After seven years of plotting the destruction of the Affordable Care Act - ACA (ObamaCare); the Republican controlled Congress has introduced the American Health Care Act- AHCA (TrumpCare) to fulfill their campaign season promises of “repeal and replace”. Almost immediately the bill has received resounding negatives from consumer groups, healthcare organizations, Democrats and Republicans in Congress and State governments around the country. Despite the backlash, the bill is moving quickly through Congress and cleared two key committees within days of being introduced (but is facing stiff resistance in the more difficult Senate).
President Trump is putting on a “full-court press” to support the bill, and has hosted a variety of groups in the White House promising that “everyone will have access at lower costs to better healthcare” under the plan. Conservative opponents deride the bill as being “Obamacare Lite” or “Obamacare 2.0” because they consider the tax incentives to be another form of entitlements. Consumer and healthcare opponents chafe at the draconian cuts to Medicaid, tax breaks for the rich and insurance companies, and for shifting the burden from the wealthy and healthy to the poor and the elderly.
Whichever side of the debate you are on, there are some clear winners and losers in this latest round of the Healthcare Hunger Games--
- High income tax brackets: Those with high incomes are receiving a significant tax break from what the ACA had imposed to help fund care for the poor, elderly and children. Families with annual incomes over $1 million will benefit from cuts worth a cumulative $157 billion. In addition, the amount that can be sheltered tax free in a Health Savings Account (HSA) would be increased in 2018 to $6.550 for an individual and $13,100 for a family.
- The young and healthy: Individual mandates are out. Tax incentives are in. HSA limits will increase. High deductible plans will be incentivized through refundable tax cuts. It appears that people who need healthcare the least will benefit the most which is a shift in priorities from the ACA.
- Insurance companies: The $500,000 tax deduction limitation on insurance companies’ executive compensation packages will be lifted allowing health insurers to deduct the full amount of executive compensation packages. This is a generous gift to insurance companies whose compensation packages for executives runs in the multiple millions annually.
- People with and without pre-existing conditions: The AHCA did not eliminate the prohibition on pre-existing condition exclusions. But, it does impose a 30% premium increase penalty on those with pre-existing conditions that allow their coverage to lapse and then re-join coverage. The idea is to discourage the highest cost users of insurance from dropping coverage when they don’t need it and then re-joining when they do. This saves money in premiums for the healthy and those that maintain their coverage regardless of health status.
- Low Income tax brackets: The new bill promises “access” to healthcare but it does not promise “coverage”. This is an important nuance as Speaker of the House Paul Ryan has said it is not his job to mandate that people have coverage. Negatively impacting middle and lower income families; the bill eliminates the federal premium subsidies for low- and middle-income insured’s and it eliminates the subsidies for out-of-pocket expenses covered by the ACA.
- Seniors and children: The bill is very much a Trojan Horse for the changes to Medicare and Medicaid that Republican leaders want to see enacted. In this bill Medicaid cuts are coming by 2020. There will be significant reductions in Federal funding to the states, as well as limits to those allowed to enroll that will have an immediate impact on the number of people who will become uninsured. Medicaid funding will switch from one-to-one Federal matching dollars in the states to funding on a per-capita basis (block grants) resulting in less money to fund state Medicaid budgets. Those most at risk are the poor, children and the elderly. The AARP has come out in opposition to the bill because it “would weaken Medicare’s fiscal sustainability and put at risk the health care of millions of children and adults with disabilities, and poor seniors who depend on Medicaid”.
- Healthcare providers and people who need healthcare: The American Medical Association (AMA) and the American Hospital Association (AHA), the two most influential groups representing healthcare providers, came out against the bill as well. They cite the reductions in funding and coverage for individuals and families, as well as less reimbursement for care providers who already receive “significantly less than the cost of providing care".
When the AHCA was introduced it received an almost immediate rejection from not only consumer groups, medical groups, and the insurance industry, but it was resoundingly rejected by Democrats and many factions of Republicans as well. Once the Congressional Budget Office (CBO) scored the bill as not achieving the desired savings while also pushing as many 24 million people back into the rolls of the uninsured, it set off a full-scale rush for the exits by everyone except the House Leadership and the White House. Support for “ObamaCare” is now at an all-time high as cries to abandon “TrumpCare” are growing louder from all quadrants. The combination of political pressure and fiscal reality may be too much for this version to survive.
As we enter this next phase of the Healthcare Hunger Games it is too soon to know who the ultimate winners and losers will be-- but if the architects and champions of this bill are not careful they could be staring down the barrel of the biggest loss of all in the 2018 elections.
Chris Orestis is the CEO of Life Care Funding and a 20-year veteran of both the insurance and long-term care industries. His blog on senior living issues can be found at www.lifecarefunding.com. He can be reached at 888-670-7773 x 6623 or email@example.com.
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