The Apixio Blog

ACA Repeal and Replace Collapses. What Does It Mean for Risk Adjustment?

On the last day of RISE Tennessee, the risk adjustment industry’s largest conference, the Republican-controlled House unveiled their Affordable Care Act (ACA) replacement plan.

Debate over the American Health Care Act (AHCA) was fierce, with many key organizations such as the American Association of Retired Persons, and the American Medical Association coming out in strong opposition to legislation. Speaker of the House Paul Ryan ultimately could never wrangle enough votes for passage and withdrew AHCA from consideration without a vote.

Why did AHCA fail, and what does its failure say for future healthcare reform efforts? As RISE Tennessee’s Keynote Speaker, Howard Fineman noted in his address to attendees, there is no middle ground left in American politics, and in these circumstances putting together a successful legislating coalition is incredibly difficult.

 

Repeal starts strong out of the blocks

House Speaker Paul Ryan pitches the AHCA to the media

The ACA repeal and replace efforts started strong out of the blocks. Speaker Ryan made a personal pitch for AHCA, that included a PowerPoint presentation to the press .

In his presentation, Ryan explained the House GOP’s “three pronged approach” to repeal: First, the bill was being done through budget reconciliation (to skirt around a possible filibuster in the Senate); Second, there would be parallel administrative action at the Department of Health and Human Services; And lastly, additional legislation would amend the bill further down the line. You can watch Speaker Ryan’s presentation in it’s entirety here at CNN.

In the weeks following, President Trump proclaimed his full commitment to the legislation, and members of the Republican Study Committee, who had previously publicly expressed serious doubts about the AHCA met with the President and were announced to be on board.

 

Voters pressure representatives over CBO score

On March 13th, a week after the AHCA was released, the Congressional Budget Office released their analysis of the practical consequences of the bill. The CBO forecasted lower-than-suggested savings for the national deficit and the likely loss of coverage for over 24 Million Americans. These predictions caused shockwaves, and constituents started to seriously pressure their House representatives.

 

Freedom Caucus and Moderates Unable to Compromise

In the following days, the outlook got even worse for the bill. The Freedom Caucus, the group of some three dozen hardline conservatives to whom more and more concessions had been granted 1, shifted the goalposts on the President and Speaker Ryan.2 .

The sticking point in negotiations really came at the removal of the coverage of  “essential health benefits” mandated by the ACA, this includes services such as emergency-room visits, hospital stays, mental health and maternity care as well as prescription drugs. Their insistence proved a serious challenge; as The Washington Post points out, the removal of these provisions would likely be deemed irrelevant or “extraneous”, to the budgetary nature of the bill; this would make it virtually impossible to pass through reconciliation. The White House and Speaker Ryan offered a commitment to have these benefits repealed in the Senate, but the Freedom Caucus demanded this be included in the legislation at the House level, bringing negotiations to a standstill and further away from positions moderate Republicans could support.

That same Thursday, the vote for the legislation was postponed as conservative and moderate wings of the Republican party struggled to compromise over elements of the bill such as essential health benefits, while all Democrats united in opposition.

On Friday, the vote was pulled altogether, and Speaker Ryan conceded, “Obamacare is the law of the land”.

 

What next for the ACA and Risk Adjustment?  

The collapse of Republicans’ health reform efforts last Friday was truly stunning, given that after the 2016 election most had accepted that there would at least be some key changes to the ACA.

That doesn’t mean it’s all smooth sailing from here for the ACA. There is concern that subtle changes to the way the executive branch implements the ACA will harm the law: pulling back millions in paid advertising dollars in the final days of 2017 open enrollment and tightening up rules on special enrollment periods.

Still, it seems all but impossible now that there will be another attempt at health care reform in the near future. A lot of political capital was spent in the repeal efforts, and many involved seem unwilling to spend any further reserves on a fight they just don’t have the spirit for.

For now, the status quo remains for players in the insurance market and risk adjustment industry.

 

Now that commercial risk adjustment is here to stay, let us know if you’d like more information on Apixio’s HCC Profiler solution, which enables the most complete and accurate risk adjustment.  

 

 

Footnotes:

1. Speaker Ryan added “Managers Amendments” to the bill to please the Freedom Caucus, causing the CBO to update its analysis of the bill, with even worse results.

2. The Freedom Caucus’s demands included: repealing the essential health benefits requirement, cutting preventative health service coverage, stopping the medical loss ratio requirement, repealing the standardized documents requirement, which requires insurance companies use standardized coverage sheets to make comparing plans easier, and eliminating the single risk pool, which would have removed the requirement that insurers use the same premium rating factors for everyone in the risk pool.

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