The current AHCA bill by House Republicans may not be able to stabilize insurance markets as proposed and may negatively affect providers, according to a recent Commonwealth Fund post by Timothy S. Jost of Washington and Lee School of Law and insight from W. Steve Love, president of DFW Hospital Council.
The AHCA, introduced on March 6, heavily relies on the individual market for healthcare. However, the bill states it plans to remove its prime stabilizer of the ACA–the individual mandate. In its place, the AHCA will have a continuous coverage requirement imposing a 30 percent premium surcharge for 12 months on individuals who have a gap of 63 days or more gap for 2016.
While this ideally incentivizes citizens to maintain continuous coverage, the 30 percent penalty is “unlikely to discourage individuals who really need high-cost care and will not offset the cost of that care,” writes Jost. He says it more likely poses a barrier for low-income individuals, who occasionally must “decide between insurance premiums and car repairs or rental payments.” If the ACA individual penalty is repealed and the AHCA continuous coverage requirement doesn’t take effect until 2019, Jost says, this leaves a “gap in market stabilizers at a critical time.”
Love agrees with Jost’s concerns, saying the 30 percent penalty for securing insurance if coverage lapses “might discourage people from buying insurance and seek primary care in emergency departments.” Also, the AHCA’s main market stabilization initiative offers states $100 billion over a nine-year period to support high-risk pools, reinsurance programs, or other stabilization methods starting in 2018. If states do not create their own projects, they will receive funds for individual market reinsurance or use the funds to provide their own cost-sharing assistance for low-income enrollees to pay for care. However, this is only possible if states can provide matching funds. And according to Jost, “the funds are likely far too little to stabilize individual insurance markets, even if states spend the money wisely.”
Another reason why the AHCA may not stabilize markets as it suggests is its plan to increase the age-rating ratio from 1-to-3 to 1-to-5. This allows insurers to charge older people up to five times more than younger individuals, although age-adjusted tax credits are intended to lessen the sting. Jost says the current model will “discourage enrollment by some healthy as well as unhealthy older people–since tax credits are not geographically adjusted, they will discourage enrollment in high-cost areas, including many areas with few insurers.”
There are also concerns, most recently addressed by the American Hospital Association, American Medical Association, and other groups, on how the AHCA will impact providers in addition to the individual insurance market concerns.
Love says the AHCA’s current provisions will have negative impacts on providers. “Providers are going to deal with more uninsured, less reimbursement, and more people seeking primary care treatment in emergency rooms,” Love told D CEO Healthcare. “The Medicaid changes will hurt Texas, increase the uninsured—we already have the highest [rate] in the nation—and reduce payments to physicians and hospitals, which are already extremely low.”
And, based on the Congressional Budget Office cost estimate released Monday, there would be an $880 billion decrease in Medicaid spending and 14 million more uninsured.
“With Texas already leading the nation with the highest uninsured rate, this will cause a greater increase and the emergency room departments will have more people seeking primary care and providers will receive less reimbursement,” Love said. “By 2026 that 14 million number becomes 24 million, with 52 million to be uninsured in 2026 versus 28 million currently per this report.”
Moreover, the Medicaid change as proposed in the AHCA to a per-capita payment model must include all funds paid for Medicaid services such as Medicaid “disproportionate share,” the Medicaid 1115 waiver of approximately $6 billion annually, and any additional supplemental payments.
“This capped reimbursement model will be very problematic for Texas based on the volume, not the payment rate, of the growing [number of] Medicaid recipients each year,” Love said.