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ALDA & Associates International, Inc. Newsletter

May/June 2017

The American Health Care Act- Is It Time For Reflection Or Hysteria? by David H. Fater

After seven years of attempting to repeal the Affordable Care Act (aka “Obamacare”), the House finally passed legislation on May 4 entitled The American Health Care Act (“AHCA”) which effectively repeals and replaces Obamacare. As with original Obamacare, this was a solely partisan bill with no Democratic backing. The vote is a major victory for President Donald Trump and Speaker Paul Ryan after months of false starts and intraparty dissension but still has an uphill battle to get through the Senate in a form that will be signed into law by the President.

A series of high-profile Obamacare failures over the days leading up to the vote also appeared to tip a few more Republicans into the "yes" column. GOP leaders during their closed-door conference meeting Thursday pointed out that the last insurance company on the Iowa exchange withdrew its participation this week, leaving thousands of Americans with no choice for insurance. They pointed to Aetna's withdrawal from the Virginia exchange. And they listed assorted premium increases on exchanges across the country, including one from a mega insurance company on the Maryland exchange. Since May 4, Aetna has further announced it will withdraw from offering any exchange plans in any state.

The AHCA would slash Obamacare's taxes, phase out its generous Medicaid expansion, cut down on its tax credits and — thanks to some last-minute maneuvering to win conservative support -— allow states to opt out of many of Obamacare's protections and coverage requirements. To backers, it's a chance to throw off the regulatory yoke of the Democrat-passed law and create greater competition in health insurance. But critics, including Republican opponents, say the bill would undercut protections for the most vulnerable Americans — people with preexisting conditions who could be subject to premium spikes and reduced benefits if states opt out of the Obamacare framework. Minority Leader Nancy Pelosi even asserted that the bill would “gut” protections for patients with pre-existing conditions and being one to never shy away from melodrama, she added: “This is deadly. This is deadly”. What these critics fail to realize is that if there are no insurance programs being offered in a given state, those with preexisting conditions have no coverage by default.

As one starts to fact check the proposed legislation, it is apparent that the GOP proposal is the second health-care bill Mrs. Pelosi didn’t read. The legislation makes clear: “Nothing in this Act shall be construed as permitting health insurance issuers to limit access to health coverage for individuals with preexisting conditions.”

Other critics come from a different angle, alleging danger to grant states waivers from some Obamacare requirements. These critics maintain that as a result of the genes you were born with, you’re going to pay more for health insurance.  The legislation provides states the ability to seek waivers from some Obamacare provisions, but the law explicitly prohibits waivers on pre-existing-condition protections. In fact, in order to receive a waiver, insurers must prove it would lower or stabilize premiums, increase coverage, or expand the choice of health plans. People in waiver states who never had insurance or let their policies lapse would be guaranteed coverage, but to keep them from gaming the system (which was prevalent under Obamacare), insurers could take their health into account when determining premiums. After one year, premiums would drop to the standard rate. This is even better than the situation years ago where if an individual had a preexisting condition there was a one year waiting period before claims for that condition would be paid.

The AHCA also includes $8 billion over five years to help states with waivers to create high-risk pools to cover people with expensive illnesses. A study performed by the Kaiser Family Foundation found that 35 states had high-risk pools covering 226,000 people with $2.6 billion in claims. Some $1.4 billion was covered by the premiums these patients paid, and the states had to toss in only $1.2 billion. That’s $400 million less than would be available each year under the AHCA.  

This hardly exhausts Democratic complaints. The arguments include that Republicans had voted to impose an "age tax" because the bill would allow premiums for older Obamacare policy holders to be five times those of younger people. (Now insurers can charge older people only three times as much). Yet the older age group's health expenses are, on average, nearly five times as high. As a result, today everyone under 50 on Obamacare is paying higher premiums to subsidize the policies of those above 50 years old.

There are also claims that the Republican bill will cause 24 million people to lose their insurance. How can 24 million people lose Obamacare when only 11 million people bought the policies? Furthermore, having insurance that has lower premiums and high deductibles is tantamount to having no insurance at all because people cannot afford to access their healthcare insurance because of the significant amounts of money required to be spent to meet their high deductibles.

The Republican bill would enable more competition, expand health savings accounts and promote inexpensive catastrophic coverage. In contrast, Americans have lost plans and doctors and watched as their premiums and deductibles skyrocket. The ensuing debate in the Senate should focus on two things: First, reminding voters of Obamacare's many broken promises and second, and more importantly, offer a practical explanation of how the AHCA will improve health care. This will not be an easy task: However, the Republicans who supported the AHCA have reality on their side which should be able to overcome "hysteria".

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To explore the continuing impact the new Washington mindset  may have on your business or healthcare organization, please contact David H. Fater at dfater@alda-associates.com or Richard M. Cohen at rcohen@alda-associates.com or (877) 845-4657. 

 

 

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