The Affordable Care Act amendment offered by House
leadership yesterday seems well-intended. But it falls far short of the “repeal
and replace” promises that have been made for years.
Instead of offering better health insurance, more choices,
and greater affordability as promised, the draft proposal pushes more people
into private health insurance exchanges, through which insurers will offer
poorer coverage at a higher cost.
Older adults will immediately pay as much as 60 percent more
for their health insurance.
All individuals will find themselves subjected to a new “individual
mandate,” disguised as a 30 percent premium surcharge for those who lose their
coverage for more than two months and for those 26 year olds who fail to enroll
as soon as they leave their parents’ policies.
A new high risk pool for those with chronic diseases will
become a multi-billion dollar unfunded mandate on the states by 2026.
Employers will no longer have to provide insurance to their employees.
People newly covered by Medicaid who are unfortunate enough
to lose coverage for a month or more will find themselves permanently excluded
from the program.
The “essential benefits” that mandated that insurers cover mental
health and other conditions the same as they cover physical health will be
wiped out from the Medicaid program forever.
And they will effectively disappear from private insurance products as
well when insurers are newly permitted to offer insurance products that pay far
less in benefits than individuals pay for the insurance.
These are just some of the provisions of the new proposal that should concern people. But they are not the only ones.
Consider the Medicaid program. Medicaid is an expensive program, costing $546
billion in 2015. That is a lot of
money, and members of Congress are completely justified in trying to bring
those costs under control.
It has been proven time and again through the Medicaid
waiver process that the way to do this is not to just pay less than it costs
for health care providers to deliver quality care. It is to expand the range of
services that can be provided, including non-medical services, such as
employment or housing supports. To get a
Medicaid waiver, a state has to prove that what it will do will cost less than
it would have spent doing the same old things.
So there is a huge body of evidence that could have been
used to re-fashion the Medicaid program. And it makes no sense to continue to require states to go through the
onerous process of applying for new waivers every time they want to replicate
something that has already been done successfully in another state.
But this proposal does nothing to give states greater flexibility in managing their Medicaid dollars.
Instead, it offers a new Medicaid cost sharing formula to
the states. It says that the federal
government will institute a per capita cap – in other words, a capped payment –
for every individual on the Medicaid program.
But here’s the problem.
The cap will take effect in 2019, but be based on what states are
spending in 2016.
The way the federal government will calculate the cap is
simple. It will take the amount spent in 2016, inflate it by the rise in the medical
CPI, and make that the initial state payment.
On its face, that sounds reasonable – the medical CPI is
rising more quickly than the CPI in general.
But Medicaid costs are rising more quickly than that. This past year, the medical CPI went up 4.7 percent. But Medicaid costs – largely due to an aging,
sicker population the program covers – increased
by 5.9 percent.
A 1.2 percent difference may not seem like much. But, remember,
this is based on a $546 billion budget.
Every percentage point is worth $5.5 billion. So after three years, when the new cap goes
into effect, states will be picking up nearly $20 billion in new annual Medicaid
costs – before they even get started.
The federal government projects its budget costs and savings
over a ten year period. That means that
during the first ten years, this simple, little, mild-sounding budget initiative
will cost states more than $200 billion.
That’s pretty harsh, but so is this proposal.
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