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ACA vs AHCA vs BCRA: More Healthcare Ructions and Ruminations

ACA Vs AHCA Vs BCRA: More Healthcare Ructions And Ruminations

Senate Obamacare Repeal Vote to Happen Soon; Senate Replacement Bill Unveiled

We had predicted action in the Senate would not occur quickly. We may in fact be wrong.

It appears Senate Majority Leader Mitch McConnell is devoted to an up-or-down vote sometime before the Independence Day holiday. This is meant to stop the political bleeding one way or the other in his caucus and move on to new initiatives. Deliberations over an Obamacare replacement bill (in the Senate the Better Care Reconciliation Act or BCRA) have been occurring behind closed doors for the past many weeks and a draft was finally released Thursday. Like its House counterpart, the Senate bill will put a stake through the heart of the current Affordable Care Act (ACA). The Congressional Budget Office (CBO) should have its analysis sometime over the next few business days. But the draft Senate bill is different than the House’s American Health Care Act (AHCA) in a number of respects.

Because the 50 GOP votes needed to pass the bill are not yet there, further changes will likely be needed. Four rather conservative GOP Senators came out Thursday against the bill, saying that too much of the ACA is left in place. At the same time, five moderate GOP senators also expressed concerns about affordability and Medicaid’s future and could vote no unless the bill is beefed up. So, on the face of it, McConnell may have a Herculean task ahead of him to pass the bill (or it may be a no-win situation). He needs to trim down the entitlement to meet demands of four senators, but potentially beef up benefits to satisfy five other colleagues. He can lose two votes total.

Here are key differences from the House bill that was passed:

  • The Senate bill would more slowly phase out the Medicaid expansion over concerns for coverage. The bill would continue enhanced expansion funding until 2021 and then phase it out over three years.The House bill would end it in 2020. This will lead to a slower increase in the number of uninsured than the House, but eventually we end up in the same place. This is the real problem with the bill. The exact phaseout will likely change before passage.
  • The Medicaid program is converted to a per capita cap program as in the House bill, thereby limiting funding growth and shifting responsibility toward cash-strapped states. The Senate’s annual trend formula is actually more restrictive in later years (after 2025) than the House (CPI-U vs. CPI-M) and will lead to a greater projected increase of the uninsured due to Medicaid coverage loss and much deeper long-term spending reductions (hundreds of billions over time more than the $800 billion in the House bill). This will lead to funding crises and increases in uninsured rates in the future. It creates huge challenges to adequately prepare for the aging demographic and long-term care burden the country faces.
  • The premium subsidies in BCRA look more like the ACA provisions in current law but are less generous overall than the current regime. Compared with the House bill, this is a positive step toward recognizing the need to responsibly subsidize coverage based on individuals’ means. This is necessary to transform the healthcare system from a patchwork system to one centered on prevention and quality. Unlike AHCA, additional subsidies are tied to both age and income. This helps lower-income Americans, including those who are elderly and on fixed incomes. As well, those under 100% of poverty would now qualify to get subsidies, helping those who are uninsured in non-expansion states. However, compared with the current law, some younger populations would be net winners, while older Americans would still pay more under the Senate bill (although most are better off than under the House version). As with the House bill, older Americans would also now be allowed to be charged up to five times more than younger Americans (current law is three times). The actual subsidies drop from 400% to 350% of the federal poverty level. We have often noted that some middle income Americans have high rates of uninsured because ACA subsidies are not generous in this income range. The Senate bill may make this problem worse. One other point: the Senate targets subsidies to benchmarks plans that are lower in actuarial value than the ACA (roughly Bronze compared with Silver) and cost-sharing subsidies go away in 2020. On one hand, a bigger burden for those paying; on the other hand, as we have noted, financially sustaining the ACA approach was not feasible and did discourage personal responsibility for some.
  • Both the employer and individual mandate would be repealed.
  • The Senate bill does not allow states to waive protections barring discrimination for pre-existing conditions like the House does, but allows some flexibility for states to waive ACA market and essential benefit rules. In general, we support a moderate approach to reducing benefits and overall actuarial value to preserve affordability and markets but at the same time protect the ability for those with disease states and conditions to access insurance coverage and not be shut out. Critics do note, though, that in the Senate bill those with pre-existing conditions would be guaranteed coverage but could be in a state where an important benefit is no longer covered in an overall benefit package.
  • BCRA would also fund the current Cost-Sharing Reduction (CSR) subsidies in 2018 and 2019. This helps stabilize coverage until the transition. (See more information in the brief below.)

We have taken the consistent position that Obamacare as we know it is too rich and broken. At the same time, the House’s AHCA is not the answer. It shifts us back in time to a system where up to 50 million people are uninsured and accessing care at the most expensive settings instead of building a prevention and quality focused system. The Senate’s BCRA is by no means perfect, but at least a step toward the middle. We think the Senate’s ACA waiver provisions and subsidies come much closer to a reasonable construct; however, they still need tweaking.

The most troubling aspects of the Senate bill are the approaches on Medicaid. We have argued a subsidized Marketplace will always be a relatively unstable and adverse world. Medicaid is the most cost-effective way to provide access to healthcare for low income Americans. What lawmakers are missing is the financial no-brainer of covering the uninsured in Medicaid compared with subsidizing coverage in the commercial arena. It also better protects those covered from high deductibles, co-insurance and other outlays. While we support a transition to a per capita cap program, a generous funding mechanism taking into account real healthcare inflation, recessionary trends, the aging demographic and population growth is important. This is the only way to ensure private health plans help states transform the Medicaid program on both acute medical and long-term care sides. In addition, as is so often the case, the most vulnerable in our society (e.g., those with physical and mental disabilities) often are forgotten when state budget climates are tough and money is sparse. A fair formula is a moral imperative, too.

The CBO should report some improved numbers against the AHCA. But the Senate has more work to do.

Obamacare Subsidies Paid; Plans Pull Out of Exchange

Despite the political rhetoric and his threat to hold Obamacare cost-sharing reduction (CSR) payments to plans hostage, President Donald Trump did the right thing when he paid them in June. Then again, the President and the Centers for Medicare and Medicaid Services (CMS) seem to be taking this one month at a time, with no commitment to continue making payments in the future. Plans are now making final decisions about staying in the program next year. Some plans are pulling out. Others are staying, building in substantial increases in premiums due to the uncertainty over CSR payments as well as an expected riskier profile as plans exit. Cigna has filed in the seven states where it now participates, but may pull out before the New Year depending on what happens with other plan participation and the fate of the subsidies. With very limited exceptions, Anthem will fully fold its Exchange plans next year. Previously, United Healthcare, Humana and Aetna had either completely pulled out or scaled back dramatically so that they were not major players.

Lifting Burdens on Enrollment in MA

In a June 15, 2017 memo, CMS announced a few major paperwork and administrative reduction burdens for Medicare Advantage (MA) and Part D (PDP) Plans.

Up until now, plans had to provide a copy of the completed paper enrollment form to prospective enrollees. This requirement clearly was burdensome and increased costs of plans demonstrably. CMS is revising its enrollment manual guidance to remove the requirement to provide a copy of the completed paper enrollment form to individuals. CMS justifies the change by noting that plans must notify individuals within a specified period of time of their enrollment request and its outcome. Potential enrollees would have the necessary information at their disposal to consider their options or pose any questions to the plan. Plans still need to maintain copies and provide copies to prospects and enrollees upon request.

In another change, previously plans were unable to gather critical financial information from prospects during phone or electronic enrollment. This meant that plans had to approach beneficiaries again to educate them on premium payments and sign them up for a payment method.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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