The New GOP Health Care Bill and its Effects on Providers
15 March 2017
On Monday, March 6, 2017, House Republicans unveiled the American Health Care Act, a plan to replace the Affordable Care Act (also referred to as “ACA” or “Obamacare”) that has subsequently been coined by Republican opponents as “Obamacare Lite” and has been subject to endless hours of debate. It is unclear whether Republicans can garner sufficient votes to pass the bill and it has been criticized for lacking details as to how these provisions will be funded and how it will affect taxpayers. The key points of the plan include maintaining three significant provisions of the Affordable Care Act including: (1) the provision barring insurance companies from discriminating against those with preexisting conditions and forces insurance companies to allow young adults to stay on their parents plan until age 26; (2) the ACA’s Medicaid expansion through the year 2020; and (3) the ban on lifetime coverage caps. The new bill also eliminates the individual mandate and resulting tax penalties for those without health insurance and incorporates a system of tax credits instead of the subsidies relied on through Obamacare.
The major distinction between the new plan and the ACA is that it will replace subsidies with tax credits for eligible applicants. The tax credits will be awarded based on an applicant’s age and then phase them out, in increments, by income. Conversely, the ACA determined subsidies for insurance by income regardless of age and were intended to assist lower income individuals in paying deductibles and other out of pocket costs for insurance purchased through the public marketplace. Thus, with the ACA, enrollees who earned more than $48,000 per year were not eligible for any subsidies, regardless of their age. With this new proposal, tax credits would apply to anyone who makes up to $75,000 (or $150,000 for a married couple filing jointly) and after that threshold the tax credits would decrease in 10% increments. According to an article by the Washington Post, this means that “[c]ompared to the Affordable Care Act’s subsidies, tax credits would go to more people but provide less financial help to lower income people.”
Further, this reform looks like a return to privatization with less government oversight. Through the GOP’s new plan insurers are allowed to charge older enrollees five (5) times as much as they do younger insureds; currently, this increase is limited to three (3) times as much. This proposal eliminates the individual mandate that requires everyone to obtain health insurance and instead will allow health insurance companies to charge 30% higher premiums if customers went 63 days or more without health insurance. At least 20 million more people have health insurance today than before the Affordable Care Act was enacted. Of these 20 million newly insured, about half obtained health insurance via new exchanges, which were set up to help them purchase private health insurance, often with the help of federal subsidies. The other half obtained health insurance through Medicaid expansion.
An important feature of 2010’s Affordable Care Act was that it required insurance companies to cover anyone who wanted to buy insurance and it set out a minimum list of conditions and services that had to be provided by the plans. Included among these services are pregnancy care, prescription drugs, mental health care, and cancer screenings. These required services appear to be preserved within the new plan for now. However, after December 31, 2019, state Medicaid plans will not be required to include these services. Further, the GOP plan targets Planned Parenthood, rendering the woman’s health organization ineligible for Medicaid reimbursements or federal family planning grants. The GOP’s proposal will also cut off other government programs for one year.
One noteworthy transformation is how the proposed new plan will approach Medicaid by revisiting it entirely. The plan allows the 31 states (and Washington D.C.) who elected to expand Medicaid under the ACA to continue receiving federal funding to maintain the expansion. The remaining 19 states who declined to expand Medicaid will receive cash funding but will not be able to opt in after 2019. Medicaid will be altered from its current structure as an entitlement program, which allows anyone to apply for eligibility, to a per capita allocation of funding to states.
Whereas the ACA provided for a funding match of the state’s expenses on Medicaid, regardless of the cost, this new allocation would depend on the number of people enrolled and would cap the amount of funds states can receive per Medicaid enrollee. States will continue to receive funding for Medicaid, so long as the same number of people remain eligible and there will be no enrollment after 2019, making this look like an eventual phase out of the program. This provision has received major backlash from the healthcare community because it could mean stripping away coverage for many of the most vulnerable individuals.
Lastly, this most recent proposal would delay the ACA’s “Cadillac” tax, a 40% excise tax on the most generous employer-provided health plans that cost more than $10,200 for individuals and $27,500 for families, which was devised by employers and labor unions alike. The ACA scheduled this tax to be implemented in 2020 and the new GOP plan would delay the implementation until 2025. Additionally, this new bill eliminates the tax penalties that the ACA places on employers with 50 or more full-time workers who do not provide their employees with health insurance.
It is clear that there are deficiencies with this new health care proposal but how do physicians feel about it, and most importantly, how will they be effected if the proposed health care reform is passed? Republicans assert that their goal in implementing this new plan is to give control back to individuals and families and to move decisions into doctor’s offices. One primary concern for doctors throughout the implementation of the ACA has seemed to be its negative effect on their reimbursement levels, because there were required non-clinical duties and paperwork, and they had to see more patients to keep up with expenses. Through this new plan and the removal of the individual mandate, many may be left uninsured and this could be a less significant concern. In a healthcare model with less government oversight and more privatization, power may be moving into the hands of patients and doctors.
In contrast, many doctors have spoken out about their disagreement with this new health care proposal. The largest organization of doctors, The American Medical Association, recently sent a letter to Congressional committees debating the bill and stated “[w]hile we agree that there are problems with the ACA that must be addressed, we cannot support the AHCA as drafted because of the expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations.”