[This is the second post in a two-part series. Last week I provided a brief overview of Obamacare; this week, a review of the House’s recent reform bill.]
RICHMOND, Va. (WRIC) — In March, Republicans in the House of Representatives were forced to scuttle their widely-promoted attempt at healthcare reform. House Speaker Paul Ryan couldn’t get his “Freedom Caucus” conservatives to support the bill because they thought it cost too much. And Democrats were joined by a handful of moderate Republicans who realized just how unpopular the bill was, with some polls showing Americans opposed the Republican reform by a margin of 3-to-1.
How, then, did Ryan and his fellow Republicans shepherd the American Health Care Act (AHCA) to a successful House vote just weeks later? They didn’t aim to please their moderates or the public; instead, the bill’s authors decided to go with the conservatives. The result is a bill the Freedom Caucus reluctantly supported, but the rest of America still pretty much hates. As we’ll see, they probably have plenty of good reasons for doing so.
Why? The biggest Republican in the country, President Trump, has repeatedly promised Americans that Republican health care reform will be cheaper and better than Obamacare, ensure that no one loses coverage, and will provide “healthcare for everybody.” The Republicans’ reform bill doesn’t do that. At all. Like, it doesn’t even come close to trying. It’s not for nothing that the hosts of the liberal podcast “Pod Save America” describe the bill as “Repeal and Go [something rather impolite].”
To be clear: the AHCA is not currently law; the Senate still needs to pass it before the President can sign it. Senate Republicans are starting with their own reforms, with differences between House and Senate bills ironed out later in a conference committee. Still, the Senate at least has the AHCA bill to work with, and so it’s worthwhile reviewing it to see what it actually does.
So what’s in the AHCA? You can read the entire bill here – but I wouldn’t recommend it unless you really like phrases like “presumptive eligibility period” and “expenditures that are attributable to meeting this requirement.” Instead, I’ll summarize six of the key provisions:
— Repeal of mandates. The House bill repeals the “individual mandate” that forces people to get insurance or pay a penalty, as well as the requirement that most employers offer insurance to workers. These were the most unpopular parts of Obamacare, especially among conservatives who saw them as restrictions on liberty. These also were the “carrots” for insurance companies to participate in exchanges, as the mandates would produce more healthy (and cheaper) customers for them. Eliminate the mandates, and you undermine the whole system of exchanges and expanded coverage on which Obamacare rests.
— Medicaid cuts. The bill not only reverses the expansion of Medicaid begun under Obamacare but cuts the program further. Remember, Medicaid funds health care for low-income Americans (vs. Medicare, which is mainly for the elderly). AHCA aims to reduce spending on Medicaid by placing per capita caps on how much each state gets. So, for example, if Wyoming has 100 low-income people who qualify for Medicaid, they get $100; while Rhode Island, which has 200 qualifiers, gets $200. But if Rhode Islanders are, in general, sicker than Wyomingers (Wyomingites?), too bad; they don’t get more money. The Congressional Budget Office’s review of one version of this bill suggested that over $800B would be removed from the program eventually, and 14 million Americans would lose Medicaid coverage by 2026. (This despite Trump’s early campaign promises not to cut the program.) Finally, the bill allows states to set work requirements for Medicaid, threatening the health coverage of people with disabilities or who are caregivers for family members. The bill’s authors, in a nice bit of Orwellian double-speak, call all this stuff Medicaid “Enhancement.”
— Tax cuts for corporations and the wealthy. The AHCA repeals a 3.8% Medicaid tax on investment income for those making $250,000 or more; grants a tax break to insurance companies, so they can deduct more of their CEO pay from their tax bill; drops other taxes on insurance companies (based on market share), medical device makers, and prescription drug manufacturers; plus removes an “extra” Medicare surtax on people earning over 250k a year.
— Individual Tax breaks. In part to make the breaks for the wealthy more palatable, the AHCA lets those who can afford it put more money into tax-free accounts (“flexible spending” and/or “health savings” accounts.) It also allows for more tax deductions for medical expenses. These measures don’t help the poor much – they don’t have enough money for flex spending or direct expenses to deduct – but some middle-class Americans might benefit. The bill also proposes additional credits to help lower income people afford premiums (replacing the direct subsidies offered under Obamacare, though).
— State waivers. States can opt out of placing demands on insurance companies operating within their borders, particularly the “essential benefits” requirement. As I noted last week, insurance companies under Obamacare have to cover some basic treatments and services, including mental health and lab tests. The AHCA would change this; so if it becomes law, better read the fine print on your health insurance contract.
— Reinstates pre-existing conditions – sort of. OK, here we go: Republicans argue that their opponents are spreading lies (“Pinocchio-worthy claims,” as one Senator wrote) about how insurance companies can return to the days of denying coverage to cancer patients. In fact, the bill’s defenders note, the AHCA reinforces the idea that no one can be denied coverage for a pre-existing condition (cancer, diabetes, whatever). And that’s true — technically. But the AHCA includes two provisions that undermine the Republicans’ case here. First, if states get a waiver, insurers can charge you more if you’re sick: at least 30%, and maybe even more, depending on what you read. (Think states aren’t interested? Well, Wisconsin Governor Scott Walker is already on board.) If you are priced out, you are effectively denied coverage. Second, if your coverage lapses (the limit you can go without is 63 days), the bill allows insurance companies to deny you coverage for a year. What if your employment or financial situation becomes unstable for a month or two? Too bad – you’re out of luck for another year.
Republicans say this provision is necessary to stop people from “gaming the system” by signing up for insurance only when they get sick. The problem? There’s no data to suggest that this is actually a problem. (Plus the AHCA eliminates another possible solution for any “cheaters” – the individual mandate that incentivized them to get insurance.) The bill proposes added funding for “high-risk pools” – basically all the sick people being charged more for insurance – to help those with pre-existing conditions afford their premiums. But experts think the AHCA drastically underfunds these pools, which haven’t worked all that well in the past.
There’s a bunch of other stuff in here, including a temporary block on federal funding to Planned Parenthood and the repeal of a tax on tanning salons. (Welcome back, skin cancer!) But the bill was rushed through the House so there may be more than we know about right now. For example, some are worried that the bill may allow insurance companies to restore a lifetime cap on benefits, which Republicans didn’t even seem to intend.
Still, there’s one thing that seems clear. Thanks to combining the huge cuts to Medicaid benefits with all of the tax breaks and goodies for insurers, AHCA can probably best be described as “cutting healthcare benefits for the poor and middle class to pay for tax cuts for the rich.” To be fair, House Republicans may have strongly held ideological reasons for taking this road. Many of them believe that tax cuts for the wealthy help stimulate the economy for everyone, and the most conservative among them really see no role for government at all in helping ensure that people can afford healthcare. But that’s not the story they’re telling about this bill, and certainly not what the President says about it. Instead, he promises lower premiums, lower deductibles, and “healthcare for everybody.”
We’ll see soon what the Senate does with the AHCA, and what sort of story they tell. You may not like theirs either.
The views expressed in this blog post are those of the author and do not represent those of WRIC or it’s parent company Nextstar Media Group, Inc.