Senate bill would break health care promises from Grassley and Ernst

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Iowa’s Senators Chuck Grassley and Joni Ernst say they are “continuing to carefully look through the revised health care discussion draft” released by Senate Republican leaders last week. Iowans who have called the senators’ offices are likewise hearing from staffers that Grassley and Ernst have not decided whether to support the GOP alternative to the Affordable Care Act.

I suspect Iowa’s senators would rubber-stamp any GOP “health care” bill Majority Leader Mitch McConnell brings to the floor, for several reasons:

• None of the Washington-based reporters on this beat include Grassley or Ernst on their lists of Republican senators who may not support the bill.

• Reports speculating about special deals GOP Senate leaders may offer to lock down votes don’t refer to any additional spending geared toward Iowa.

• Neither Grassley nor Ernst made time to meet with Iowa hospital leaders who lobbied against the bill on a trip to Washington last week.

• Neither Grassley nor Ernst has bucked the party line on any important Senate vote that I can recall.

For now, let’s take Iowa’s senators at their word: they are still undecided and seeking input from constituents. If Grassley and Ernst intend to keep promises they’ve been making on health care policy, they need not spend any more time deliberating. They have ample reasons to vote against the Orwellian-named Better Care Reconciliation Act (BCRA).

Non-partisan analysis indicates that if this bill becomes law, tens of millions of Americans–including hundreds of thousands of Iowans–will have worse health insurance coverage or no coverage at all.

The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) released the official cost estimate of the BRCA on June 26. Click here to read the whole horror show. Key points:

HIGHER PREMIUMS AND DEDUCTIBLES, ESPECIALLY FOR OLDER IOWANS

Grassley has repeatedly said (most recently in a form letter going out to Iowans this month) that health care policy should provide “more choice for less cost.” He told reporters in March that he was especially concerned about projected insurance premium increases for late middle-aged people.

Ernst has similarly told the public, “Iowans deserve affordable health care coverage that meets individuals’ and families’ needs.”

Haeyoun Park and Wilson Anders reported for the New York Times yesterday,

The C.B.O. estimates that average gross premiums would initially rise under the Senate bill, then drop by about 20 percent, compared with what it would be under the current law, in 2026.

This would largely be achieved by offering skimpier plans with higher deductibles, and by pricing the old and the sick out of the insurance market.

The Senate bill would make financial assistance for premiums less generous than under the current law. That means that average deductibles for the plans would be much higher. For many low- and middle-income Americans who currently receive subsidies, their share of premiums would rise.

The CBO score shows particularly large cost increases for people over 50, who (as under the House Republican bill) could be charged five times as much as younger Americans for health insurance. For example, a 64-year-old earning $56,800 a year would go from paying $6,800 per year for health insurance under current law to $20,500 annually under the Senate Republican bill.

A 21-year-old earning $26,500 per year would pay about $500 more annually for a “silver” health insurance plan under the BCRA. A 40-year-old with the same income would pay about $1,300 more per year, but a 64-year-old would pay $4,800 more ($6,500 annually under the Senate bill, compared to $1,700 under the Affordable Care Act).

The AARP is pushing hard against this “age tax” in new television and radio commercials. Iowa is among the states where these ads are running.

The CBO estimated that 22 million fewer Americans would have health insurance in 2026 under the Senate Republican bill, compared to current law. People between the ages of 50 and 64 would represent a large share of the uninsured, but there would be big losses in all age groups.

FEWER IOWANS COVERED BY MEDICAID

Like the bill House Republicans approved, the BCRA would fundamentally change Medicaid, with devastating consequences for people with lower incomes, people with disabilities, and those in nursing homes. Dylan Matthews explained at Vox,

The BCRA would effectively end the Medicaid expansion starting in 2021. Under current law, the federal government initially paid 100 percent of costs of Medicaid expansion beneficiaries, a percentage set to wind down to 90 percent in 2020 and stay at that level permanently. Under the Senate bill, the federal government would gradually wind down that percentage to the states’ normal matching rates for Medicaid — rates that are as low as 50 percent in certain states. […]

Replacing Medicaid expansion for poor people are new tax credits that are much less generous than those under current law. Under Obamacare, tax credits were tethered to the cost of plans covering 70 percent of medical expenses. The BCRA would reduce that amount to plans that cover 58 percent. That means higher deductibles, copayments, and other means of cost sharing to make up for lower premiums than a more generous plan would have.

That’s particularly bad news for the people being kicked off Medicaid, who would get tax credits but would be forced to use them to buy coverage that could cost them thousands of additional dollars per year. Medicaid, by contrast, has minimal or no premiums, deductibles, or copays, depending on the state. […]

Moreover, the changes to credits are also bad news for low-income people already on the exchanges, who would get smaller credits for worse coverage.

The CBO expects that because of these issues, few low-income people will even bother to use the tax credits to buy insurance. “The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income,” the office writes. “As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.”

Matt Broaddus and Edwin Park wrote for the Center on Budget and Policy Priorities,

Under the Senate bill, the federal share of expenditures for expansion adults would fall from the current 90 percent to 85 percent in 2021, 80 percent in 2022, 75 percent in 2023, and then to states’ standard Medicaid matching rates (which average 57 percent across all states) in 2024. By 2024, states that wanted to continue covering low-income adults in expanded Medicaid coverage would have to pay 2.8 to 5 times their current-law cost for each enrollee. […]

On top of that, the Senate plan — like the House bill — would impose a per capita cap on Medicaid, including the Medicaid expansion, and would limit growth in federal funding per beneficiary even more severely than the House plan, shifting additional expansion costs to states. These two policies combined would starve states of the federal resources needed to continue covering low-income adults. […]

Few states could generate the extra funding needed to keep their expansions going — by raising taxes or cutting other parts of their budgets, like education — since the federal cuts, and required state increases, would rise each year. Thus, even non-trigger states would likely end their expansions in 2021 or soon after. The 11 million low-income adults covered by the Medicaid expansion who would have been ineligible for Medicaid, and likely uninsured, under pre-ACA rules would be in severe jeopardy of once again going without quality, affordable health coverage.

The CBO projects that federal spending on Medicaid would drop by $772 billion over the next decade, compared to $880 billion in the House bill. But paradoxically, the CBO anticipates that coverage losses would be even higher under the Senate bill (15 million fewer covered by Medicaid in 2026) than under the House bill (14 million fewer covered by Medicaid in 2026).

One figure from the CBO report:

Sara Rosenbaum provided a detailed comparison of the Senate and House provisions on Medicaid. This Iowa Fiscal Partnership analysis of the House bill provisions applies equally to the Senate bill:

Probably the most important danger with the AHCA per-capita cap is the “demographic time bomb.” The population is aging, in Iowa and throughout the country. As the Baby Boomer bubble works its way through the elderly population, seniors will become older on average. The share of Iowa’s seniors who are age 75 or older is expected to rise from 42.6 percent in 2020 to 47.3 percent by 2030, and then 55.7 percent by 2040.[9] This is significant because Medicaid spending per capita is much higher for the “old old” than for the “young old.” Average Medicaid spending per recipient for those age 85 or older is 2.5 times the amount spent per recipient age 65 to 74.[10]

Growth in the per capita Medicaid reimbursement for the elderly population will be based forever on Iowa’s level of spending for all seniors as of 2016, before the boom in Medicaid’s aging population. The rising cost of Medicaid for seniors, as they become on average older and sicker, will not be matched by the federal government. That will stick the state of Iowa with higher costs, cause cuts in benefits to seniors, or both. One program that could very well end up on the chopping block is in-home health care, an important program that allows seniors to receive needed services while remaining at home, rather than in a nursing home, which is more expensive.

None of this is a fluke, or an unintended consequence of the AHCA. To the proponents, it is a measure of the success of that legislation — to shift costs and risk from the federal government to the states, health-care providers, and to the low-income populations served by Medicaid. The states will have to make the hard choices — who gets served, who gets cut. The elderly and the sick will suffer the consequences.

The Center on Budget and Policy Priorities estimates that it would become 53 percent more expensive for Iowa to maintain our state’s version of the Medicaid expansion under the Senate bill. Almost certainly, our state budget could not afford that extra expense. Rolling back Medicaid expansion here would leave around 148,000 people without coverage.

Jordan Rau reported for the New York Times on June 24 that the Republican legislation could “force retirees out of nursing homes.”

Medicaid pays for most of the 1.4 million people in nursing homes, like Ms. Jacobs. It covers 20 percent of all Americans and 40 percent of poor adults. […]

Under federal law, state Medicaid programs are required to cover nursing home care. But state officials decide how much to pay facilities, and states under budgetary pressure could decrease the amount they are willing to pay or restrict eligibility for coverage.

“The states are going to make it harder to qualify medically for needing nursing home care,” predicted Toby S. Edelman, a senior policy attorney at the Center for Medicare Advocacy. “They’d have to be more disabled before they qualify for Medicaid assistance.” […]

While most Medicaid enrollees are children, pregnant women and nonelderly adults, long-term services such as nursing homes account for 42 percent of all Medicaid spending — even though only 6 percent of Medicaid enrollees use them.

“Moms and kids aren’t where the money is,” said Damon Terzaghi, a senior director at the National Association of States United for Aging and Disabilities, a group representing state agencies that manage programs for these populations or advocate on their behalf. “If you’re going to cut that much money out, it’s going to be coming from older people and people with disabilities.”

On June 23, Ernst told Iowa reporters, “I think we do need some changes in Medicaid,” adding, “We want to make sure they have access to health care. We want to make sure they have access to quality health care.” In a form letter to Iowans who contacted Grassley’s office recently about health care, the senator says,

health care reform has to reestablish states as the main regulators of health care. All states have different demographics and healthcare needs and reform must begin with the idea that states know what’s best for their constituents. This principle also applies to Medicaid. In general, I prefer allowing states to have the option to manage Medicaid as they know best what the residents of their state need and I will work to preserve Medicaid for the most vulnerable in our society.

If Grassley and Ernst are truly concerned with preserving “access to quality health care” for “the most vulnerable in our society,” they should rule out voting for the BCRA.

NO GUARANTEE OF INDIVIDUAL HEALTH INSURANCE OPTIONS

The collapse of Iowa’s individual health insurance market has been a recurring theme in rhetoric from Grassley and Ernst on this issue, including during the past few days. Yet the CBO analysis suggests that the Senate bill would not guarantee that all Americans could purchase individual policies. From pages 17 and 18:

Nongroup coverage. On net, CBO and JCT estimate that roughly 7 million fewer people would obtain coverage in 2018 through the nongroup market under this legislation than under current law; that figure would be about 9 million in 2020 and about 7 million in 2026 (see Table 4, at the end of this document). Fewer people would enroll in the nongroup market mainly because the penalty for not having insurance would be eliminated and, starting in 2020, because the average subsidy for coverage in that market would be substantially lower for most people currently eligible for subsidies—and for some people that subsidy would be eliminated.

Market Stability. In CBO and JCT’s assessment, a small fraction of the population resides in areas in which—because of this legislation, for at least for some of the years after 2019—no insurers would participate in the nongroup market or insurance would be offered only with very high premiums. In the first case, the elimination of cost-sharing subsidies for low-income people and the greater share of income that older people pay toward premiums would shrink the demand for insurance compared with that under current law, and it would probably not be profitable for insurers to bear the fixed costs of operating in some markets. In the second case, because the total subsidy per person under the legislation would be substantially smaller than under current law, the fraction of purchasers who are subsidized would fall. Among the unsubsidized population, less healthy people are more likely to purchase insurance—and the higher costs for them would put upward pressure on premiums. As unsubsidized people became a greater fraction of the purchasers, that pressure would be greater and could result in very high premiums in some markets—mainly during the second half of the coming decade, when much less federal funding would be provided to reduce premiums.

DIRE CONSEQUENCES FOR HOSPITALS

Kirk Norris of the Iowa Hospital Association has flagged other problems with the Senate health care bill. From the latest Des Moines Register story by Tony Leys:

Norris said rural hospitals tend to be the most dependent on Medicaid, which covers 10 percent to 20 percent of their patients. If Medicaid is cut as much as predicted, he said, small hospitals are likely to drop money-losing services, starting with mental-health and addiction-treatment programs.

“If you think we have a behavioral health service shortage now, just wait,” Norris said in an interview.

Norris said he doesn’t understand who would benefit from the bill. There has been a dearth of vocal defenders, outside of the members of Congress touting it, he said. “I haven’t heard anybody say they support this bill,” he said. “Not anybody.”

Earlier this month, Chelsea Keenan reported for the Cedar Rapids Gazette on similar concerns expressed by Iowa hospital leaders.

Contact information for all the Grassley and Ernst offices can be found at the end of this post. Although I’m not optimistic they will listen to feedback from constituents, a phone call is still worth a few minutes of your time. Iowa’s senators may jump on the bandwagon of opponents if they sense leaders can’t get to 50 votes on this terrible bill.

I will update this post as needed.

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