GOP ACA change bill may favor commercial health

The new Republican American Health Care Act draft could give health insurers an incentive to like their individual commercial health units a little more and their Medicaid units less.

A LifeHealthPro.com analysis suggests that the newly released draft could keep total support for individual commercial health coverage users about the same over the next 10 years but cut federal Medicaid funding by about 11 percent to 14 percent.

The House Republicans today posted a new, searchable version of the AHCA bill. A copy of the new, searchable text is available here.

Related: The big new House Republican ACA change draft is here

Like the version of the AHCA released Monday, which was not searchable, and an earlier version of the proposal leaked in February, the new version is a bill that would change Affordable Care Act spending and revenue-raising provisions, not a bill that would repeal and replace most or all of the ACA.

Drafters used that approach because Republicans hold just 52 seats in the Senate. Getting an ordinary bill through the Senate traditionally takes 60 votes. Senate traditions let a budget measure get through with just 51 votes.

The current AHCA verbiage is just a draft.

Sen. Rob Portman, R-Ohio, has joined with three other Republican senators to argue that the draft would cut Medicaid funding too much.

“We believe Medicaid needs to be reformed, but reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals,” Portman wrote to Senate Majority Leader Mitch McConnell.

Shelley Moore Capito of West Virginia, Cory Gardner of Colorado and Lisa Murkowski of Alaska also signed the letter.

Rep. Mark Walker, R-N.C., the leader of the House Republican Study Committee, has opposed similar proposals in the past, arguing that they looked too much like Obamacare. At press time, he had not yet weighed in on the new draft.

But, if the new AHCA draft took effect as is, it would eliminate the ACA individual and employer “shared responsibility” provisions, or coverage mandates.

The draft also would:

• • • • Eliminate the need for Medicaid coverage to meet ACA essential health benefits package requirements, and the need for major medical plans to cover about 60 percent of the actuarial value of the EHB package.

      • Let insurers sell coverage outside their state of domicile.

      • Widen the gap between what insurers charge the youngest adult enrollees and the oldest enrollees.

      • Replace the current income-based ACA exchange plan premium tax credits with age-based premium tax credits that could be used to buy coverage inside or outside the exchange system, with credit amounts ranging from $2,000 for people younger than 30 to $4,000 for people ages 60 or older.

      • Change the federal Medicaid funding formula.

      • Delay the onset of the ACA “Cadillac plan tax,” or 40 percent excise tax on high-cost employer-provided health benefits.

      • Kill the health insurer tax.

Old versions of the AHCA draft would have provided funding for grants states could spend on market stabilization programs, to replace the existing ACA risk corridors program, and that ACA reinsurance program that expired at the end of 2016. The Patient and State Stability Fund could provide $100 billion in grant funding through 2026.

The new AHCA draft might lead some insurers to rethink their strategies. (Image: Thinkstock)

Possible effects

Crude calculations suggest that the AHCA changes could hit Medicaid plans harder than commercial coverage issuers.

Medicaid

Government figures show that Medicaid and the Children’s Health Insurance Program now provide coverage for about 72 million people.

The AHCA draft could cut Medicaid spending by $560 billion over 10 years, according to Richard Fiesta, executive director of the Alliance for Retired Americans, a group that opposes the proposal.

The latest government National Health Expenditure projections show the federal government will account for $362 billion of Medicaid’s $567 billion in 2017 spending, and is on track to contribute about $4 trillion of the $7 trillion to be spent on the program through 2025.

Analysts at Standard & Poor’s predict the proposal will cut Medicaid enrollment by 4 million to 6 million. That would reduce total Medicaid enrollment by 8 percent.

But it’s possible that the cuts could be good for insurers with strong managed Medicaid units. Michael Neidorff, chairman of St. Louis-based Centene Corp., said in February that tight Medicaid budgets could create opportunities for carriers that know how to keep costs down.