A House Divided Against Itself Cannot Stand: 7 Things to Know on Health Insurance

Once again, the ACA marketplace is facing great uncertainty. The bottom line is that we, the American consumers are going to pay for this in the end. Here are the four things to know:

  1. The Senate GOP is surging ahead with their latest plan to to repeal the Affordable Care Act – The Graham-Cassidy Bill
  2. As a result of the Graham-Cassidy Bill push, the Senate Bi-Partisan effort has stalled.
  3. Trump administration continues attack on Affordable Care Act.
  4. Insurance Companies must commit to insurance exchange (marketplace) participation by September 27, 2017.
  5. Bernie Sanders releases a completely unrealistic Medicare for All plan.
  6. A future for “A Health Insurance Roadmap”. America’s Health Insurance Plans (AHIP) announces support of Medicare Advantage for All
  7. Children’s Health Insurance Plan funding still in limbo

Read on for a look at each of these areas:

1) The Senate GOP is surging ahead with their latest plan to to repeal the Affordable Care Act – The Graham-Cassidy Bill

The main premise of this effort is that it is towards federalism, transferring more control to individual states from the federal government. “Obamacare took power away from patients and states and gave it to the federal government. This returns that power to where it belongs,” the bill’s authors wrote in an explainer. “Each individual state is a laboratory of democracy, allowed to innovate to find solutions.”

Here’s the problem: All 50 states will most likely need to set up agencies to administer the new federal block-grant funding, change their insurance laws and create new programs and do it all by 2020. And if it’s hard for two entities – U.S. House and U.S. Senate, think about how challenging it will be for 100 State Houses and Senates to come up with plans. The odds of all 50 states being able to come up with their own plans by 2020 are about as good as being struck by lightning while winning the lottery.

Here’s a look at what’s inside the Graham-Cassidy Bill:

  • Pre-existing conditions: Graham-Cassidy does not repeal the ACA’s rules about pre-existing conditions. This is a “paper lion” argument as states can opt out of ACA rules that keep insurance companies from charging higher premiums to people with pre-existing conditions. It would also allow insurers to opt-out of covering the ten essential benefits including prescription drugs. In so doing, insureds might not have access to a plan that covers those drugs leading to them having to pay out of pocket. On a side note, services that are not essential benefits are not subject to the ACA’s ban on annual and lifetime maximum benefits. Effectively, people with pre-existing conditions will most likely pay significantly more while having less coverage. To see how much premiums would be increased for a specific pre-existing condition click here(for example the annual surcharge for diabetes would be $5,600 per year and $17,320 for pregnancy.
    • As quoted on axios.com: Caroline Pearson of Avalere: “if you have less money, you either cover fewer people, or you cover the same amount of people with less generous coverage. People with pre existing conditions are very reliant on having access to affordable insurance and need insurance that is comprehensive. So if a bill reduces the availability of comprehensive insurance, people with chronic conditions are going to be disproportionately harmed.” And here are the Top 10 Threats to People With Disabilities Under the Graham-Cassidy Bill.
    • Eliminates Medicaid Expansion as adopted by 31 states and the District of Columbia by 2026. Instead states would receive a block grant based on a per capita cap rather an actual expenses basis. States would have to decide whether to make up that funding, trim services or limit medicaid access. In the first year, it is estimated that the block grant overall would be $20 billion (or 14% less) in 2020, the first year of implementation than states would receive in Medicaid expansion and subsidy funding under the ACA according to Fitch Ratings. The Center for Budget and Policy Priorities says the block grants would provide $239 billion less through 2026 than the spending forecast for Medicaid expansion and marketplace subsidies. It would cut the growth in the basic Medicaid program about $175 billion over the same period (about 8%). Funding would end in 2027.
  • Premium subsidies that lower premiums, deductibles and co-pays would be eliminated at the federal level by 2020. Funding would end in 2027.
  • Each state could waive requirements to cover mental health care.
  • Eliminates the individual and employer mandates which encourage health people to purchase health insurance. While mandates are not the best long term solution, they are necessary at this point to provide balanced risk pools to offset higher costs for less healthy people. People mostly do not choose to have health issues. The CBO estimate that eliminating the individual mandate would lead to 15 million people being uninsured.
  • Allow increased tax-free contributions to health insurance savings accounts. This is effectively a tax cut for the wealthy since they are in higher income tax brackets.
  • Defunds Planned Parenthood for one year.
  • Allows states to require adult Medicaid recipients to work. The disabled, elderly and pregnant women would be exempted.
  • Taxes on over-the-counter medicine and medical devices would be repealed.
  • Premiums for older Americans would also increase substantially. According to a study released by AARP, a 60 year old could pay up to an additional $16,174 per year.

The cold reality is that this is really about repealing the Affordable Care Act because of the Obamacare Moniker and the GOP’s seven years of pledging to repeal it. Remember, Obamacare is just a nickname that was derisively given to the ACA by the GOP. This is purely about politics and as Senator Pat Roberts puts it “Graham-Cassidy is the last stage out of Doge City…. This is not the best possible bill – this the best bill possible under the circumstances”.

The Congressional Budget Office (CBO) has stated that they will only have basic budgetary estimates as required by reconciliation rules ready before the September 30th deadline. So even though health care is about one sixth of our economy and no one is clear on the impact in terms of how many millions of people would lose coverage or have reduced coverage or how much higher premiums would be, a majority of GOP Senators are moving forward anyway. The bill will also proceed without any hearings or testimony throwing traditional Senate procedure aside. The House and Trump are all in as well.

The bill would cut billions in spending with GOP Senator Jim Inhofe stating “They can do it with less money” without further explanation. If the House and Senate can’t make the numbers add up, how will 50 separate state legislatures be able to do so? If a business were to act in this way, they would at minimum be called irresponsible and at maximum reckless. You can see for yourself: GOP senators are rushing to pass Graham-Cassidy. We asked 9 to explain what it does. If this is the future our democracy, this should scare you.

The bill is opposed by almost everyone except for a potential majority of GOP Senators & Members of Congress and 15 GOP Governors. The list of those who oppose the Graham-Cassidy Bill include multiple state Governors (see their letter to Senator’s McConnell & Schumer), The National Association of Medicaid Directors(all 50), America’s Health Insurance Plans (health insurance company trade group), the Blue Cross, Blue Shield Association, the American Medical Association, The Federation of American Hospitals, Children’s Hospital Association, Nurse’s associations, other major physician groups, consumer advocates including ConsumersUnion, AARP and almost every major advocacy group for people suffering from major diseases like the American Cancer Society, American Diabetes Association, American Heart Association, JDRF (see: Sixteen Patient and Provider Groups Oppose Graham/Cassidy Bill). And of course, Jimmy Kimmel.

Keep in mind that the GOP has only until September 30, 2017 to use their 2017 budget reconciliation bill with a simple majority in the Senate. So not only must the Senate pass the bill by then, the House must also pass the identical bill by that date. House Speaker Ryan has indicated that the House would do so and Trump has said he would sign it. So far, there has not been much word from other House GOP members on what they will do and it is always uncertain to predict what Trump will do.

To reach the simple majority of 51, the GOP can only afford 3 no votes as it is presumed that all other members of the GOP would vote yes, all Democrats would vote no and Vice-President Pence would vote yes as a tie-breaking vote. It is far from certain that there will be sufficient GOP votes and it is expected that this will come down to the same three Senators who voted no on the “skinny repeal” bill – Lisa Murkowski (Alaska), Susan Collins (Maine) and John McCain (Arizona). Strong efforts are being made behind the scenes to encourage all 3 to vote yes and each continues to voice their same concerns as before. At this point, no vote has been scheduled.

2) As a result of the Graham-Cassidy Bill push, the Senate Bi-Partisan effort has stalled.

The bipartisan group of senators working on an ACA stabilization bill was pulled on Tuesday by Senator Lamar Alexander. The committee’s goals were to stabilize 2018 marketplace premiums by guaranteeing cost-sharing subsidies for at least two years and to explore reinsurance programs to help insurance companies offset costs from patients with higher health care expenses. Senator Alexander stated “”During the last month, we have worked hard and in good faith, but have not found the necessary consensus among Republicans and Democrats to put a bill in the Senate leaders’ hands that could be enacted”.

It is unfortunate that they were not able to continue their work on a stabilization bill as it is necessary especially if the Graham-Cassidy bill does not pass. In a joint letter, ten state governors wrote to Senators McConnell and Schumer urging them to continue work on a bi-partisan bill.

GOP Senator Suzanne Collins also expressed her dismay, stating that “the four hearings the health committee held in the past month were “substantive” and “the kind of hearings that we need.” Continuing with “So it’s disappointing that this bipartisan effort — which should be our approach — was not allowed to proceed to conclusion,”.

3) Trump administration continues self-fulfilling prophecy to have the Affordable Care Act fail,

Trump has tweeted that Obamacare will fail on it’s own. However, Trump is helping it along:

  • By creating uncertainty about whether cost-sharing subsidies will be continued. This makes it challenging for insurance companies to set premiums as they can’t count on these subsidies. Anyone who purchases an individual health care plan pays for this uncertainty.
  • Individual Mandates. Guidance has been given that it does not need to be enforced. However, the IRS is still enforcing it.
  • Decreasing the budget for outreach. The Health and Human Services department said it would cut the Affordable Care Act’s advertising budget by 90 percent, to $10 million, and would also reduce spending on groups that help customers find the appropriate insurance plan. The administration called the cuts necessary reductions for programs that have run their course and aren’t efficient.
  • Reducing the open enrollment period for the 35 states that do not have their own exchange and use healthcare.gov from 3 months to 6 weeks. Open enrollment will start on November 1st and end on December 15th.

The White House also announced this week that the annual review of a rule called the “Notice of Benefit and Payment Parameters” will commence as reported by Axios. This rule details how the ACA exchanges will function in 2019. Past rules have tinkered with risk adjustment and plan designs, and they are closely watched by the industry. The proposed rule usually is released in November. These changes could impact the law’s 10 essential health benefits.

4) Insurance Companies must commit to insurance exchange (marketplace) participation by September 27, 2017.

Insurance companies must sign final contracts with the federal government for the plans they offer. Though every insurance market currently has at least one insurance company offering plans, insurers can pull out of ACA markets up until contracts are signed. A number of counties have only one insurance company to choose from.

5) Medicare for All plan is introduced by Senator Sanders.

While this sounds great in concept, it is completely unrealistic. This would be unaffordable. And by introducing it Democrats are also moving away from a bi-partisan solution that makes sense. More on this later.

6) A future for “A Health Insurance Roadmap”.

As outlined in A Health Insurance Roadmap, there must be a public and private partnership such as exists with Medicare through Medicare Advantage and Medicare Supplement plans. Keep in mind that Medicare enrollees pay premiums for Parts B & D, so the government’s cost is for Part A. Medicare Part A is free for most Americans already. Medicare Part A is mostly free for most Americans already due to the Emergency Medical Treatment and Labor Act of 1995. Medicare Part A covers emergency health care services (hospitalization).

And my proposal is in good company:

Senator Debbie Stabenow has introduced the Medicare at 55 Act which would be a step in this direction and the bill has seven sponsors. The bill would allow an individual between the ages of 55 & 65 to buy into Medicare and receive the same benefits and protections as an individual enrolled under Medicare Parts A, B and D.

America’s Health Insurance Plans has released a statement about single-payer health insurance plans that the focus should “build on proven solutions that work.” The example given is a similar structure to Medicare Advantage or Medicaid Managed Care which allow private insurers a change to use government subsidies to provide health coverage.

In 2016, Hillary Clinton introduced a proposal that would allow people over 50 (or 55) to enroll in medicare. See: Hillary Clinton Takes a Step to the Left on Health Care.

Japan is a good example of a hybrid private-public insurance program. The government pays 70% of the cost of all health procedures, unless you’re a low-income elderly resident, in which case it pays as much as 90 percent. The remaining 30% is covered by private health insurance — either employer-sponsored or privately purchased. Spending on private health insurance to cover the 30% co-pay is partially tax-deductible. Benefits are the same for everyone, and — unlike many U.S. health plans — include dental and mental-health care. For catastrophic care, poor people, and people with disabilities or certain chronic conditions, the government pays more. Read more at: Want a Better Health Care System? Check Out Japan.

7) Children’s Health Insurance Plan funding still in limbo

Congress must decide whether to extend federal funding authority for the Children’s Health Insurance Program (CHIP), which ends September 30, 2017. CHIP operates much like Medicaid, providing federal matching payments for state program expenses, although CHIP’s funding rate is higher than the federal rate paid for traditional Medicaid and was further enhanced under the Affordable Care Act. States can use their CHIP funds to expand Medicaid, operate separate CHIP programs, or combine the two approaches. Today CHIP covers 8.4 million children and provides maternity coverage for approximately 370,000 women. Read more: Extending the Children’s Health Insurance Program: High Stakes for Families and States.

A Side Effect: As part of the CHIP funding, a special trust fund for community health centers was also created. If CHIP is not funded, billions of federal dollars for community health centers, which provide care for some 26 million patients will have dramatic repercussions. According to the Department of Health and Human Services own estimates, a failure to renew these funds would lead to loss of 51,000 jobs, closure of 2,800 community health centers delivery sites, and a loss of access to care for more than nine million patients.

The Bottom Line:

Our country has a long history of coming together to work on solutions. As quoted in the title, Abraham Lincoln said “A house divided against itself cannot stand”. We must come together and work as one nation to create a solution that truly provides affordable comprehensive care for all. This will inevitably involve trade-offs and will not be perfect. The ACA was designed to be a starting point rather than a final solution. Occam’s Razor provides our answer: The simplest solution is usually the best solution.

What can you do? Contact your U.S. Senator and let them know where you stand. Find your U.S. Senators contact information be here. Sign the petition for Fair Health Insurance for All. Remember knowledge is power. Thank you as always for reading and if you like this, please share.

Best Regards,

Tony Steuer

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