The Congressional Budget Office, a non-partisan federal government agency that provides economic and budget information to Congress, recently released a report on the American Health Care Act. The AHCA is the Republican replacement for the Affordable Care Act, also known as Obamacare, which the Trump administration is determined to repeal. The CBO report claims that as many as 24 million people will lose health coverage if the AHCA (“Trumpcare”) is passed into law. However, a review of the CBO findings indicates that a large number of those who will “lose” healthcare may actually choose not to purchase coverage once the individual mandate is eliminated. How many people will lose insurance under Trumpcare? That depends on how you define a loss in coverage.
In the report, the CBO states that most of the uncovered Americans would choose not to have health insurance because they will no longer be required to do so. The claim is that people only have health insurance under the ACA because the law required it. Some experts are saying that it is irresponsible to include these numbers in the report because people who chose not to keep health insurance are not actually “losing” coverage. Instead, they are simply choosing not to be insured. Republican leaders say that it isn’t the role of the federal government to force people into purchasing goods and services they don’t want and that doing so creates a “nanny state.”
In order to keep people from dropping health insurance, one suggestion is to reintroduce the “bare-bones” plans that were available before the ACA. These were plans that offered minimum coverage at low rates. Critics labeled these policies “junk health insurance” or “skeleton policies,” claiming that they were more dangerous to consumers than beneficial. Too often, these plans had so little coverage, it was as if the enrollee had no insurance at all, leading to situations in which people who became seriously ill had thousands of dollars in unpaid medical bills.
However, the premiums for bare-bones policies were extremely low, and many people chose these types of plans to have some sort of coverage. There are reports that the elimination of this type of coverage led to higher than expected premiums under the ACA over the past few years. Insurance companies typically dislike these plans as they create competition in the marketplace, but supporters argue that Congress should not base healthcare laws on what benefits insurance companies.
Consumers who elect to drop healthcare coverage are not the only ones who will lose coverage according to the CBO. Under the ACA, 31 states and the District of Columbia expanded Medicaid coverage. Prior to the expansion, state Medicaid programs targeted specific populations of poor people: pregnant women, children, the elderly and the disabled. Thanks to expanded guidelines under Obamacare, anyone with an annual household income of less than 138 percent of the federal poverty level, around $16,000 per year, is eligible in states that opted for expansion.
Republicans argue that expansion led to significant abuse and mismanagement as healthy people took advantage of free or low-cost insurance. Under the GOP plan, expansion would end as of 2020. Anyone enrolled in an expanded Medicaid program prior to January 1, 2020 would be allowed to remain on the program as long as there was not a lapse in coverage. Anyone who became ineligible under the expansion could not reapply for Medicaid under the AHCA, leading the CBO to claim that millions will lose Medicaid coverage over the next 10 years.
Seema Verma Plan
In 2006, policy consultant Seema Verma worked on a team searching for better government-funded health insurance in Indiana. She presented a proposal to then-Governor Mitch Daniels, who dismissed the initial plan. A few years later, Verma returned with a plan for a Medicaid alternative. The plan included a health savings account for poor people that required Medicaid recipients to contribute to their own healthcare, even if it was just a few dollars. The program eventually became the Healthy Indiana plan, which had positive outcomes.
Participants were more likely to seek generic drugs and to ask for second opinions. They were also less likely to go to emergency rooms because they were charged $25 for non-emergency visits. The theory is that poor people are good consumers and by allowing them to have choices in their healthcare, they choose wisely. This is not the case when all care is free, leading to increased medical costs across the board. Seema is now the administrator of the Centers for Medicare and Medicaid Services under the Trump administration, taking a leading role in Medicaid reform. Her experience in reforming Indiana’s Medicaid program may be beneficial at the federal level.
Many of the states that passed legislation to expand Medicaid also included language that would allow the state to cut back should the federal government repeal the expansion. In those states, such as New Jersey, the expansion could simply be eliminated and Medicaid returned to its former eligibility requirements. However, in other states, there is not language that allows them to change eligibility at this time. This means that the state will bear the burden of funding Medicaid recipients who were eligible under the ACA but not eligible under Trumpcare. This could mean an added burden to state budgets so that poor people remain insured unless a plan similar to the Indiana program is implemented.
Voluntary vs. Involuntary Loss
The GOP faces an uphill battle in passing the AHCA as written. Democrats are firmly against the bill, claiming that too many people will lose insurance under the proposal. Even some Republicans have expressed concern that the bill will leave too many uninsured, and lawmakers on both sides of the aisle have said that the AHCA will have trouble succeeding in the Senate.
Supporters of the bill claim that the CBO is using predictions that either will not come to pass or should not be considered when determining long-term effectiveness. They also say that it’s not the job of the government to force people to purchase healthcare and that consumers who choose not to have health insurance should have the right not to do so. Therefore, those numbers should not be included in the CBO report. Republicans claim that job creation and a growing economy is the key to reducing the number of people on Medicaid, not adding additional people to the program. They believe that by 2020, job growth will be significant enough that there will be fewer people dependent on government assistance for healthcare.