Alice Murray and Saira Ghafur on the changes that the American Healthcare Act seeks to bring in US healthcare
By complete serendipity the details of the new American Healthcare Act (AHCA) were released the day before we were due in Washington DC for a policy briefing.
We had a stellar line up of political correspondents, pollsters, members of the Congressional Budget Office, policy advisors to the Obama administration, Republican Congressional staffers and specialist interest groups to cover the details and potential impact of the new repeal and replace bill.
The new AHCA brought forward by Senator Paul Ryan, contains legislation aimed at rectifying the rising costs of individual insurance premiums and rolling back on federal intervention, seen as government over reach
As many as 20 million people gained insurance coverage with the introduction of The Affordable Care Act, but it has received widespread criticism, mainly for not delivering on the “affordable” part. The promise for an immediate repeal of the ACA dominated Trump’s election campaign and appealed to voters. Only now, with the threat of removal, has the ACA achieved its highest popularity ratings amongst Americans at 49 per cent.
Since its passage, the Republican Party have been strongly critical of the ACA. The new AHCA brought forward by Senator Paul Ryan, contains legislation aimed at rectifying the rising costs of individual insurance premiums and rolling back on federal intervention, seen as government over reach.
They aim to reduce the costs of coverage, roll back on essential health benefits, give more power back to state legislatures to run Medicaid, and make changes to stabilise the individual insurance marketplace whilst satisfying voters by delivering on election promises to “repeal”.
The mandatory score from the non-partisan Congressional Budget Office released has projected that on one hand it will lower the federal deficit by $337bn but that will come at the cost of 24 million Americans losing insurance and raising premiums for those remaining in the market.
The AHCA keeps a few of Obamacare’s most popular reforms: coverage of people with pre-existing conditions, the ability to stay on parental insurance until the age of 26 and caps on annual or lifetime out-of-pocket expenditures, but more controversial changes are outlined below:
Under this new bill, Medicaid will be affected in two ways; restructuring of the programme and rollback of Medicaid expansion by 2020 with the potential loss of insurance for the poorest Americans. States that chose to take up Medicaid expansion under the ACA were able to cover adults with incomes over 138 per cent of the poverty line, in addition to those who were traditionally eligible.
Instead of predicted block grants, the draft bill has replaced them with capped per capita payments alongside a patient and state stability fund to mitigate any risks. This is seen to hand more power to individual states, but essentially is a significant cut and the removal of access to healthcare for millions of the most vulnerable people.
2. Incentive to obtain and keep insurance
The individual mandate, whereby people received penalties for not buying insurance, was intended to stabilise the market by introducing younger, healthy, low cost patients. This penalty has been reduced to zero under the new bill and replaced with a new penalty for those who have a break in their coverage.
A 30 per cent increase in premiums for a full year if coverage is discontinued for 63 days, aims to keep these same young healthy people in the marketplace to stabilise risk pools. Whether this is more or less of an incentive to buy insurance is anyone’s guess, but this could lead to individuals losing their employer based insurance due to illness and then after the break cannot afford to get the costlier coverage.
3. Insurance affordability: Employer mandate
Employer based insurance makes up two thirds of the market in the US (approximately 177 million people) and providing insurance through jobs remains a strong incentive for staff recruitment. However, large employers will no longer be subject to penalties for not providing insurance, thought the actual mandate remains.
4. Insurance affordability: Premium subsidies
Under Obamacare, policyholders on the individual market were provided with subsidies (according to income) to reduce deductibles and co-pays. Under the new bill these have been replaced with tax credits according to age, with older Americans receiving more.
At the same time, higher income earners (individuals earning $75,000 per annum) who previously didn’t receive any subsidies will now also be eligible for tax credits, which is seen as a tax rebate for the rich. Older, poorer patients in high cost areas, who are likely to need more health care will inevitably now pay more.
5. Older people
Medicare (government insurance for patients >=65years) was not directly mentioned in this bill (apart from tax changes). However, the changes outlined will affect “dual eligibles”, those covered by both Medicaid and Medicare.
Also, for those covered by employer insurance there is a new allowance for insurers to charge their oldest enrollees five times more than their youngest (previously 3:1 with the ACA). The AARP (special interest group representing over 50s) has come out strongly against the bill, stating it will unfairly hit the older population.
6. Tax breaks
A number of tax provisions from the ACA have been repealed, including branded prescription tax, health insurance tax and taxes on tanning salons (!). These will ultimately benefit wealthier Americans, insurers and providers and may amount to a sum larger than any savings made even with the winding down of Medicaid, pushing the bill towards a negative budget balance.
What was not included?
A number of elements were not explicitly mentioned, including changes to the delivery system, leaving value based initiatives such as Accountable Care Organisations and bundled payments out of the picture for now. However, the newly appointed Health and Human Services (HHS) secretary Tom Price, an orthopedic surgeon, has publicly come out against the mandatory component of existing surgical bundles.
There is a consensus that value based healthcare is bipartisan and essential to control healthcare costs whilst maintaining quality consistent with moves in the UK and other countries towards more accountable care.
Where from now?
The bill was released with very little warning, and is on a rapid track tailored to avoiding a democratic filibuster in the Senate. The CBO score has put a spanner in the works for the Republicans who want this all to be decided, from start to finish, within the next three weeks prior to recess in April.
It is expected that no Democrat will vote for it, and with critics emerging amongst the Republican ranks, it will be a close call
Alongside the Democrats interest groups such as the American Medical Association and the American Hospital Association have expressed their concerns over the bill. However, there is dissent across both party lines.
Whilst called “Obamacare-lite” by some, many of the far right freedom caucus Republicans will only be satisfied with an outright repeal. More moderate Republicans are concerned over the loss of Medicaid expansion, especially in states where their constituents will be affected.
Planned Parenthood, a non-profit organisation providing women with reproductive health services and education will have funding terminated for a year. This is a double edged sword, on the one hand aiming to placate pro-life Republicans, but may prove costly as two female Republican senators publicly declared their opposition to the bill if this is included, due to its discriminatory nature.
The final vote in the Senate requires 51 votes to pass. It is expected that no Democrat will vote for it, and with critics emerging amongst the Republican ranks, it will be a close call.
Alice Murray from Department of Healthcare Policy and Practice, TH Chan School of Public Health, Boston; and Dr Saira Ghafur from The Commonwealth Fund, New York