The Republican-driven American Health Care Act approved Thursday by the House of Representatives isn’t certain to become law. Many are predicting that the Senate will make significant changes, if not deciding to start over with a new bill.
That said, the AHCA is what’s on the table at the nation’s capital now and it could bring substantial changes to the current law — the Affordable Care Act or “Obamacare.” Some of the key changes involve the individual mandate to buy insurance, coverage for pre-existing conditions, Medicaid (the program for the poor and the disabled) and employer-offered benefits. It also contains two changes that speak directly to health care funding in New York. Here’s a look at what the bill does.
No more mandates
The AHCA would eliminate the Obamacare mandate that everyone obtain insurance and the penalties that large employers face for not offering health insurance. It would provide an incentive for maintaining coverage: Companies can charge you higher premiums if you have a gap in coverage.
The Obamacare rationale for the mandate was that if everyone was paying premiums, overall rates would be lower than otherwise because of the wider pool of people to distribute costs.
Pre-existing conditions, the waiver and the extra cash
Obamacare ended the practice of allowing insurance companies to charge higher premiums or deny coverage altogether to an individual who had a medical condition or illness, such as cancer, high blood pressure, alcohol or drug abuse, epilepsy, heart disease and dozens of others, according to the Kaiser Family Foundation, which estimated that 52 million Americans younger than 65 have some sort of pre-existing condition.
The Obamacare provision was one of its most popular elements.
In a bargain to win support from the so-called Freedom Caucus, a group of conservative Congress members that sunk a previous version of the health bill in March, the AHCA includes a provision to allow states to obtain a waiver that does two things: Allows companies to return to charging more for pre-existing conditions; and allows states to opt out of a minimum set of “essential” benefits. Some of the “essential” benefits mandated by Obamacare included mental-health care, emergency room visits and maternity care.
The waiver would allow companies to offer more stripped-down coverage plans, perhaps even less expensive for some consumers. If a state seeks a waiver, it would have to establish a “high-risk pool” for those with pre-existing conditions that includes subsidies for buying coverage.
This was one of the most divisive issues for House Republicans, with many moderates saying the bill would result in too many people either losing coverage or being offered policies with unaffordable premiums. In a last-minute change to woo moderates, Republicans added money to the provision, bringing the total subsidies earmarked to help cover pre-existing conditions to $23 billion for those buying individual policies.
That’s not nearly enough — in fact, it would provide adequate subsidies for just 5 percent of the people in that market — according to Avalere, a leading health care consulting firm. If a few states apply for the waiver, the money could be enough, but it would not be so if many do.
“Given the amount of funding in the bill, the program can only afford a few small states to opt into medical underwriting,” said Caroline Pearson, senior vice president at Avalere. “If any large states receive a waiver, many chronically ill individuals could be left without access to insurance.”
Backers of the bill, including President Donald Trump, say it covers those with pre-existing conditions. But analysts say think of it this way: The bill offers a way to cover, for example, cancer treatment, but some patients might not be able to afford the premiums and deductibles.
It’s not certain New York would seek a waiver to create a high-risk pool — it’s also still not certain that the Senate will approve the House plan. Even if it doesn’t want to, the state could eventually face a situation in which it needs to create a high-risk pool if enough young and healthy people drop out of the market altogether, some analysts say, leaving the remaining market older and sicker.
Out-of-pocket cost caps on employer-offered plans
Obamacare prevents annual limits and bars lifetime limits on “essential” benefits. Because there was a national set of essential benefits, state benefits mandates had little impact. But under the AHCA, employers can select a set of benchmark benefits offered in any state, even states that obtain the waiver to offer fewer benefits.
Companies could select a less expensive insurance plan as a way to cut its costs as well as employees’ costs for premiums. However, some experts doubt that large employers will rush to take this option.
“Many wouldn’t,” Larry Levitt of Kaiser told The Wall Street Journal. “Many employers offer quality benefits to attract employees. But employers are always looking for ways to lower costs.”
New York’s “Essential Plan”
New York and Minnesota were the only two states to adopt this aspect of Obamacare. It was an insurance program open to people who earned too much to be in Medicaid but were earning 200 percent of the poverty level or less ($24,000 for an individual; $48,000 for a family of four). About 635,000 people signed up for it in New York.
The AHCA likely would end the Essential Plan here, according to an analysis by the Empire Center for Public Policy, a fiscally conservative think tank. Under Obamacare, the federal government gave the state $3 billion annually for the program, covering 80 percent of the cost. It’s probably too big a number for the state to carry on its own, meaning the program could be halted. The Empire Center estimated that about 200,000 of the Essential Plan enrollees could fall back into Medicaid coverage, but the rest would have to buy private policies.
Medicaid cost shift from New York counties to state government
The AHCA would eliminate a New York practice in which the state makes county governments pick up 13 percent ($2.3 billion) of the costs of Medicaid and shift the obligation back to the state. New York City is exempted because it has its own residential income tax.
The chief backers, Reps. John Faso (R-Kinderhook) and Chris Collins (R-Buffalo), say it frees the counties from a state mandate they’ve borne for five decades — counties have long called Medicaid a driver of local property taxes. Gov. Andrew M. Cuomo, a Democrat, has said the state can’t afford it and the change would result in either tax hikes or the closure of some hospitals and nursing homes.
End of the Medicaid expansion
Under Obamacare, 31 states expanded Medicaid and some 11 million Americans gained health insurance. The federal government pays almost all of the costs of the new enrollees. The AHCA would phase out the Medicaid expansion policy by 2020 largely by cutting federal reimbursement rates to the states. States instead would get a fund grant or a per capita allotment.
Some analysts believe this is among the biggest impacts of the Republican bill, along with the end of the insurance mandate and the changing of tax credits. The Congressional Budget Office projected in March the change would cut Medicaid spending by $880 billion over 10 years — and enrollment by 14 million.
New York could see a $2 billion reduction in federal Medicaid money, experts estimated.