What to Know about ACA Repeal

By Marshall Wilde, Executive Director, Lane County Medical Society

Many LCMS members have expressed curiosity about the Affordable Care Act (ACA/Obamacare) repeal, American Health Care Act (AHCA), and the Senate proposal, the Better Care Reconciliation Act (BCRA). I’ve included a brief synopsis of each.

Affordable Care Act

This chart, courtesy of Don Berwick, the former Center for Medicare and Medicaid Services administrator, gives an overview of what the ACA accomplished.

Since so many of you are already familiar with it, I’ll forgo a detailed analysis. In a nutshell, the ACA reduced Lane County’s uninsured rate from 20% to 6%, largely, but not exclusively, due to Medicaid expansion. Oregon hospital net operating revenues shot up 54% in one year, and hospital bad debt fell from roughly $1.3 billion to around $530 million. While the revenue impacts to practices weren’t as dramatic, there was an average increase in revenue per visit, likely due to the reduction in uninsured patients.

American Health Care Act

The House version of the AHCA would substantially repeal the insurance reform parts of the ACA. This would result in approximately 32,500 more uninsured in Lane County, increasing the uninsured rate from 6% to around 15-17%. Nationwide, the Congressional Budget Office estimated about 23 million people would lose coverage. In turn, this would likely result in giving back about two-thirds of the financial benefit to hospitals and providers.

Specifically, most of the loss in coverage would come from the elimination of the Medicaid expansion. Worse, it would block grant Medicaid at an artificially low level, forcing states to either cut their base Medicaid programs or contribute more towards maintaining them. AHCA would eliminate the employer and individual mandates, leading to a reduction in employer-provided and individually purchased insurance. Also, it would eliminate profit caps for insurance companies, potentially leading some to attempt to recoup losses from participation in the exchanges.

In place of individual mandate, insurers could charge a 30% penalty above baseline premiums for individuals coming off a period of lacking health insurance. Planned Parenthood would be banned from participating in the Medicaid program for one year. States could request waivers from the essential benefits package, although this will likely not impact Oregon. The current 3-1 ratio of elderly to non-elderly premiums would be expanded to 5-1, making insurance significantly more expensive for people ages 50 to 64.

In exchange, AHCA would repeal almost all taxes imposed by the ACA, providing 80% of the benefit of that repeal to people who earn more than $1 million per year.

Better Care Reconciliation Act

 The Senate released its initial repeal bill on June 22. According to The New York Times, “It is, plain and simple, a plan to cut taxes for the wealthy by destroying critical federal programs that help provide health care to tens of millions of people.” We do not yet have a CBO score, but I estimate that it will result in 18 to 21 million people losing coverage, as it largely mirrors the AHCA.

It rolls back the Medicaid expansion over a longer period of time than the AHCA but enforces an even more draconian cost containment on the base program. BCRA largely keeps the ACA’s tax credit structure to encourage the purchase of health insurance. The individual mandate is completely eliminated, and the act permits no penalties for enrolling only after a person becomes sick.

Since the prohibition on denials of coverage or rating for preexisting conditions would be maintained, a significant amount of “moral hazard” would result in increasing premiums. These would hit the near-elderly particularly hard. From the perspective of providers and hospitals, the impacts of BCRA and AHCA would be similar — substantial decreases in revenue and increases in bad debt.

The Road Ahead

AHCA and BCRA face an uncertain future. No Democrats in the House or Senate support their chamber’s version of the bill. Four conservative Republicans in the Senate have threatened to vote no on the BCRA on the grounds that it fails to completely repeal the ACA. The Senate will debate the bill the week of June 26, including a likelihood of dozens, if not hundreds, proposed amendments.

Nevertheless, the Republican Senate leadership has indicated a desire to hold a vote on the bill before the Fourth of July recess.

Should the Senate pass some version of the BCRA, the bill would move to a conference committee. There, conferees from both House and Senate would wok out a compromise bill, likely incorporating key portions of each bill. Given the similarities between the two bills, Medicaid expansion and repeal are certain to be part of that bill. From that point, the bill would go to each chamber for approval, then to the White House for the president’s signature.

It is impossible to say with any certainty whether the bill will pass in any form. Should it fail to pass, we will see a continuation of the status quo — Medicaid will continue with the expanded population. The exchanges will continue to suffer from underfunding, as Congress fails to deliver promised risk corridor payments. The Oregon Legislature would have to address its increased share of the bill for the expansion population in the 2019 session.

If the bill passes, Oregon would suffer dire impacts. Oregon benefited significantly from the ACA and would suffer a proportionally greater loss if it were substantially repealed. While the Legislature could theoretically use its recently passed provider taxes for another purpose if the Medicaid expansion is repealed, those funds represent only about 5% of the total cost of the expansion. We could not “go it alone” to continue expansion without increasing taxes in amounts the voters have previously rejected (albeit in other contexts).

As always, LCMS exists to serve and inform you. We are happy to answer questions. You may contact me at executivedirector@lcmedsociety.com or at 541-686-0995.