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ACA Replacement Faces Criticism As GOP Divisions Widen

By Grant Huang, CPC, CPMA ,Director of Content at DoctorsManagement.

The long-awaited Republican replacement for the Affordable Care Act (ACA) was finally unveiled March 7, but the resulting bill has divided Republicans in the House and Senate. Dubbed The American Health Care Act (AHCA), the replacement plan was released by committees in the House of Representatives and quickly received a damaging assessment from the Congressional Budget Office (CBO).

The CBO, often referred to as a bipartisan “scorekeeper” for legislation proposed by both parties, assessed that the AHCA would result in 14 million Americans losing their insurance in 2018. The CBO projects that figure to grow to 24 million by 2026, though the agency also estimates that the bill would also reduce federal deficits by $337 billion over the next decade, largely the result of slashing the ACA’s Medicaid expansion.

More conservative members of Congress argue that the AHCA strongly resembles the ACA and doesn’t go far enough in terms of a true replacement. More moderate Republicans, in the wake of the CBO analysis, have expressed concern that the AHCA would quickly alienate voters who lose their insurance, and that the bill doesn’t fulfill the promises made by President Donald J. Trump during his campaign. Trump had stated that the ACA replacement would cover the same number of Americans, if not more, while also reducing premiums.

Core elements of the AHCA first appeared in past Republican proposals, including A Better Way, the plan by House Majority Leader Paul Ryan (R-Wis.) and The Empowering Patients First Act drafted by former Rep. Tom Price (R-Ga.), now the HHS Secretary.

“These ideas have been out there, some of them go as far back as the Republican proposals during the creation of the ACA in 2009,” says Jack Hoadley, research professor at Georgetown University in Washington, D.C. “For Republican leaders and the rank-and-file, the issue is going to be what their criteria is for an acceptable program, in terms of the number of people insured, what the costs are, and how those costs will be paid.”

Replacement looks similar to ACA

But it’s also true that the replacement plan does resemble the ACA, Hoadley says. Below are highlights of the AHCA:

  • Popular provisions preserved. People with pre-existing conditions would continue to be protected from higher rates, though people who experience a lapse in coverage could be charged higher premiums when they reenroll. Also, the AHCA copies the ACA’s provision allowing young people to stay on their parents’ plans until they turn 26.
  • Medicaid expansion stays until 2020. The AHCA would preserve the ACA’s massive expansion of the Medicaid program until Jan. 1, 2020. After that date, Medicaid would stop new enrollments and allow existing enrollees to attrition out whenever their income rose above the minimum. The AHCA would also set a per-person limit on Medicaid benefits for the first time in the history of the program, a move that would eventually shift a major chunk of the financial burden to the states. Even so, this temporary preservation of Medicaid is the single biggest change from previous Republican proposals. The Ryan plan would have significantly reduced the scale of federal contributions to Medicaid, while the Price plan completely eliminated the Medicaid expansion.
  •  Individual mandate goes away. The AHCA immediately eliminates the ACA’s individual mandate, which requires individuals to purchase health insurance or pay a tax penalty. This measure would likely reduce the number of insured because there would be no cash incentive for the young and healthy to buy insurance.
  • Keeps ban on lifetime benefit cap. Just like the ACA, the AHCA prevents insurance companies from putting a dollar cap on maximum benefits for an insured individual. While most people wouldn’t hit such caps, some very sick individuals who need significant care could’ve potentially hit the cap and lost benefits during a major illness without this provision.
  • Mandatory benefits pared back, but remain. In another unexpected parallel to the ACA, the AHCA continues to require a minimum set of benefits to be covered by every health insurance plan. The AHCA reduces some of the more generous mandatory benefits, but the fact that a mandate remains at all has been seen as a surprise.
  • Age-based tax credits. Unlike the ACA’s income-based tax credits, which help offset the cost of insurance premiums, the AHCA relies on age-based tax credits which ignore income. The result is a more regressive approach to subsidizing the costs of health care that wouldn’t be nearly as generous to the poor, but would reduce the overall costs of the program.

Vote expected soon

For his part, President Trump appears open to having the end product be tweaked by the various Republican factions. He described the bill as being open to “review and negotiation” in a March 7 Tweet. The entire process is expected to move quickly; Rep. Ryan has promised that the AHCA bill would be up for a vote in a matter of weeks.

“President Trump talked about ACA repeal at a very rhetorical level, saying ‘we’re going to keep what’s good and get rid of what’s bad,’” says Hoadley, the Georgetown policy expert. “But now that we’re down to a policy level, there’s going to be conflicts between the Trump approach and what can pass Congress.”

— Grant Huang, CPC, CPMA (ghuang@drsmgmt.com). The author is Director of Content at DoctorsManagement.