Saturday, February 25, 2017

GOP Health Care Reform Plan a Mind Numbing, Convoluted, Confusing and Complex maze of Regulations. Can't wait to see the Insurer policies small print....

Besides being a great look at the Republican health insurance reform plan (still waiting for the CBO estimate), imagine trying to navigate this system below for you and every family member...every year, throughout the year. Don't forget to read through the insurers small print policy exceptions that don't require minimum coverage. Who's got this kind of time or expertise?

And Republicans hate regulation?

High risk pools are paid for twice by the public, once in tax dollars and again in premium increases for the insurer contribution. Beautiful. We would hate to have insurers find themselves stuck with sick people.

My plan beats this; every doctor is your doctor; every hospital is your hospital; no copays or deductibles. Yes, it's single payer/Medicare for all. But you be the can take my plan, or navigate the maze of regulations listed below, that will continually change over time:

What The Bill Does Not Do

First, it must be emphasized what the bill does not do. It does not repeal the ACA. Indeed, it only repeals particular sections of the ACA, such as its taxes, mandates, Medicaid expansion and subsidies. And some of these it only does after 2019. It does not appear to repeal most of the ACA’s insurance reforms, such as the requirements that health plans
  • cover preexisting conditions;
  • not health status underwrite; meet actuarial value requirements;
  • cover adult children up to age 26;
  • not discriminate on the basis of race, nationality, disability or sex;
  • cap out-of-pocket expenditures; and
  • not impose lifetime or annual limits.
It does not touch the ACA’s Medicare reforms or cuts. It is replace, but not repeal.


Much of the bill is focused on changes to the Medicaid program. It ends the ACA expansion for low-income adults and essential health benefit requirements as of the end of 2019, as well as the ACA’s presumptive Medicaid eligibility provisions and disproportionate share hospital payment reductions. The bill establishes a per-capita cap approach to funding state Medicaid programs beginning with fiscal year 2019. The per-capita cap provisions are lengthy and complicated and I will leave it to others more expert on Medicaid than myself to explain them.
Federal payments to the states through Medicaid or any other program for Planned Parenthood would be prohibited.

High-Risk Pools: The State Innovation Grant And Stability Program

The bill would establish a “State Innovation Grant and Stability Program,” beginning in 2018. States could use funding from this program for a variety of initiatives such as high risk pools, reinsurance programs, programs to subsidize providers for direct provision of care or to reduce cost sharing, or programs to promote access to preventive services. Beginning in 2020, states would have to apply for the funding, but an application would be deemed approved within 60 days of submission if not acted on and, once an application is approved, it would be deemed reapproved each year through 2026. It is not wholly clear how the funds would be distributed before 2020, but apparently no application is necessary.
The bill would appropriate $15 billion for the program for calendar years 2018 and 2019, and $10 billion a year for the following calendar years through 2026. The money would be allocated among the states using a formula that is based for 2018 and 2019 on relative marketplace participation and premium costs for each state, and thereafter based on the percentage of residents of states that are below some income threshold or uninsured. (The formula for 2018 and 2019 might favor states that did not expand Medicaid because individuals with incomes between 100 and 138 percent of the poverty level would be in the exchanges rather than on Medicaid). States would have to match the federal contributions at a rate initially set at 7 percent for 2020, increasing to 50 percent by 2026.

Continuous Coverage Requirement

A continuous coverage requirement in the individual and small group markets would begin with plan year 2019, or 2018 for special enrollments. Premiums would increase by 30 percent for twelve months for individuals who had a gap in creditable coverage of at least 63 continuous days during the preceding 12 months (or, for people leaving dependent coverage, who did not enroll during the first available open enrollment period). The legislation does not seem to allow preexisting conditions exclusions or health status underwriting, rather only imposing a premium penalty on people who do not maintain continuous coverage.
The bill would end the ACA’s essential health benefit definition as of the end of 2019 and allow states to define EHB beginning with plan year 2020. Premiums would be allowed to vary by a 5 to 1 ratio, rather than 3 to 1 as under the ACA. Verification of special enrollment period eligibility would be enhanced. The bill would extend indefinitely ACA non-compliant individual and small group plans that were allowed to continue under the 2013 transitional plan guidance, recently extended; it also apparently allows insurers to offer these plans to new enrollees and not just to renew them for current enrollees.

Cost-Sharing Reduction Payments And Tax Credits

The bill would end the ACA’s cost-sharing reduction payments at the end of 2019. It would extend the ACA’s premium tax credit provisions through the end of 2019 but modifying the tax credits to:
  • Allow their use for ACA-compliant off-exchange plans after 2017. Credits for off-exchange coverage could only be claimed at tax filing time and not as advance tax credits.
  • Allow their use for catastrophic plans for which individuals were otherwise eligible.
  • Prohibit their use to cover premiums of plans that cover non-Hyde amendment abortions—abortions for which federal funding in other programs would be prohibited by the Hyde amendment—although insurers could sell separate abortion coverage).
  • Change the formula for determining the percentage of income that individuals must spend on premiums before receiving tax credits to decrease the percentage for younger individuals and increase it for older individuals.
The bill would create a new age-adjusted, fixed-dollar tax credit beginning with 2020 amounting to
  • $2,000 for individuals under 30;
  • $2,500 for those ages 30 to 40;
  • $3,000 for those ages 40 to 50;
  • $3,500 for those ages 50 to 60; and
  • $4,000 for those over 60.
The total tax credit for a tax family would be capped at $14,000 or the amount available for the five oldest individuals in the family. The tax credit would only be available for individual coverage (including, apparently, short-term coverage but not excepted benefits) or unsubsidized COBRA continuation coverage that does not cover non-Hyde amendment abortions. It would not be available to persons eligible for employer coverage (regardless of affordability or adequacy) or a government program. It also would only be available to U.S. citizens or nationals or a limited class of lawful aliens.
The tax credits would be adjusted for inflation. It would be advanceable, payable to health insurers on a monthly basis. Persons whose tax credit exceeded the cost of their coverage could have the excess deposited in their HSA. However, most older people, and even younger people in some parts of the country, would have to supplement the tax credits substantially out of their own pockets to afford coverage. Older enrollees could face premiums five times as high as younger enrollees, but only receive tax credits twice as high. Insurers would be required to report to the IRS and to covered individuals information on advance payments received.

Repeal Of Individual Mandate Penalty And ACA Tax Provisions

The bill would zero out the penalties for the individual and employer mandate. It would repeal the taxes imposed by the ACA, including:
  • The Cadillac plan tax.
  • The exclusion of coverage for over-the-counter medication from tax-subsidized accounts such as HSAs.
  • Limitations on contributions to flexible spending accounts.
  • The tax on prescription medications.
  • The medical device tax.
  • The health insurance tax.
  • The tanning tax.
  • The Medicare surcharge and Medicare tax on unearned income for high-income taxpayers. as
The bill would also allow deductibility of medical expenses above 7.5 percent of income instead of 10 percent as under the ACA. The penalty imposed on expenditure of HSA funds for non-medical purposes would be reduced from 20 to 10 percent.
The taxes are repealed as of the end of 2016, except for the medical device tax, which extends through 2017. In 2015, the CBO estimated that the repeal of these taxes would result in the loss of over a trillion dollars in revenue over ten years. The repeal of the Medicare taxes would provide $2.6 billion in tax cuts per year for the 400 highest income taxpayers, $7 million each.

Limit On The Employer-Sponsored Insurance Tax Exclusion

The bill would add to the taxable income of employees, beginning after 2019, the cost of employer group coverage that exceeds the “annual limitation.” For 2019, that amount would equal the 90th percentile cost for premiums for self-only employer coverage; the amount would be adjusted for inflation thereafter based on consumer price index (CPI) increases plus 2 percentage points. (This means that the employer-sponsored coverage subject to tax could ratchet up quite quickly if health care cost inflation exceeds this amount) Employer contributions to HSAs, MSAs, long-term care, and oral or vision coverage would not be subject to the tax; neither would coverage for law-enforcement personnel, firefighters, or emergency responders. The deduction for coverage for self-employed persons would be subject to similar limits.

Liberalization Of Tax Benefits From HSA Contributions

The amount that taxpayers could shelter from taxes in annual HSA contributions would be increased to the amount of the HSA out-of-pocket limit, more than doubling the current limit. HSA requirements would also be loosened to allow both spouses to make catch-up contributions to the same health savings account and for HSA coverage for medical expenses incurred before the establishment of an HSA.

Other Provisions

The bill would end the Prevention and Public Health Fund as of 2018 and rescind all unobligated funds after that date. It would provide $285 million for FY 2018 for community health centers, far less than the ACA provided initially. The bill would also repeal the small business tax credit after 2019.
Further limits would be placed on funding of non-Hyde amendment abortions in certain benefits and programs.

Future Hurdles And The Funding Question

As stated at the outset, these provisions may very well change before we see a final bill; indeed, they may have changed already. It is also hard to see how some of these provisions, such as the changes in essential health benefits or age rating, would survive budget reconciliation limitations in the Senate. It is also likely that some provisions of the bill would be rejected by House conservatives or moderate Senate Republicans, and most of the bill would certainly be rejected by Democrats.
The biggest question posed by the draft is how Congress proposes funding it. The bill would give up all of the taxes that funded the ACA, yet would provide tax credits, albeit less generous than the ACA’s, to millions of additional individuals. The only real revenue in the bill is the tax on generous employer plans. It simply does not seem to add up, but the CBO will soon tell us whether it does or not.

1 comment:

  1. You covered this better than any news source I have read. Thank you Curmudgeon. It does show the need for single payer that is for sure.