Health law’s woes, real or perceived, drive call for repeal

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WASHINGTON—President Donald Trump and Republican leaders say drastic action is needed because the Obama-era health care overhaul is a disaster, with soaring premiums and insurers bailing out.

It’s true that major parts of the 2010 law are clearly troubled, but others are working fairly well.

The risk is that the GOP’s “rescue mission” will inflict collateral damage on what’s working and cause new problems. Or that promised solutions might disappoint.

The Affordable Care Act, or ACA, expanded coverage in two main ways. It offered subsidized private health insurance through online markets such as HealthCare.gov that cater to people without workplace coverage. It also allowed states to expand their Medicaid programs to cover more low-income adults.

Together, those features have helped push the nation’s uninsured rate below 9 per cent, a historic law.

A look at some of the law’s major elements, their current status, and how they might be affected by the repeal and replace legislation advancing in the House:

MEDICAID

Status: Thirty-one states have expanded Medicaid under the health law. The federal-state health care program for low-income people now covers about 1 in 5 people in the United States, from newborns to elderly nursing home residents. About half of the expansion states have Republican governors. Gov. John Kasich, R-Ohio, says it has allowed his state to offer “a stable source of care” for the working poor, the drug-addicted, and the mentally ill. Although Medicaid is a notoriously stingy payer, hospitals have strongly supported the expansion as preferable to treating uninsured patients.

Impact: The House bill would repeal the Medicaid expansion, which now covers about 11 million people. Currently the federal government offers a generous matching payment to states that expand their programs. Starting in 2020, that payment would only be available for beneficiaries already enrolled under the expansion, not for any new ones.

In an even bigger change, the bill would end Medicaid’s open-ended entitlement status, moving to a system of limited federal financing. Washington would pay the states a fixed amount per beneficiary, based on Medicaid spending in each state, adjusted annually for medical inflation. Supporters say the change would bring needed fiscal discipline and encourage states to innovate. Critics say it will ultimately harm the poor and goes far beyond addressing issues with the ACA.

INDIVIDUAL HEALTH INSURANCE

Status: The health law was meant to expand and stabilize the market for individual health insurance, through which roughly 20 million people get coverage. It’s been a roller-coaster ride instead. As sicker, costlier customers came into the market, premiums and deductibles shot up. Consumers eligible for the law’s income-related financial assistance were cushioned, but millions who still pay their own way are in shock. Former President Bill Clinton, in a candid moment, called it a “crazy system.” Recently, Aetna CEO Mark Bertolini pronounced the ACA’s health insurance markets in a “death spiral.”

Impact: The House bill would rework the ACA’s tax credit subsidies and loosen some of its major requirements on insurers. It would allow people to set aside more money in tax-sheltered health savings accounts. More people would be eligible for the GOP subsidies, but the assistance may not go far enough for those with modest incomes. The GOP tax credits are not designed to keep pace with rising premiums, as the Obama subsidies do. Insurers would be able to experiment with redesigned plans that hold the promise of lower premiums. The pros and cons will become clearer as more detail and analysis emerges.

ONLINE INSURANCE MARKETS

Status: HealthCare.gov froze up the day it was launched in 2013, an episode that embarrassed the Obama White House and prompted a high-tech repair job lasting weeks. Since then, the federal website has improved, now serving as the backbone of a system that insures about 12 million people nationwide. Several states operate similar websites.

Impact: The GOP bill does not repeal the provisions that created HealthCare.gov and its state counterparts, but their future is unclear nonetheless. “The federal and state marketplaces would likely shrink,” said Larry Levitt of the nonpartisan Kaiser Family Foundation. With smaller tax credits, there wouldn’t be as many customers. The GOP bill allows consumers to use their tax credits for coverage purchased outside the government markets as well.

COVERAGE PENALTY

Status: As a way to get healthy people into the insurance pool, the law imposed tax penalties on uninsured people deemed able to afford coverage. Last year 6.5 million people paid penalties averaging $470, according to the IRS. An additional 12.7 million people claimed exemptions for financial hardship and other reasons.

Some young adults in good health decide to pay the fine because they can’t squeeze $100 a month for premiums out of their already tight budgets. Experts argue about whether the unpopular requirement has been particularly effective.

Impact: The House bill repeals the tax penalties on individuals and employers that don’t offer coverage. That would be retroactive to the end of 2015, meaning that those who owe penalties for last year would be off the hook. With the penalty gone, Republicans would try a different way to nudge healthy people into the coverage pool. Those who have a break in coverage would face a 30 per cent penalty on their premiums.

GENERATIONAL EQUITY

Status: Obama’s law limited what insurers could charge their oldest, pre-Medicare customers to no more than three times what they charge young adults. The GOP bill would raise that to five times, or more if states want to go higher.

Impact: Coverage would become more affordable for young adults, but premiums for older people would rise even as they contend with physical ailments that emerge with age.

Republicans say their bill reflects market realities, citing estimates that the cost of care is 4.8 times higher for older adults. Recognizing that older adults have higher health care costs, the tax credits in the GOP proposal are age-based. People over 60 would get $4,000, double what someone under 30 would get.

But AARP says the GOP proposal would provide “substantially less assistance” for lower- and moderate-income older adults, particularly if expected higher premiums are taken into account. The lobby for older people has called the Republican plan an “age tax.”