June 5, 2017 

An analysis by the nonpartisan Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued on May 24 estimates that the amended Republican proposal to replace the Affordable Care Act (passed by a vote of 217 to 213 by the House of Representatives on May 4), would, by 2026, yield a net federal deficit reduction of $119 billion and leave 23 million fewer Americans covered by health insurance. As H.R. 1628 moves to the Senate, it remains too early to know the legislation’s impact on clinicians in general and anesthesia practices in particular, but the American Society of Anesthesiologists (ASA) continues to monitor the bill through its recently created Ad Hoc Committee on Health Care Reform. The ASA also has proposed a list of key principles that the organization believes should be included in any new healthcare reform legislation. As the bill awaits its fate, for planning purposes, anesthesiologists and nurse anesthetists might want to look back and consider their payer mixes before the ACA, i.e., Obamacare (which includes the Exchange Products and Expanded Medicaid Programs in many states) to get a sense of the level of uninsured and under-insured patient populations they could potentially be caring for if the AHCA were passed in this form.

Major Provisions

Key provisions of H.R. 1628 propose to:

• End Medicaid as an open-ended healthcare entitlement program and provide states with either an allotment for each beneficiary or a lump sum as a block grant.
• Eliminate tax penalties for people who do not have health insurance.
• Allow states to obtain limited waivers to opt out of certain provisions of the ACA, including the requirement for insurers to provide “essential health benefits,” such as emergency services and maternity care, and the requirement not to charge higher premiums for people with pre-existing conditions. However, states would not be allowed to charge higher premiums unless they have an alternative mechanism in place, such as a high-risk pool, to help cover people with serious illnesses. These provisions, introduced by Rep. Tom MacArthur (R-New Jersey) and Rep. Mark Meadows (R-North Carolina) in what have come to be known as the MacArthur Amendment, won critical support for the bill from the far right House Freedom Caucus. The revised bill originally allocated approximately $130 billion for a new Patient and State Stability Fund and high-risk pool funding. An additional amendment to the AHCA introduced by Rep. Fred Upton (R-MI) and Billy Long (R-MO), known as the Upton Amendment, provides an additional $8 billion for this purpose.
• Reduce taxes for high-income people by repealing a payroll tax increase and a tax on investment income mandated by the ACA.
• End the taxes on insurers, medical device manufacturers and pharmaceutical companies enacted to finance the ACA.
• Allow insurers to charge older adults five times the amount they charge young adults for the same coverage. Under the ACA, insurers are prohibited from charging older adults more than three times what they charge younger adults.
• Offer $2,000 to $4,000 annually in tax credits to people who do not have insurance coverage through their employers or a government program such as Medicare or Medicaid. A family could receive up to $14,000 per year in credits, which would be reduced for individuals earning more than $75,000 and families earning more than $150,000 annually.
• Encourage “continuous coverage” by requiring insurers to impose a 30 percent surcharge on premiums for people who experience a gap in coverage.

A Nonpartisan Analysis

The current CBO estimate of the number of Americans who would be uninsured by 2026 is slightly lower (by one million) than the CBO analysis of the bill’s initial version. (See our March 20, 2017 eAlert, “The American Health Care Act: An Overview for Anesthesia Practitioners.”) The net deficit reduction of $119 billion would be achieved primarily by the repeal or delay of taxes on high-income people enacted by the ACA and a reduction in Medicaid spending, including termination of the expansion of Medicaid mandated by the ACA and the creation of a per-capita-based cap on Medicaid payments (see graph below).

In brief, those most seriously affected by the American Health Care Act (AHCA) of 2017 (H.R. 1628) would be Medicaid beneficiaries and the elderly, while younger, healthier, middle-income Americans would benefit from reductions in insurance premiums and high-income earners would see tax breaks, including the elimination of a tax on investment income.

According to a CBO summary of its analysis:

The largest savings would come from reductions in outlays for Medicaid and from the replacement of the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance with new tax credits for nongroup health insurance. Those savings would be partially offset by other changes in coverage provisions—spending for a new Patient and State Stability Fund, designed to reduce premiums, and a reduction in revenues from repealing penalties on employers who do not offer insurance and on people who do not purchase insurance. The largest increases in the deficit would come from repealing or modifying tax provisions in the ACA that are not directly related to health insurance coverage—such as repealing a surtax on net investment income, repealing annual fees imposed on health insurers, and reducing the income threshold for determining the tax deduction for medical expenses.

The CBO predicts that the AHCA would leave 14 million Americans without insurance coverage by 2018, the same number predicted with the initial proposal. It projects that 51 million people would be uninsured by 2026, compared with 28 million if the ACA were to remain in place. Premiums for enrollees in the individual exchanges would increase by 20 percent in 2018 and five percent in 2019; however, average premiums would decrease beginning in 2020, but benefits would also be less comprehensive.

According to Senator Majority Leader Mitch McConnell, “whatever the CBO says about the House bill, the status quo under Obamacare is completely unacceptable and totally unsustainable,” and a repeal is necessary. Health and Human Services Secretary Tom Price criticized the CBO analysis, stating that the agency “was wrong when they analyzed ObamaCare’s effect on cost and coverage, and they are wrong again. In reality, Americans are paying more for fewer healthcare choices because of Obamacare, and that’s why the Trump Administration is committed to reforming healthcare.” Homing in on other aspects of the CBO report, House Speaker Paul Ryan said the analysis confirms “that the American Health Care Act achieves our mission: lowering premiums and lowering the deficit.”

Mixed Reviews

Not surprisingly, the amended bill continues to garner vocal disapproval from the medical and healthcare communities, including AARP, the American Hospital Association and the American Medical Association. In a statement, AHA President and CEO Rick Pollack condemned the proposal’s Medicaid cuts and urged the Senate “to restart and reset the discussion in a manner that provides coverage to those who need it and ensures that the most vulnerable are not left behind.” AMA President Andrew W. Gurman, M.D., said the bill “will result in millions of Americans losing access to quality, affordable health insurance and those with pre-existing health conditions face the possibility of going back to the time when insurers could charge them premiums that made access to coverage out of the question.” He called for “solutions so all American families can access affordable and meaningful coverage, while preserving the safety net for vulnerable populations.”

Some conservative organizations contend that the revised bill at least offers a step in the right direction toward their desired goal of a full ACA repeal. Calling it “a good foundation,” the Heritage Foundation’s Robert E. Moffit, Ph.D., said “the House’s action should be understood as part of a continuing process of national health reform. As amended, the House bill rightly focuses on costly health insurance rules, makes historic changes in Medicaid—transforming Medicaid from an open-ended entitlement to a budgeted program—and repeals the national health law’s mandate penalties and its slew of taxes.”

Other conservative groups maintain that the new legislation misses the mark. “The AHCA is bad health policy that will come back to haunt its Republican supporters,” wrote Mike Cannon of the conservative Cato Institute on May 25. “Free market reforms, he argued, “would reduce premiums by up to 90 percent, make access to care more secure for people who develop expensive medical conditions, reduce taxes and healthcare prices, and give states the ability and flexibility to cover pre-existing conditions.”

Economists Emily Gee and Topher Spiro of the independent nonpartisan Center for American Progress express serious concerns regarding the use of high-risk pools to cover people with pre-existing conditions. They said the addition of $8 billion through the Upton Amendment to help fund high-risk pools would actually have almost no effect. High-risk pools have failed to provide adequate health coverage in the past, they argue, and the current AHCA provision is merely a partisan attempt to mask the impact of the MacArthur Amendment allowing states to waive protections for patients with pre-existing conditions. “The full $138 billion [for high-risk pool funding] would subsidize about 700,000 people annually . . . in a high-risk pool. But if roughly 5 percent of current individual market and small-group enrollees needed coverage through the high-risk pools, more than 800,000 people with high-cost health conditions would still be left without protection or affordable coverage,” they said, citing the results of a Center for American Progress analysis.

ABC will continue to follow this legislation and keep you informed of significant developments as the bill moves through the Senate. Indications are that it will face an uphill battle. Only 21 percent of Americans approve of the plan, according to a May 11 national poll by Quinnipiac University—a slight improvement over the 17 percent who approved of the first plan introduced in March. (Please note that this eAlert is for your information only and does not represent a position either for against the proposal.) We want to hear from you.

With best wishes,

Tony Mira
President and CEO