No Seat at the table: Shutting Healthcare Out of the ACA Repeal

Lobbyists have a favorite maxim: If you don’t have a seat at the table, it means you’re on the menu. And that is certainly true for those left out of the top-secret, closed-door creation of the Senate’s “Better Care Reconciliation Act.”

If you were expecting health care policy that maintains current insurance levels to emerge from the ACA repeal effort, you’ve not been paying attention. The stated reason for the Senate and House bills is to deliver on the GOP’s election promise to repeal Obamacare. But the House and Senate bills both achieve much more: delivering a significant tax break to the wealthy while ending the Medicaid entitlement created as part of Lyndon Johnson’s “Great Society.”

The Senate bill softens the Trump-labeled “mean” House repeal-and-replace bill – mostly by delaying the effects of its most damaging cuts until after key election dates. It also modifies the House’s bill’s effects on the individual insurance market by restoring income-adjusted subsidies through 2019, but for fewer people (up to 350% of poverty, not 400% as in the ACA). Premium assistance is also skimpier than under the ACA.

In the Senate bill, the ACA Medicaid expansion – through which 16 million people have coverage – will be phased out for three years beginning in 2021 rather than ending in 2020 in the House version. Both bills eliminate Medicaid’s guarantee to provide ‘medically necessary coverage’ and allow states to limit benefits as they choose.

Both bills end the Medicaid entitlement by capping federal funding on a per-member basis and then setting yearly inflation rates that don’t keep pace with medical inflation. The effect will be a continual downward spiral of federal support, forcing states to further limit enrollment, reduce benefits and/or cut payments to providers. The House version of this cut removes $880 billion from Medicaid over 10 years (CBO), and the Senate’s version cuts deeper than that.

Like the House bill, the Senate bill eliminates funding of Planned Parenthood, sets up a “State Stability Fund” to help states stabilize their individual markets. Unlike the House bill, the Senate bill does not penalize those with lapses in their insurance coverage. The Senate bill also allows states to opt out of the ACA exchanges and essential benefits requirements, allowing commercial insurers to exclude high-cost services and conditions that were protected under the ACA.

So who and what is at risk? The 74 million people who depend on Medicaid for their healthcare, including 10 million disabled people and 40 percent of the nation’s children. Rural hospitals and inner-city hospitals whose patient mix is more heavily reliant on Medicaid. State governors and legislatures who will have to decide which people/services to cut from their Medicaid programs, with the choices getting worse each year. Those with chronic or pre-existing conditions in the individual market, who will get less help affording lesser coverage. Medicaid MCOs who have developed expertise in administering managed Medicaid benefits – those benefits will be radically different state-to-state, and will only shrink.  The pharma and device industries whose products may no longer be covered under Medicaid. Women in need of family planning or cancer screening services. Older people in the individual market whose premiums can be up to five times higher.

The similarity between the House and Senate bills suggests it will be a relatively easy reconciliation of the two if the Senate passes the BCRA. But while it may achieve its authors’ political aims and appetites very quickly, it could leave a bitter aftertaste for many within the health care industry.

 

 

To hear more on the evolving healthcare environment, attend our upcoming Webinar on June 27, titled “The Politics of U.S. Healthcare – Exchanges in the Trump Era.” Registration is available here.

This blog is part of a series of posts from DRG regarding the impact of the 2016 election on US healthcare. See our other blogs as they are added here.

For more on the Medicaid, follow Paula Wade @PaulaWadeDRG

 

About Health Plan Analysis

DRG’s Health Plan Analysis explores pharmacy benefit, provider contracting, and product trends through actionable industry insight and key enrollment data across the United States, including Commercial, Exchanges, Medicare, and Medicaid markets. Find out more: Health Plan Analysis.

 

About Managed Markets Surveyor

DRG’s Managed Market Surveyor delivers benefit enrollment data by managed care organization and at multiple geographic levels to better inform strategic planning and resource allocation. Find out more: MMS and MMS-Rx.

 

 

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