By John Rother, President & CEO and Larry McNeely, Policy Director
Although we lack a full Congressional Budget Office(CBO) analysis, the House budget reconciliation package appears to fall short with respect to NCHC’s central priority, improving health care affordability. We are also concerned the bill would shift costs now born by the federal government onto consumers and state taxpayers. It is time for this Congress to begin considering a different approach.
In a series of blog posts on NCHC’s website in the summer of 2016, we expressed our hope that certain concepts in the House Republican Conference’s health care blueprint, A Better Way, could serve as the basis for serious discussion and common ground. We singled out that document’s support for value-based insurance design, pre-existing condition protections, and state innovation funds as constructive. Yet we also took strong exception to policies that merely moved costs borne by the federal government onto consumers or taxpayers at the state level.
With the release and accelerated markup of the American Health Care Act (AHCA), we have now seen the 115th Congress’ first effort to translate A Better Way into legislation. Regrettably, preliminary analyses from outside research organizations, ranging from Standard & Poors to the Kaiser Family Foundation, indicate that the AHCA would have significant negative effects on affordability and coverage.
We continue to consult with our member organizations regarding the legislation. Once a Congressional Budget Office (CBO) analysis is released, we expect to react to its central provisions, including its Medicaid and tax credit sections.
But even without a publicly available CBO score, serious problems are apparent. These flaws undercut its authors’ own stated goals of minimizing disruption to Americans’ current coverage during a transition period and empowering states to lower costs and improve care. Indeed, aspects of the bill could do serious and immediate harm- even before the broader Medicaid per capita allotment and tax credit provisions take effect.
Our early analysis has identified specific provisions that would:
Threaten the stability of non-group insurance markets: The Ways and Means Budget Reconciliation Legislative Recommendations immediately zero out the penalty for failing to meet current law’s individual responsibility requirement. Yet the proposed State Patient and Stability Fund, established to stabilize the market, is scheduled to go into effect in 2018. That deadline may prove challenging to meet operationally. And any mismatch between the individual responsibility requirement repeal and the availability of state stabilization funds could destabilize non-group insurance markets. This effect will only be exacerbated by continuing uncertainty around the availability of cost-sharing reduction (CSR) payments for 2018 and 2019.
Decimate chronic disease prevention efforts: Section 101 of the Energy and Commerce Budget Reconciliation Legislative Recommendations immediately eliminates the Public Health and Prevention Fund without making any provision to replace those dollars through Congressionally-directed spending. A funding cut of this magnitude not only eliminates 12% of the Centers for Disease Control and Prevention budget; it threatens $625 million a year in support for innovative state and local initiatives to fight preventable chronic diseases like cancer, heart disease and stroke.
Undermine Medicare Financing: As called for in the W&M Recommendations, the immediate repeal of the 0.9% Medicare Hospital Insurance payroll tax is estimated to accelerate the insolvency of the Medicare Part A Trust Fund forward to 2025-absent offsetting revenues. This manufactured crisis could be used by a future Congress as a pretext to impose blunt provider, health plan or beneficiary cuts in Medicare.
Defund state Medicaid expansion coverage for the working poor: Section 112 of the E&C Recommendations would maintain enhanced federal support (E-FMAP) for Medicaid beneficiaries enrolled as of Jan 31, 2019. However, if a beneficiary has any break in Medicaid coverage of a month or more, the enhanced E-FMAP would be terminated. This encourages states to drop from coverage any childless adult who secures a job paying more than the Federal Poverty Level (just $1005 per month for a single individual in 2017). In itself, this is a work disincentive. Additionally, Section 116 incentivizes state officials to audit their circumstances and earnings to ensure that they are eligible. The interaction of these provisions would immediately begin reducing Medicaid expansion and significantly limit states’ flexibility to support employment and cover the working poor through Medicaid.
It is time for Congress to consider an entirely different tack. Congressional leaders should set aside sweeping overhauls of the health sector and return to a more step-by-step approach.
For our part, the National Coalition on Health Care has come together around several nonpartisan policy objectives, which could inform the development of a constructive agenda:
- Stabilize the non-group health insurance markets, by maintaining cost-sharing reductions and tax credits, avoiding disruption of current Medicaid funding and providing ongoing risk stabilization support
- Bring down the cost of care in Medicare and the private sector by improving chronic illness care, further accelerating the transition away from fee-for-service, and embracing value-based insurance design
- Expand primary care, prevention and other interventions that improve outcomes and reduce downstream medical costs
- Extend the state-based Children’s Health Insurance Program(CHIP) and bolster funding for the nation’s network of community health centers
- Tackle the high cost of prescription drugs through market-based solutions: transparency, value, and competition
There is much that is broken in American health care. To have hope of fixing these problems, this Congress and Administration will have to act. Unfortunately, we fear that the legislative language advanced this week could make Americans’ health care affordability problems worse, not better.