Health Care Reform: What Can Payers Expect from Washington?

A year ago, when questioned if it was possible for the ACA to be repealed, Norm Smith, president of Viewpoint Consulting, Inc, told First Report Managed Care that “The United States has never been good at taking away benefits.” 

A year later, President Donald Trump—who campaigned on an immediate repeal of the ACA—and House Speaker Paul Ryan—the architect of the replacement bill, known as the American Health Care Act (AHCA)—are beginning to understand that repealing, or even replacing, is a lot more complicated than they had anticipated. They might have been better served if they read Mr Smith’s analysis before embarking on their journey within the president’s first months in office. At the very least, they may have had a better sense of what they were getting into. 

Mr Smith told us recently that while America’s health care system is complicated, understanding the challenges of repealing the ACA is not. 

“Every time an ‘entitlement’ is legislated into law, it creates a constituency,” Mr Smith said. “That constituency then gets a support group, an advocacy group, or an industry group that creates a media storm when someone proposes to take it away.”  He added that when you mix in socioeconomic factors, the viral nature of communication today, Washington consultants, and interest money, “what you get is nothing done.”

Even the House passage of the AHCA in early May by a razor-thin margin—while perhaps a moral victory for the GOP—is interpreted by some, including Mr Smith, as the practical equivalent of accomplishing little to nothing. 

Majority Rules?

The drawn out process by Congressional Republicans to keep their repeal pledge is perhaps not surprising, given that angry constituents filled their offices and town halls after the Congressional Budget Office reported that the bill would strip coverage options from poor and sick patients. Additionally, they faced opposition from many major patient advocacy groups, including the AARP, AMA, and AHA. 

The GOP even harmed their own efforts in the first attempt to bring the AHCA to a full House vote in March, with hardline conservatives unwilling to go along after claiming that early versions of the bill were nothing more than ‘Obamacare Light.’ Conversely, placating to the far-right made the bill passable in the house but unpopular. 

“The House vote moved everything to the right, but in the process it created an unpassable bill,” Mr Smith said. “The Administration is jumping up and down, but it still needs to pass the Senate.”

Furthermore, according to reports, the Senate could take months before a vote because they are said to be crafting their own version of the AHCA as a result of the bill’s haphazard construction in the House. 

Meanwhile, a host of questions remain, including why were not both parties better prepared to take on health care reform, what comes next for insurers who face crucial deadlines regarding their participation in the beleaguered ACA exchanges, and are there short-term fixes that can prop up the ACA marketplace this year?

Breaking Down the Bill

Gary Owens, MD, suggested that the AHCA’s challenges are “a classic case of over promising during the campaign without really thinking through the details of what had to be done to fix the problem.” 

Despite the fact that the GOP finally controlled the executive and legislative branches, they faced opposition from within their moderate- and far-right ranks, resulting in many Republican defectors.

 “Political alignment was not in place around a clear plan to make something happen,” offered F Randy Vogenberg, PhD, RPh, principal at the Institute for Integrated Healthcare. 

“The AHCA as passed does not meet the goal of improved access, and will not lead to better health, smarter spending, or better care,” Barney Spivack, MD, a medical director and First Report Managed Care Editorial Board member, added. 

This could be the result of the bill being repeatedly amended and remanded. Republicans finally came to a compromise after Tom MacArthur (R-New Jersey) offered the lynchpin amendment to the AHCA. His amendment reinstates the ACA’s Essential Health Benefits provision, which had been stripped out in the original AHCA bill. Additionally, these provisions will remain under the House iteration:

• Prohibition on denying coverage due to preexisting medical conditions 

• Prohibition on discrimination based on gender 

• Guaranteed issue of coverage to all applicants 

• Guaranteed renewability of coverage 

• Coverage of dependents on parents’ plan up to age 26 

• Community rating rules, except for limited waivers 

Each of these provisions mollified moderates. Meanwhile, hardline conservatives were pleased by the inclusion of  “limited waivers.” These will give states the option to opt out of federal standards in the interest of lowering premium costs and expanding the number of insured individuals. Specifically, states could seek waivers for essential health benefits, and some community rating rules. 

Opponents of the House bill believe it will end up discriminating against those with preexisting conditions. Proponents point out that insurance companies could not get a waiver on the health status category unless they offer access to a high-risk pool. Additionally, payers could charge more to those with preexisting conditions only if the individual has a more than 2-month coverage lapse. Supporters argue that this prevents people from gaming the system by signing up for coverage only when they might need it. 

Additionally, states must attest that the purpose of their requested waiver will reduce premium costs, increase the number of persons with health care coverage, or advance another benefit to the public interest in the state.

How Might The Senate’s Version Look?

“The House’s state waiver has some chance in the Senate,” Mr Smith said. “It’s a painless way to salve conservatives.” He added that he believes that the requirements for continuous coverage will be defined the same way it has been under the ACA. “There will be a long list of [stipulations put in place by the Senate] for losing coverage. You’ll have to purposely not take insurance for a number of months before you are charged with higher rates.” 

Dr Vogenberg concurred that “continuous coverage and preexisting conditions are already established [under the House bill], and this is not likely to change much in the Senate’s version.” 

He also predicted that as states are given increased responsibility to run Medicaid with less federal oversight and funding, they will institute work requirements for Medicaid recipients who can and are able to work as a way to stretch limited dollars. Mr Smith agreed, but said he believes its impact will be restricted to unmarried people who stop looking for work. 

Meanwhile, health service researcher Michael S Sinha, MD, JD, MPH, said he worries that what emerges from the Senate will be a setback for women’s health, given that no women were named to the bill’s working committee.  He also explained that because the two moderate sponsors of the Patient Freedom Act, Bill Cassidy and Susan Collins, were left off the working group, the Senate seems less apt to consider middle-of-the-road provisions. 

Dr Spivack said he believes one thing is certain: “What emerges from the Senate will look greatly different from the [House version of the] AHCA.” It will go back to the House to be reworked and, he noted, “may have even less of a chance of gaining approval from the vastly different factions in the House.”

Moreover, he added, “the whole effort will be impacted by other issues swirling around Trump, who fewer Republicans may be beholden to now.” This is especially true after members of Congress went home for the latest recess and heard more negative feedback from their constituents. 

With the 2018 midterm election campaign season on the horizon, self-preservation will very likely impact the bill that ends up on President Trump’s desk—if it ends up there at all. 

Where to From Here? 

So where does all this leave payers, who in April were slated to start determining whether or not to participate in the ACA exchanges in 2018? Some states are pushing deadlines back, and final plans are not due until summer. Still, in the current environment, payers seemingly have to become fortune-tellers in order to make business decisions. 

Dr Owens stated quite simply that insurers “will make business decisions, based on the potential for profitability. Those with more experience managing low-income, high-risk populations seem to do well” in any kind of environment. “They might continue to do well, and even grow into other markets.” 

Dr Spivack said he sees payers continuing to pull back from the exchanges. “Rather than exchange participation, it seems the more profitable and predictable channel will be Medicare Advantage.”

Dr Vogenberg suggested looking to the past to determine what payers might do now. “Similar to what happened after passage of ACA, the marketplace is at a standstill.” There will likely be “no dramatic changes by payers or purchasers in the commercial market.” 

Payers are probably going to face another year of losses on the exchanges, noted Mr Smith. But he suggested that the real change could come in 2019.

“Particularly if the midterm election goes badly for Republicans, [insurers will] put their foot down in a more strategic manner via the AHIP,” he said.

Most of our experts said they believe consumers will face further rate increases, though they admit it’s difficult to know for sure. “It’s likely that rates will go up based on past actuarial moves,” offered Dr Vogenberg. 

“Increases will vary by state,” Mr Smith said. “They will be higher in noncompetitive states, and lower where there are more than two competitors. Payers will ask for a lot, then settle for high single digits.”