Response to Rep. Zeldin’s Request for Opinions on the AHCA

This is my (somewhat edited)  response to Rep. Zeldin’s Request for My Opinion Regarding the AHCA

Major Deficiencies of TrumpCare

After seven years of promises, Mr. Trump and the House Republicans finally have put forward a bill that would “repeal and replace” the Affordable Care Act. Mr. Trump promised that “[e]verybody’s going to be taken care of much better than they’re taken care of now.” However, “Trumpcare” fails to deliver on that promise.

The AHCA appears to keep intact some of the popular features of the ACA (the same thing as “Obamacare”), such as allowing adult children to stay on their parents’ health plans to age 26 and, at least in theory, ensuring that people with preexisting conditions will still have access to insurance. These features have been retained only because the GOP recognized that they are popular politically. As to other features, because of their toxicity, the Congress is using special budget rules to avoid a Senate filibuster.

The AHCA is going to be heavily “marketed” in an effort to paper over the toxic features of the bill and garner early popular support. Our Congressman, Lee Zeldin, has indicated support for the bill and will likely be hustling for its approval. So, it is important to understand the major changes being pushed in the AHCA and how they impact consumers. Here are some of the biggest:

ŸTax Credits. If one does not have healthcare coverage through an employer or government program, both the AHCA and the ACA provide tax credits to help to pay the premium. In both plans, these credits are refundable (meaning if you owe less taxes than your tax credit you get to keep the difference) and available in advance (one doesn’t have to wait until they file their taxes to get the credits). But, the AHCA tax credit program would work very differently from those currently in place under the ACA.

Under the ACA, tax credits would be tied largely to age, with older people getting twice as much ($4,000 per year) as younger people ($2,000). However, these credits likely will not cover nearly as much of the premium cost as the current ACA subsidies do for the comprehensive care coverage the ACA requires. So, the AHCA promises less for a higher cost (often in the thousands of dollars), which estimates indicate will result in two to four million people losing coverage for this reason alone, with those people in the early 50s and 60s – those too young to qualify for Medicare – feeling the brunt must brutally. For example, a 64-year-old could see insurance premiums increase to $13,100 on average – to be covered by the $4,000 tax credit. The AHCA credits also phase out gradually, starting with incomes above $75,000 for an individual and $150,000 for families. The net result of the AHCA proposal will be that those likely to stay insured will likely be the sickest and costliest patients, which will force insurers to significantly raise individual rates.

ŸMedicaid. The AHCA fundamentally alters the Medicaid program, and not for the better. Fewer consumers will get inferior coverage and the survivability of regional hospitals will be threatened. Under the ACA, federal funding for Medicaid allowed states to elect to provide expanded Medicaid coverage to all low-income individuals under 138 percent of the poverty level, not just the specific categories of people (children, pregnant women, elderly, disabled) who were previously eligible for Medicaid. Thirty-one states opted for this Medicaid expansion. This Medicare “expansion” is preserved through 2020, but although people currently covered under the expansion would continue to be covered by federally funded Medicaid coverage, but no additional “expansion” enrollees will be permitted. And, any covered person who loses eligibility under the expansion program could not re-enroll.

ŸCessation of Funding for Addiction and Mental Health Services. Despite universal recognition of the tragic expansion of drug addiction, including casualties from opiate addiction and overdoses, the AHCA strips away what experts believe to be essential coverage for drug addiction treatment. It is estimated that nearly 1.3 million people receive treatment for mental health and substance abuse disorders under the Medicare expansion program.   Beginning in 2020, the AHCA eliminates the current requirement that Medicaid cover basic mental health and addiction treatment services in those states that opted into the Medicaid expansion program. Addiction was once an oft-cited epidemic that needed federal intervention as a solution. Mr. Trump, now a staunch AHCA supporter, promised “to expand treatment for those who have become badly addicted.” For his part, Mr. Zeldin promised to “address this crisis by increasing treatment and recovery services.” Now, after having secured their elective posts these two are in full and cynical flight from providing any assistance, leaving it up to the states.

ŸCessation of Medicaid Expansion. Medicaid costs currently are shared between states and the federal government, with the federal government reimbursing qualified recipients for expenses covering services provided under Medicaid. Currently, the federal funding obligation is open-ended, meaning that the federal government is obligated to reimburse its share of Medicaid expenses regardless of how much any particular state pays. The AHCA changes this drastically. Instead of an open-ended obligation, The AHCA caps the amount of federal funding to each state based upon the number of Medicaid eligible persons residing in that state. While a state’s funding would increase as more people qualify, the per-capita cap might not grow as fast as Medicaid costs. This would leave states on the hook for an ever-increasing share of the costs of the program. This creates the risk that the federal cap on Medicaid contributions would likely force states with already tight budgets to limit eligibility and cut benefits to at-risk Americans. The GOP’s attempt to restructure the entire Medicaid program, pushing the funding obligation onto states, would imperil coverage not just for the newly insured, but for millions who have been part of the program for decades.

ŸBenefits to the Rich. The rich, and those fortunate enough to be able to save for health care expenses, the GOP bill provides a lot to like. The AHCA repeals all of the taxes imposed to pay for the ACA. These include higher Medicare taxes for high-income earners, a tax on investment income, and various taxes on health care providers, including insurance companies, makers of medical devices and even tanning salons. The AHCA also provides new tax advantages for those who can afford to direct savings into health savings accounts, and lowers penalties for those who use those accounts to pay for non-medical needs.

ŸEnding the Individual Mandate. For procedural reasons, the AHCA does not allow for the repeal of the individual mandate to have coverage or for employers to provide it, the AHCA would reduce the penalties in both cases to zero, rendering the requirements moot. The purpose of the individual requirement was to improve insurers’ risk pools since they could no longer bar customers with pre-existing conditions. Instead of the requirement that most people obtain health insurance or pay a penalty, the AHCA would impose a penalty for those who do not maintain “continuous coverage.” An insured that has a break in coverage of more than 63 days could still purchase insurance without regard to preexisting health conditions, but for 12 months would be required to pay a premium that is 30 percent higher.

All in all, in its current form, the AHCA offers little to cheer about. As Ms. Palin once said: you can put lipstick on a pig, but it’s still a pig. We deserve better.

The Kaiser Foundation compared the effect on tax credits on a nationwide basis. It mapped the effects, which can be found at https://www.nytimes.com/interactive/2017/03/08/upshot/who-wins-and-who-loses-under-republicans-health-care-plan.html?em_pos=small&emc=edit_up_20170308&nl=upshot&nl_art=0&nlid=75682993

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