As anyone who has been following the news this month may know, the Affordable Care Act (ACA) replacement bill, the American Health Care Act (AHCA) was passed in the House of Representatives.
We previously noted that after the last attempt at getting the AHCA through Congress failed, House Speaker Paul Ryan (R-WI), called the Affordable Care Act “the law of the land” for the foreseeable future. Maybe both we and the Speaker spoke to soon, because healthcare reform is back on the Congressional agenda in a big way.
Key amendments revive a stalled bill
The reform bill was jokingly referred to as “Zombiecare” in the media, and just like the Walking Dead, it resurfaced and made it through the House of Representatives on May 4th, 2017.
Central to the previous bill’s failure was the chasm between the hardline conservative and moderate Republican caucuses in the House over the issue of the ACA’s 10 essential health benefits and protections for individuals with pre-existing conditions. Moderates wary of constituent backlash and collapse of the insurance markets, were hesitant to remove the mandated coverage of essential health benefits and guarantees for individuals with pre-existing conditions. Hardline conservatives in the House draw a firm red line on these provisions, believing that they are essential to the fiscal health and responsible scope of federal healthcare.
Central to securing the new votes was the introduction and inclusion of the MacArthur amendment, developed by Rep. Tom MacArthur (R-NJ) of the moderate Congressional Republican Tuesday Group and Rep. Mark Meadows (R-NC) of the Freedom Caucus. The amendment allows insurers to charge older and sicker enrollees much more than younger enrollees, and pares down the coverage requirements for participating health plans1. The MacArthur amendment brought the hardline Freedom Caucus to the table, but it still didn’t placate moderate members about the bill— in fact, it made them more wary of it.
To resolve this issue, $8 billion was added to the bill in the form of subsidies for people with pre-existing conditions, an amendment suggested by former Energy and Commerce Committee Chairman Rep. Fred Upton (R-Mich.) and Energy and Commerce Committee member Rep. Billy Long (R-Mo.). Many analysts, such as the Kaiser Family Foundation Senior Vice President Larry Levitt, say [$8 Billion] won’t be nearly enough, and won’t match the protections of the ACA which guarantees that individuals with chronic conditions coverage, and protects them from being charged more— especially because this amount is intended to be spread out over five years. The new legislation initially provided $130 Billion through 2026 to offset health care premiums and deductibles; the latest addition tallies the funds at a total $138 Billion.
Senate may write its own version of the bill
The next step for the Bill is the Senate, where a much slimmer Republican majority awaits. Because it is expected to use “reconciliation,” a process intended to expedite passage of bills that solve pressing budgetary needs, the bill does not need a filibuster-proof 60 votes. There are only 52 Republican Senators, and the bill will need 50 to pass. Furthermore, the Senate has already clearly indicated it will be taking its time to review the bill, if not rewriting it entirely. However, to use reconciliation the bill must save money, and because it passed the House without an updated CBO (Congressional Budget Offie) analysis – it’s actually possible it will need to go back when the score is released.
Since the bill cleared the House, Senate Majority Leader Mitch McConnell has said “Congress will continue to act on legislation to provide more choices and freedom in health care decisions” — a non committal commitment to the legislation. On May 16 , citing instability in the individual insurance markets, he said “I don’t think we have forever to address this, but I’m not going to put a strict timeline on it.”
If the Senate changed or rewrote the bill, it would need to go back to the House for another vote, then it would go to the president’s desk for signed approval or veto.
Several possible impacts on risk adjustment if AHCA becomes law
- Smaller insurable populations: In its current proposed form, the AHCA allows states to apply to HHS (Health and Human Services) for waivers for the coverage requirement for individuals with pre-existing conditions, but the states must make provisions for these persons to be covered under high-risk pools. Risk adjustment professionals will have to pay attention to the states that are likely to apply for such waivers, as there will be significant shifts in the insurable populations— perhaps an improvement in the overall health of the general risk pool and decrease in the size of the pool. Smaller healthier pools would mean plans will have fewer chronic conditions to report and may result less variation in risk across plans.
- New high-risk pools: The previously mentioned point brings us to the possible creation of high risk pools. High-risk pools would essentially be small markets for especially sick people. It’s yet to be seen how risk adjustment will function in this context, but it may function similarly to Medicare Advantage, another program where it’s generally assumed that members have significant chronic care needs.
- Lower costs for younger individuals: The new proposed legislation includes allowances for insurance companies to charge older enrollees more for coverage. This naturally means younger, healthier enrollees will be charged lower premiums — and the legislation includes a proposed refundable tax credit for those under 30 years old to offset their premiums. This may still not be enough to convince younger Americans to buy health insurance. The enthusiastic participation of younger, healthier enrollees in risk pools is of course critical to creating a balanced risk pool, and the possible exodus of this population from the individual market would affect risk adjustment.
A slow senate means a sticky status-quo
The bill still faces staggering opposition from numerous healthcare industry groups such as the American Medical Association, the American Hospital Association, the Association of American Medical Colleges and consumer advocacy groups like the AARP. With the new bill’s updated CBO (Congressional Budget Office) score due the week of May 22nd, and polls also showing the ACA’s popularity rising, Democrats are sure to stay away from the legislation, and it will be tight work keeping moderate Republicans on board.
With such little room for defections, it will be a tricky game for Republicans to iron out details that meet the needs of the entire caucus. There are a number of sticking points that may leak support from center Republicans like defunding Planned Parenthood or pushing to reduce Medicaid coverage. Politico reported last week that it may take McConnell and his Senate colleagues until the Senate’s August recess to prepare a version of the bill that will succeed. “It will be a real big challenge on the Senate side,” Time Magazine quotes McConnell about passage through the Chamber he leads. However, these challenges in the Senate should not lead to assumptions that the status quo will remain. The fact is, that the numbers are there for something to pass, the question is — What?.
1. First, it allows insurers to charge enrollees in their 50s and 60s more than younger enrollees. Second, it allows states to waive essential health benefits and certain sections of the community rating program— which allows the sick to coexist in risk pools with the healthy. Without the community ratings, individuals with pre-existing conditions can be charged much more for coverage, though they cannot be denied coverage. ↩