American Health Care Act v. Affordable Care Act: Contrasting Views of Responsibility for Health.
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The American Health Care Act (AHCA) passed by the House of Representatives on May 4 and the Affordable Care Act (ACA or Obamacare) reflect starkly divergent views of the role of government and the rights and obligations of Americans. These differences make compromise on health policy nearly impossible. As Senators consider what to do with the AHCA, they will be deciding between personal responsibility and social solidarity in health care.
The goal of Obamacare was (near) universal access to affordable health care. To simultaneously preserve the private, commercial market for insurance and keep premiums costs affordable, everyone—sick or healthy—had to be in the insurance pool to spread the costs. Even then, however, the cost of health care was more than affordable premiums could cover. So, government financing was needed to subsidize both premiums and cost-sharing for lower income individuals. The federal government filled the gaps in the private individual and small group markets, expanded subsidies for states to cover more very low-income Medicaid enrollees, and maintained financing for Medicare. The result is complex but fairly comprehensive coverage, with costs that approximate the original Congressional Budget Office (CBO) estimates. Like most major legislative initiatives, it needs adjustments to achieve its goal, as well as attention to managing the cost of providing care. Yet, the ACA is an expression of social solidarity, in which access to health care is accepted as a human right that the government is responsible for fulfilling, whether directly or through private entities.
In contrast, the goals of Obamacare opponents are to limit federal revenues and expenditures, reduce deficit spending, restrict federal regulation of private markets, and return more sovereignty to the states. Their original health policy objective was to repeal Obamacare, period. Faced with demands for some replacement, however, Republicans patched the AHCA together to gain support from members whose constituents depend on Obamacare. The AHCA that passed the House on May 4 favors “actuarial fairness,” in which individuals pay according to their personal health risk profiles, but allows those who cannot afford private insurance to qualify for some government assistance.
The AHCA goes a long way toward achieving Republican goals (different provisions take effect in 2017, 2018, and 2020). First, it reduces federal revenues by eliminating the taxes imposed by the ACA. Second, it decreases the federal deficit somewhat by reducing federal spending on health insurance and Medicaid. Importantly, the deficit reduction paves the way for new tax cuts in the next federal budget. Finally, the AHCA limits federal regulation, freeing states to exercise more regulatory authority, and places greater personal responsibility on individuals for their health and the cost of their care.
The AHCA retains the provisions in the bill that did not come to a vote (explained in an earlier post and Tim Jost’s Health Affairs blog). These include ending the tax penalties on individuals who do not have coverage and employers who do not offer adequate health plans to employees, as well as all the taxes that help fund the subsidies. Federal financing for Medicaid is ratcheted down through block grants or per capita payments, so that sooner or later states will have to cut benefits or beneficiaries. Governor Baker estimates that Massachusetts could lose at least $1 billion. The CBO analysis for the first AHCA estimated that about 24 million people would lose their private or Medicaid coverage by 2026. The CBO is likely to increase the number of uninsured when it analyzes this new AHCA version for Senate consideration.
The original Republican bill was amended to garner more votes, but the amendments are faithful to the bill’s focus on personal responsibility. The MacArthur Amendment appealed to the Freedom Caucus. It allows states to waive the ACA requirement that health plans cover Essential Health Benefits—to give insurers and consumers greater “choice” of plans with limited benefits and lower premiums. It will be difficult for consumers to compare prices in states where plans offer different benefit packages and actuarial values. The Wall Street Journal notes that these waivers may also affect health plans provided by employers, since employers may site their plans in states with fewer benefit requirements. Milliman actuaries estimate that the benefits most likely to be dropped—pregnancy and maternity, mental health and substance abuse, pediatric, and preventive services—each account for about 1 percent of premiums prices. These are relatively inexpensive benefits that can prevent serious and even fatal illnesses.
Insurers can impose a 30 percent one-year premium surcharge for individuals who had a 63-day gap in coverage in the past 12 months. In addition, state waivers may also allow insurers to medically underwrite individual policies for such “gap” persons and charge more for pre-existing conditions. But, such states must have a reinsurance program or join an “invisible risk sharing program” to reduce out of pocket costs or finance expensive claims. Alternatively, waiver states can create a high risk pool to cover those without insurance. The AHCA provides $130 billion in federal funding over 10 years to finance these programs. (The Upton-Long Amendment added $8 billion to these funds to win moderate Republican votes.) If history is any guide, high-risk pools with this little funding are likely to cover only a tiny fraction of services for people in need. A Families USA analysis estimates that between 7 million and 15.8 million people with pre-existing conditions currently have ACA marketplace coverage, but fewer than 700,000 would be covered under AHCA high-risk pools.
The May 4 AHCA looks a lot like the pre-ACA status quo. Public health, medical, and patient organizations, as well as women’s groups and Democrats, strongly opposed the AHCA and now urge the Senate to kill the bill. The AHCA may encourage some premium price relief to young and healthy consumers, but it would take health insurance away from millions of Americans in order to give the richest Americans a huge tax cut.
On the White House lawn after the May 4 vote, Vice President Michael Pence said that the AHCA gives Americans the health care they deserve. We now know what that means.
Wendy K. Mariner is the Edward R. Utley Professor, Health Law, Policy & Management.