When does a Congressional bill move forward but not possess much in the way of forward momentum? That will grow apparent as the American Health Care Act moves to the Senate.
With a 217-213 vote, the U.S. House on May 4 passed the American Health Care Act (AHCA), the Republican replacement for the Affordable Care Act (ACA), aka Obamacare. The AHCA drastically scales back premium subsidies for individual enrollees and restructures Medicaid funding. The close vote was due to numerous Republican moderates voting against the AHCA.
Quick passage meant the new AHCA does not have new legs. The Congressional Budget Office did not score the new bill, but any new score would be less glowing than the one issued for the bill’s previous iteration, which itself predicted a loss of coverage for 24 million Americans if passed. Unlike Congress, Senators face statewide elections, changing the calculus.
The House-approved bill has drawn near-universal opposition of healthcare lobbies. Say what you will about Obamacare – even its ardent supporters believe it needs some substantial fixes – most sectors of the healthcare market eventually signed off. So far, physicians and hospitals have been the most vocal.
To satisfy the majority’s most conservative members who wanted a full ACA repeal, the new version of the AHCA allows states to choose whether to abide by Obamacare’s essential health benefits. While most Obamacare opponents key on the maternity child requirement in all policies, essential benefits including prescription drug coverage, outpatient services, emergency services and mental health/substance abuse coverage. An insurer could cut premiums by offer plans similar to the mini-medical plans that Obamacare wiped out, giving policyholders a few doctor visits and little more.
States that opposed Obamacare would be most likely to reduce essential benefits. It would not be a stretch to see Texas, Florida or most Southeastern states drop some essential benefits. For the drug industry, the impact would vary by indication and by geography as states who opt to relax essential benefits could reshape the market conditions for a given disease. Where the ACA placed greater authority at the national level, the House-passed AHCA returns some of that power to individual states.
Another tenet of the House bill - states could also decide whether to charge higher premiums for people with pre-existing conditions higher rates. The assurances that people with pre-existing conditions would receive coverage would only apply in states that preserved guaranteed issue. Without an individual mandate, guaranteed issue only guarantees much higher rates for an entire state’s commercial market.
Those implications are stark. Charging people with pre-existing conditions higher rates would push many in that population out of the market entirely. The bill also allows states to establish risk pools for those that do, but anyone who remembers the pre-ACA risk pools knows they always fell short on funding and offered people with pre-existing conditions premium rates that few could afford. One can’t think of risk pools without immediately focusing on orphan diseases. Despite their small populations, orphan diseases’ high cost of treatment could threaten the financial reserves of these pools if they were adopted.
The House added $8 billion in risk-pool funding to draw moderates, although it is widely expected that the bill’s money for such initiatives will fall far short of actual costs for risk-pool enrollees.
Despite having their Disproportionate Share (DSH) payments restored to pre-ACA levels, hospitals will see rates of insured patients plummet and uncompensated care costs resume old levels, especially in states that expanded Medicaid. Drug prescription volumes would nosedive.
Even staunch Republicans insist the AHCA has no chance of passing the Senate in its current form. The red-state Democratic senators might be more amenable to alteration of Obamacare, as hinted by Sen. Joe Manchin (D-West Virginia). But don’t expect any of them to sign onto the AHCA.
The AHCA could be a tough vote for some Republicans, such as Nevada Sen. Dean Heller. Nevada had the nation’s highest rate of uninsured children until the ACA cut the rate in half. The state’s Medicaid enrollment more than doubled under the ACA expansion, from 332,349 in July 2013 to 641,720 in July 2016, according to Decision Resources Group’s enrollment data.
So expect much more negotiation in the Senate. If it does eventually pass, the bill that goes to President Donald Trump might not bear heavy resemblance to the one the House passed.
For more on the exchanges and healthcare, follow Bill Melville @BillMelvilleDRG
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