Assessing the American Health Care Act: Who Will It Benefit, Hurt Moving Forward

President Trump promised to repeal Obamacare and has since committed that the replacement will “increase access, lower costs and provide better health care.” House Speaker Paul Ryan released the first draft of the American Health Care Act this week as the Republican’s plan to accomplish these goals.

Some of the American Health Care Act specifics include:
• Individual and Employer Mandate taxes are eliminated retroactive for 2016.
• Ban on discrimination against patients with pre-existing conditions remains.
• Continuous coverage penalties were introduced for those re-entering the market more than 63 days with a 30% rate increase.
• Medicaid expansion continues through 2020 and funding shifts to a per capita cap per enrollee.

The previous Affordable Care Act roll-out was poorly executed. It received no Republican support, launched late, exchanges failed, and premiums soared. The program has never had higher approval ratings, however, until Americans became confronted with losing benefits and trying to understand what replacement looked like.

Many are still asking about the primary goals for this bill? Republicans position it as a free-market solution, but the bill does not appear to increase access, lower costs, or improve care. Many on both sides are calling it Obamacare Lite for keeping the ACA structure a goal to meet a campaign promise.

The bill met immediate resistance from conservative groups including AARP, the House Freedom Caucus, Heritage Foundation, and Republican leadership in swing states. These groups are uncomfortable backing the largest federal entitlement program in our country’s history.

Who benefits:
Younger Americans get cheaper plans. Younger patients no longer subsidize older, sicker patients and 20-29 year olds should save $400-2,000 annually with tax credit increasing from $103 to $2k.
Healthy people will have less expensive options. High deductible, catastrophic plans without free preventative care will expand.
Higher Income Americans. ACA support taxes on high earners are eliminated saving $33k for the top 1% and $197k for the top 0.1%.
Insurance Companies and their CEOs. Removal of the executive compensation deductions limit to $500k allows much higher deductions on CEOs earning $10-25m.
Big Pharma, for now. President Trump talks about renegotiating pharmaceutical contracts but nothing has been included.
Corporations. No requirement to provide health insurance through the employer mandate.

Who might be hurt:
Older Americans will pay more. 50-65 year olds will pay 13-22% more after removal of the provision that older enrollees cannot be charged more than 3x younger enrollees. The AARP opposes the bill arguing it “increases insurance premiums for older Americans without doing anything to lower drug costs.”
Lower-income Americans could be left uninsured or have to pay more. An estimated 10 million could lose coverage and Medicaid funding will be reduced under a per-capita cap per enrollee. Americans earning less than $30k would receive approximately half their subsidies under the new plan.
Coverage scaled-back. ACA coverage required preventative care to be included for a co-pay. Physicals, mammograms, and other exams will have “for fee” expense.
Individual exchange purchasers. Eliminating the individual mandate retroactively will cause marketplace disruptions and higher premiums for those without employee insurance.
Swing State Republican governors and senators. Four key Republican senators from states that opted to expand Medicaid under the ACA said, “We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.”
Hospitals. Fewer insured and more under-insured patients means more write-offs for hospitals.

Will the bill lower costs?
This draft has not been reviewed or scored by the Congressional Budget Office, and Speaker Ryan seeks to pass it before the analysis is complete. Sean Spicer stated the analysis was not important because the ACA analysis was incorrect.
The CBO report estimates the AHCA will increase the number of uninsured Americans by 14m in 2018, 21m in 2020 and 24m by 2026 of which 14m had been Medicaid beneficiaries. Employer programs are also anticipated to drop without the mandate. The ACHA is projected to save $337b from the federal deficit over the next decade. The CBO report also states that premiums could be 5x larger for older people than younger people but only receive twice the tax credits they do.

What’s Next?
If initial Republican opposition holds, the bill may be dead. Senate Majority Leader Mitch McConnell, however, said Thursday that “we need to deliver” because “we’re in the outcome business now.” McConnell went on that GOP lawmakers are now in a position to make good on the promises they’ve made to voters for the last eight years. “I hope in the end that people will remember what Reagan said, that if he could get 80 percent of what he wanted, you call it a win and move on,” McConnell said.
“This is a full-court press,” Grover Norquist added. “They want to make sure that Republicans know they ran against Obamacare for six years, and voting against repealing it is a make-or-break issue for their careers.”
These next weeks will significantly impact the legacies of Obama, Pelosi, Trump, and Ryan. The political capital spent in 2009 to push the ACA without Republican support is widely seen as costing Democrats the 2010 elections and the balance of power in D.C. The next few weeks will determine the future of the U.S. healthcare system and much of Donald Trump’s presidency.

Hunter Howard has founded three HealthTech start-ups in Dallas: Hormone Therapeutics, Ocracoke Health, and MediGain.

Posted in Expert Opinions.