By Sean Miner
Sun Current Newspapers
After a half decade of shouting and sabre-rattling, Republicans in Congress released the first part of their plan to repeal and replace the Affordable Care Act (ACA, also known as Obamacare) last Monday.
The new bill, known as the American Health Care Act itself offers the concrete details that have been lacking in that repeal effort — and those details are evoking a wide range of reactions, both within and outside Congress.
As written, the legislation has earned the backing of Third Congressional District Rep. Erik Paulsen (R-Eden Prairie), who has been an outspoken critic of the ACA throughout his tenure in the House of Representatives.
“Here’s the situation: Obamacare continues to hurt more people than it’s helping,” said Paulsen. “A lot of the promises that have been made have been broken … the plan that’s moving forward is a better alternative.”
What it does
The legislation wouldn’t be a complete do-over — it would keep some of the most popular components of the ACA, such as the very existence of health insurance exchanges and a provision barring insurance companies from denying coverage due to pre-existing conditions.
It would, however, remove the individual mandate requiring citizens to carry health insurance or face tax penalties. Instead, insurers would be allowed to charge a 30 percent higher premium for a year to anyone who allows their insurance to lapse for 63 days or more.
Both the ACA mandate and the premium surcharge designed to replace it seek to lower premiums by looping more healthy people into insurance programs. The benefit of the surcharge, as Republicans have pointed out, is that it wouldn’t penalize a healthy person, continually, for not carrying insurance.
The AHCA would also reshuffle government subsidies, for both premiums and out-of-pocket costs. Current, income-based tax credits would be replaced by credits tied almost exclusively to age — scaling up from $2,000 annually for persons younger than 30 to $4,000 annually for persons older than 60.
The program would also cut federal funding for Medicaid expansions, largely shifting costs to state budgets during the next several years. Likewise, the plan would do away with several taxes created by the ACA.
An emphasis on choice
Paulsen offered his perspective on the bill within hours of a report being released by the Congressional Budget Office (CBO), which sought to estimate the bill’s impact in numerous ways. The report is chock-full of cost and coverage estimates throughout the next decade, though a few key figures have garnered considerable attention.
Most prominently, the report predicts that approximately 14 million Americans will lose insurance coverage in 2018 as a result of the AHCA, increasing to 24 million by 2026. It notes that this decrease is expected due to a number of factors — the one emphasized by most Republicans, Paulsen among them, is the removal of the individual mandate.
Paulsen noted that breaking down the 2018 decrease into categories provided context. He claimed that some 6 million Americans would likely drop out of insurance exchanges, 5 million fewer would be covered by Medicaid and 2 million fewer would carry insurance through their workplaces.
“Many people will choose not to purchase health insurance,” said Paulsen. “Having more choices for consumers creates a better market, and creates more flexibility to get the plan they want.”
Paulsen also pointed out that coverage rates don’t reflect the quality of a particular insured person’s coverage.
“Obamacare promised it would provide coverage, but for millions of those people, they got a card, but not coverage they could use,” said Paulsen.
He echoed House of Representatives Speaker Paul Ryan, who had noted that higher numbers of uninsured persons was to be expected, reflecting an exercise of choice on the part of millions
Between fewer people carrying insurance policies and cuts to Medicaid, the program would have a positive impact on the government’s bottom line. The CBO estimated that enacting the legislation “would reduce federal deficits by $337 billion over the 2017-2026 period.”
Choice vs. cost
Other figures from the CBO report, however, suggest that the decline in insurance rates may be motivated by cost increases for some Americans. The report predicted that, by 2026, premiums would decline roughly 10 percent on the whole, but it suggests that some of that decrease would be driven by older and poorer Americans going without health insurance.
Though older Americans would receive higher age-based tax credits than their younger counterparts, the removal of income-based credits would result in large disparities between what poorer Americans will pay for health insurance, depending hugely on their age.
The effect would be most pronounced, by CBO estimates for 2026, on Americans that both fit into the 60 and older age bracket and currently qualify for income-based premium tax credits. This is due largely to a provision that would allow insurers to charge up to five times as much to older people as compared to younger people, while current law allows the charge to only triple.
The CBO report lays out an example in a chart (pictured on this page), which shows projections for single individuals of varying ages, each with an annual income of $26,500 (175 percent of the Federal Poverty Line).
Under current law, annual premiums are listed for a 21-year-old, 40-year-old and 64-year-old as $5,100, $6,500 and $15,300, respectively. Income-based tax credits reduce all three premiums to $1,700.
Under the AHCA, the equation changes considerably. First, the 21-year-old and 40-year-old see lowered initial premiums — the 21-year-old would be billed $3,900 and the 40-year-old, $6,050. That amounts to decreases of $1,200 and $450, respectively.
The outlook is different for the 64-year-old, who would see an initial premium increase from $15,300 to $19,500 – a full $4,000.
The tax credits each would qualify for would increase along with each person’s age, as described in the bill. However, the respective tax credits of $2,450, $3,650 and $4,900 would bring the ultimate amount each person pays to $1,450, $2,400 and $14,600.
Compared to the ACA numbers, that amounts to a $250 decrease for the 21-year-old, a $700 increase for the 40-year-old and a $12,900 increase for the 64-year-old.
Those age-based comparisons change considerably for those who are more well-off. Across the board, three people of the same three ages making $68,200 would pay less under the AHCA than under the ACA. The decrease is most pronounced for the younger among them.
Compared to annual credit-adjusted premiums under current law of $5,100, $6,500 and $15,300 in this income bracket, under the AHCA, the three persons would pay $1,450, $2,400 and $14,600. That amounts to decreases of $3,650 for the 21-year-old, $4,100 for the 41-year-old and $700 for the 64-year-old.
Important to note is that the bill does set aside state grants from a Patient and State Stability Fund. These grants would be intended to limit costs to insurers of enrollees with very high claims.
This and other changes would be enough to “lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market,” the report states.
Reactions in Congress
Before and after the CBO report’s release, politicians from across the political spectrum weighed in on the bill. The proposal has earned sharp criticism from Democratic politicians, many of whom have taken issue with declining coverage rates, cuts to Medicaid and other provisions.
Sen. Al Franken (DFL-Minnesota), in a March 13 Facebook post, said, “My Republican colleagues in Congress should abandon this harmful effort and help us to improve the ACA,” claiming the bill would drive up costs for seniors and visit a number of other ills on the health care industry.
Democratic opposition, by any account, was a given, however.
More troubling for the bill’s chances in the House, and even more so in the Senate, are the objections that have come from the opposite side of the spectrum, notably members of the conservative House Freedom Caucus. Many of the more conservative members of both chambers have taken issue with the AHCA, stating that it doesn’t do enough to undo the mandates and Medicaid
expansion brought about by the ACA.
Several Republican senators have urged their counterparts in the House to “slow down,” among them Sen. Susan Collins (R-Maine) and Lindsey Graham (R-South Carolina). Others, led by Sen. Rand Paul (R-Kentucky), have christened the bill “Obamacare Lite,” and advocated for voting for a clean repeal bill.
The road forward
Paulsen, however, said that those objections were not necessarily a cause for worry.
“Anytime you look at a plan where the far right and far left have objections and want to see it defeated, it’s probably a good sign that it’s right in the middle,” said Paulsen.
He noted that there was still time for revisions to make it into the bill. Though he painted a picture of the state of health care as one of crisis, Paulsen said that getting the bill right was important.
“We don’t want to pull the rug out from anybody,” said Paulsen.
Regarding Minnesota and the Third District specifically, Paulsen said that the AHCA, along with the other parts of the Republican plan to replace the ACA, should allow the state more freedom in managing its health care system.
“We have to get back to where states have flexibility to administer these plans,” said Paulsen. “Minnesota was doing it right before Obamacare.”
As for the time between now and the bill heading to the House floor for a vote, Paulsen said he wished to continue receiving constituent input in the same manner he has been.
“People call, people write — if anyone wants to meet with me, I meet with them,” said Paulsen. “We meet with people on a pretty regular basis. That will continue.”
Contact Sean Miner at [email protected]