNGZ5sfKdC5RB-COiLYoAadS06pssQ.

[5] http://www.nbcnews.com/politics/congress/here-s-what-you-need-know-about-health-care-bill-n754611.

[6] http://www.npr.org/sections/health-shots/2017/05/04/526887531/heres-whats-in-the-house-approved-health-care-bill; https://www.nytimes.com/2017/05/04/us/politics/major-provisions-republican-health-care-bill.html.

[7] http://kff.org/health-reform/issue-brief/pre-existing-conditions-and-medical-underwriting-in-the-individual-insurance-market-prior-to-the-aca/.

[8] https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0ahUKEwj7uc2h6ejTAhUJ4IMKHWu3AGAQFgg2MAM&url=http%3A%2F%2Ffiles.kff.org%2Fattachment%2FProposals-to-Replace-the-Affordable-Care-Act-Summary-of-the-American-Health-Care-Act&usg=AFQjCNGZ5sfKdC5RB-COiLYoAadS06pssQ&cad=rja; http://khn.org/news/sounds-like-a-good-idea-high-risk-pools/.

[9] https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0ahUKEwj7uc2h6ejTAhUJ4IMKHWu3AGAQFgg2MAM&url=http%3A%2F%2Ffiles.kff.org%2Fattachment%2FProposals-to-Replace-the-Affordable-Care-Act-Summary-of-the-American-Health-Care-Act&usg=AFQjCNGZ5sfKdC5RB-COiLYoAadS06pssQ&cad=rja; http://time.com/money/4766063/ahca-new-republican-health-care-bill/.

[10] H.R. Rep. No. 115-109, at 2-3 (2017), available at https://congress.gov/congressional-report/115th-congress/house-report/109/1.

[11] http://kff.org/about-us/; http://abcnews.go.com/Politics/trumpcare-bill-affect-health-care-consumers/story?id=47203086.

[12] https://www.washingtonpost.com/national/health-science/house-gops-health-care-legislation-adds-8-billion-for-preexisting-conditions/2017/05/03/7771f4ec-3021-11e7-9dec-764dc781686f_story.html?utm_term=.6a62cc0be6e4.