House Republicans Unveil Reverse Robin Hood Healthcare Plan

February 27, 2017

House Speaker Paul Ryan and his lead colleagues have generated even more news about the Republicans’ plans to repeal the Affordable Care Act.

Still no legislation. Still spare details. And still, it seems, no genuine consensus, though a large majority now understand that simply repealing the ACA would be a disaster politically, as well as for the 20 million or so Americans who’ve gained health insurance coverage since the law kicked in.

Ryan, however, has released a policy brief that purports to set out the major elements of the House Republicans’ repeal-replace plan.

Needless to say, it aims to radically cut federal spending on health care. Beyond that, a New York Times headline captures the major thrust: “Republican Health Care Proposal Would Redirect Money From Poor to Rich.”

Here briefly are the major changes and how they’d make the shift. Long post, but on one of the biggest immediate threats to the well-being of low and moderate-income people in this country and our common — though obviously not universal — concept of equity.

End of Medicaid As We Know It

Many concerned parties, including yours truly, have animadverted before about Ryan’s plans to convert Medicaid to a block grant.

Basically, states would no longer receive partial reimbursements for the costs they incur in providing health care to the poor and near-poor people they’ve enrolled. They’d instead receive a fixed sum of money, coupled with even fewer requirements and restrictions on what they can do.

We can predict from the fate of other block grants that the fixed sum will either remain the same, regardless of increases in the number of very low-income people in need — or grow somewhat, but not enough to not enough to benefit everyone eligible or who would have been had the block grant not been created.

Ryan’s new plan includes this option, but leans toward a variation — per capita grants. These too use a formula to set states’ funding, but it’s based on the regular federal match that each received in a base year for people in specific categories, e.g., children, people with disabilities.

The grants would increase, based on the inflation rate. But the rate, as commonly measured, reflects the prices of goods and services consumers commonly pay for, e.g., food, fuel, housing, with medical expenses merely folded in.

As we all know, health care costs rise more. And they’re projected to rise considerably higher, boosted by aging baby boomers, new, high-priced drugs and other drivers.

In short, same basic result, achieved by something with less tarnished name — and with a further, predicable cost-shift to all the states and the District of Columbia that have expanded their Medicaid programs.

Specifically, the plan would fold in repeal of the higher federal government match for newly-eligible people enrolled in Medicaid programs. States would continue to have the it for some unspecified time so as “not to pull the rug out from” them or beneficiaries.

The rug would, however, be immediately pulled out from under adults deemed able to work, regardless of whether they do, but at a very low wage — or have any reasonable prospects of landing a non-poverty wage job.

Redirected Tax Credits

Under the current law, people who buy health insurance on an exchange get a tax credit that serves as a subsidy if their annual income is less than 400% of the federal poverty line — currently $97,400 for a four-person family. The subsidy goes directly to the company that provides the insurance the beneficiary chooses.

It’s greatest for those in the lowest income bracket and diminishes till it reaches the highest. So it ensures that very low-income people can afford comprehensive health insurance, while not spending federal money on people in upper-income brackets.

The Ryan plan would instead award tax credits directly to people who have no employer-sponsored health insurance or coverage under a government program.

They’d would be based only on age, with larger (unspecified) credits to older people. As the Times column suggests, this would seem to make some sense, since older people tend to need more medical care.

But it means is that some very wealthy people would get a larger benefit than many of the very poor, who not only need more help in affording health insurance, but often have more health care problems.

Expanded Health Savings Accounts

Our current system already offers people opportunities to sock money away tax-free for specific medical and dental needs by putting it into a Health Savings Account.

As with the better-known Individual Retirement Accounts, you can save only up to a maximum in any given year, but the cap is based on age, when you become eligible and the type of insurance you have (see below), rather than age and taxable earnings.

You’re not required to withdraw any money during a given year. So what you’ve invested continues to grow, assuming it’s invested well and that administrative costs don’t offset real-dollar gains.

And you don’t have to pay income taxes when you withdraw, if you spend the money for approved healthcare purposes — another difference from an IRA.

The biggest difference, however, is that you have to expose yourself and your family to budget and/or health risks because you can’t have an HSA unless your insurance plan is a high deductible, i.e., covers only what are sometimes referred to as catastrophic costs.

Current federal rules, for example, allow insurance companies to require high-deductible customers to pay as much as $7,850 for an individual or $15,700 for a family before they start covering costs.

HSAs are thus obviously beneficial to some people who can afford what they and any dependent family members need and still have money left over because they’ll owe less at tax time. But only those who can stash enough to cover thousands of dollars of healthcare costs.

The Ryan plan would allow people to contribute their maximum out-of-pockets to their HSAs. Another provision would allow spouses to contribute all or part of so-called catch-up contributions, i.e. those made in a given year to compensate for lower than maximum contributions previously.

Conservatives, including lead Congressional Republicans have long argued that healthcare costs would drop if people had “more skin in the game,” i.e., more to save or lose depending on whether they choose to seek health care and, if so, what sort and from whom.

This, as I think everybody knows, is profoundly unrealistic. We’ve neither the knowledge nor, in many cases, the time to choose healthcare services the way we choose, for example, large-screen TVs.

It’s nevertheless the theory underpinning the HSA expansion, with its inherent push toward high-deductible plans. And again, it’s effectively spending more on well-off people — in this case, by forfeiting tax revenues.

Undermining the ACA Before Full Repeal

Long as this post is, I haven’t covered all parts of the plan — most notably, the full repeal part.

Sufficeth it to say that it would roil the insurance market — by immediately eliminating the penalty for having no insurance, for example, and the penalty imposed on larger employers that don’t cover most of their full-time workers.

So if Obamacare isn’t failing now — as the policy brief misleadingly says it is — it surely would during the transition period the brief promises.

NOTE: Last Friday, two insider news sources posted a leaked draft of the House Republicans’ legislation. It generally tracks the measures I’ve summarized.


Let’s Not Forget Affordable Dental Care

January 23, 2017

A comment posted some time ago raised an issue about Medicaid that seems even more timely now because it opens to the door to larger current and prospective issues.

Seems the commenter had to have some teeth pulled. Her dentist told she would have to wait for dentures until her mouth heals instead of getting a temporary set. She felt that she and others covered by Medicaid were “treated differently from other people,” who aren’t doomed to toothlessness. Would I look into this?

And I did, learning more in the process about not only the source of her problem, bur dental care in our health insurance system — today and prospectively. Results, as follows.

The commenter is actually quite fortunate. States don’t have to include dental services in their Medicaid programs, except when they administer the Children’s Health Insurance Program by expanding them.

For adults, dental care is an optional benefit, both for those whom states covered before the Affordable Care Act and those who became newly eligible when states opted for expansion. Those states must provide “essential health benefits” for the latter, but dental care isn’t one of them.

Virtually all states and the District of Columbia do cover some dental services, but only fifteen cover a comprehensive mix, the Kaiser Family Foundation reports.

Many cap per person spending or the number of services covered. And thirteen cover only emergency treatment. Even coverage doesn’t ensure affordability because beneficiaries may face high out-of-pocket costs.

Not all states that cover dental services cover dentures. And even fewer cover dentures for all beneficiaries as often as they might need them. They’re responding here to limits the federal government sets on reimbursements.

But low-income adults aren’t treated all that differently from their better-off peers. Traditional Medicare provides no coverage for dental services, except in certain limited cases when the beneficiary is in a hospital.

We who’ve had employer-sponsored health insurance also know that incomplete—or no—coverage for dental services is more common than the commenter apparently assumed.

But better-off people can shell out for dental care or supplementary insurance. Not so for low-income working age adults. Only 19% of those who were officially poor went to a dentist in 2013. And 44% had had untreated cavities in the prior two-year period.

Nearly a third of those with incomes low enough to qualify for an expanded Medicaid program reported an unmet need for dental care last year.

Without it, they may not only lose teeth and have to live with gaps in their mouths. Untreated oral diseases, including cavities can cause or worsen a range of other health problems.

Lack of sufficient coverage is obviously a major barrier, but it’s not the only one. In some places, e.g. rural areas, inner cities, there simply aren’t enough dentists. That’s partly due to an unwillingness on their part to treat low-income patients, especially those covered by Medicaid.

Dentists object to the paperwork and lost income because Medicaid patients—at least, by reputation—often don’t show up for appointments. But dentists also cite low reimbursement rates—sometimes so low as to not even cover costs.

Now, we know that states often cut provider reimbursement rates when economic downturns drive up their Medicaid costs because that’s more politically palatable than tightening up on eligibility or coverage.

And we know they’d face budget crunches—and not only during recessions—if Republicans in Congress convert Medicaid to a block grant and the President agrees.

Not much of an “if” here. The Trump’s campaign’s policy positions included a block grant. And Congressman Tom Price, his choice for Secretary of Health and Human Services, folded a block grant into the House budget plan when he chaired the responsible committee.

Looking at how states now use their flexibility to limit dental care coverage, we could reasonably expect them to make further cuts there.

They might instead (or also) cut dentists’ reimbursement rates. More than half the states did that in the aftermath of the Great Recession. So Medicaid beneficiaries who still had dental coverage may have had more problems finding someone to treat them, as certainly seems the case in Washington and in Florida.

Some states might instead join those that provide no coverage whatever.

The block grant is only one of the clear and present dangers to the health of poor and near-poor people, including the health of their teeth, gums and everything else in and around their mouths.

The impending repeal of the Affordable Care Act would immediately deny higher federal reimbursement rates to the 31 states and the District of Columbia that have expanded their Medicaid programs.

The repeal, in and of itself, would free them to shrink or eliminate dental health benefits for the newly-eligible children they enrolled because they’d no longer have to provide the essential health benefits the ACA specified.

This would also be true for most other insurance plans, unless state regulations required them because the same EHB requirements apply. And if, as predicted, premiums soar, one could expect plans to drop dental care or, at least, radically cut back coverage.

Some of you may recall the boy who died from a brain infection because his mother couldn’t find a dentist to treat him in time—this for wont of Medicaid. We might have more such cases, with or without it.

We’d almost surely have more low-income adults toothless (and not only temporarily) and more dead too because they couldn’t afford dental care—or related medications.

I know this seems a worst case scenario and perhaps an unwarranted leap from a singular problem to a vast array. But when we think about what will happen in the aftermath of health care “reforms,” we need get beyond the numbers, as important as they are.

Price objects to our government programs because they get between doctors and their patients. But, in fact, people who should be patients won’t be.

And when we think of them, we shouldn’t forgot those who need dental care because, as one dentist said, “the mouth and the head are connected to the rest of the body.”


Devastating Effects of Affordable Care Act Repeal

January 5, 2017

The Urban Institute puts some hard numbers on what will happen if the Republicans in Congress dismantle the Affordable Care Act. They’re shocking.

An estimated 53.5 million people would have no health insurance in 2021. That’s more than double the number who’d have no coverage if the ACA were intact.

Coverage would shrink most for low-income people enrolled in Medicaid, presumably because states would no longer receive funds to cover most of the costs of people who became eligible when they expanded their programs.

They’d be hard put to make up the loss and so would probably set lower limits on income eligibility, cut back on services covered and/or further reduce their reimbursements to healthcare providers.

Looking only at the first of these cost-savers, the Institute estimates that 14.5 million fewer children and working-age adults would have coverage under Medicaid.

The Institute’s estimates do not include the results of converting Medicaid to a block grant, as lead Congressional Republicans—and our incoming President—favor.

His choice for Secretary of Health of Human Services included one in the budget plan he produced while Chairman of the House Budget Committee. It would have cut federal Medicaid spending by a whopping $1 trillion over the next 10 years.

No way that state and local governments could compensate for losses so great. The crunch, however, could well be larger.

An economic downturn (likely) would cause job losses and so make more people income-eligible, even with lower thresholds. The federal government would no longer pick up its share, as it does under the current system.

The Center on Budget and Policy Priorities used the Institute’s data to estimate state-level losses. Here’s what we learn about the District of Columbia.

In 2019, 32,000 fewer residents would have health insurance if Congress repeals the ACA. This, like the nationwide total, is more than double the number who’d otherwise no coverage.

Nearly 23,500 more residents have gained affordable health insurance through Medicaid since 2013. Many would lose this coverage unless the District used its own funds to make up for the federal funds that would no longer pay most of the costs for the newly eligible. That would require a total of $1.7 billion between 2019 and 2028.

The District would also lose $85 million in funding for its health insurance marketplace. And residents who now have insurance through the marketplace would immediately lose the tax credits that subsidize their costs.

The Center doesn’t estimate how much more they’d have to pay to retain the coverage they have now. It does, however, say that the credits cover 73% of monthly premiums nationwide. Faced with that much more out of pocket, many lower-income residents would presumably forgo insurance.

In short, repeal of the ACA will have devastating effects on low and moderate-income District residents, as it will on virtually everyone but the very well-off nationwide.

Millionaires would, in fact, get tax cuts bigger than the total average income of families in the bottom two-fifths of the income scale. The very wealthiest would get cuts averaging $260,630.

We’re given to understand that the Republican leadership has put repeal at the top of its agenda. It probably won’t, however, impose an immediate death sentence on every provision, what with not having the promised replace.

It does, however, have a bill that Republican majorities have already passed. It would eliminate the two provisions I’ve focused on here—the additional funding for states that have expanded Medicaid and the tax credits that low and moderate-income people get to subsidize the costs of plans they buy on exchanges.

Republicans also, as I’ve mentioned, have the basis for converting Medicaid into a block grant. So they could make a costly down payment on a major campaign promise.

Hard to find a hopeful note to end on. So I’ll borrow from Ron Pollack, the long-time Executive Director of Families USA, a leading advocacy organization for Americans’ healthcare needs.

“One should never underestimate the extraordinary backlash that occurs when people have something they value that’s taken away,” he says.

What remains to be seen is whether they’ll lash back forcefully enough before the affordable healthcare protections the ACA provides are taken away.