There are three things that are important to know about the new healthcare proposal known as The American Healthcare Act of 2017 (AHCA). First, it does not repeal Obamacare; second, it doubles down on one of the most expensive parts of the healthcare system by subsidizing the health insurance industry; and third, it does not replace Obamacare. In fact, if it is left in its current state it will eventually lead to single-payer.
The centerpiece of the bill allows states to opt-out of essential healthcare benefits such as the requirement for mental health care and maternity care. It also allows them to opt-out of the requirement that premiums be the same for people of the same age. However, there is nothing in the legislation that will lower the cost of health insurance or put pressure on the insurance companies to lower premiums and out of pocket costs. On the contrary, it makes them the most powerful player in the healthcare system able to drive costs with risk shifted to the taxpayer due to government subsidies for people with low-income and those with pre-existing conditions.
Legislators still don’t realize that having health insurance does not equal access to quality affordable healthcare. Instead of getting input from the two parties who are the most affected, the voices of doctors and patients have been silenced like The Affordable Care Act before it. How else can you explain the fact that insurance companies are given the ability to levy a 30% surcharge for one year on patients who have not had health insurance coverage for over 63 days whether or not they have a pre-existing condition. In the real world it would be called a bail out for insurance companies at the expense of patients.
Challenges with the AHCA
Under the AHCA states may opt out of limiting premium differences based on age
Under this system seniors can be charged up to 5 times more for premium payments compared to young people. The sky is the limit now – makes you wonder how much insurance companies will gouge knowing that the government will help subsidize the cost of these premiums
There will be a $15 billion fund for risk sharing to help states lower premiums
Where is this money coming from and what happens if it runs out? Will the state taxpayers have to pick up the slack?
An $8 billion fund would be set up by the government to help lower premiums for individuals with pre-existing conditions
Where is this money coming from and what happens if it runs out? Will the state taxpayers pick up the slack?
Parents can keep their children on their health care plans until age 26
The lack of healthy young people in the pool of potential customers was one of the major reasons that insurance premiums are so high under The Affordable Care Act and why it is unsustainable. This does nothing to change that.
The federal exchanges/marketplaces remain in place
Most of the marketplaces had disappeared because they have run out of money. What’s the point and how does this change anything?
Subsidies based on income would remain
However, a change in calculation would mean smaller subsidies for young people and low-income Americans. This could be exacerbated by rising premiums which could make it unaffordable.
Medicaid expansion ends in 2020
Reduces federal support for Medicaid and places caps the amount of funding it will give states. The essential benefits such as addiction and mental healthcare services are no longer mandated.
Will this mean that state taxpayers will have to pay more? More improtantly, will this mean a widening of the two-tier system that exists between patients who have commercial insurance and Medicaid?
Good things about AHCA
Removal of ACA taxes including the tax on pharmaceutical companies, the tax on certain medical devices, the tax on HSA distributions not used for medical expenses, additional Medicare tax, and a suspension of the “Cadillac tax” – 40% excise tax on high cost insurance plans offered by employers.
This will save the popular PPO plans which allow patients to see the physicians they want without needed referrals. Conceivably, it may reduce the price of health insurance, prescriptions drugs and the cost of some surgical procedures. However, we will have to wait and see if the savings will be passed along to the patient.
Increases the contribution of health savings accounts (HSAs) from $3400-$6750 for individuals and ($6550-13,100) for individuals and families respectively.
HSAs can now be used to purchase over the counter medication in addition to prescription medication.
Overall, the ACHA will conceivably raise healthcare costs for those who are older, those who have have a lower income, those with a pre-existing condition, and for taxpayers in states that opt out of providing essential benefits and community rating (require premiums to be the same for everyone of the same age.
Powerful alternative of healthcare consumerism
The ACHA is essentially a shell game shifting costs from one group to another. The government continues to make the rules of coverage and cost while it hands out subsidies that remove choice and access to patients especially those in Medicaid, individuals or family who make too much to quality for Medicaid, but struggle to afford premiums and out of pocket expenses; and seniors on a fixed income who don’t qualify for Medicaid, but can’t afford the premiums or a supplemental plan such as AARP.
Over time as this slowly rolls out, those trapped within the health insurance system will certainly be calling for the government to fix it. There will be a demand for anything to decrease the costs. As proponents have already telegraphed, there will be a call for single payer. We may be looking at the last gasp of the commercial insurance industry making money before they get rolled into the administrative infrastructure of the government as the ‘Advantage’ plans.
If the Congress really wanted to lower costs and improve healthcare delivery they could have empowered the free market medical system which would provide competitive pressure to lower costs. They could have done it while leaving Obamacare untouched.
My prescription for fixing the healthcare system
- Mandate price transparency for any healthcare related entity. (Hospitals, Independent doctors, Labs, radiology centers etc….)
- Allow health savings accounts (HSAs) to be used outside of insurance plans for any medical service/treatment that the patient wants (for example Health sharing ministries, Direct primary care (DPC), cash based practices and medical tourism).
- Allow people to put as much money as they like tax free into their individual HSA
Let it be allowed upon death to be transferred to whomever is designated.
- Make health insurance companies share in the risk for medical outcomes
If medical care is denied by the insurance companies against the guidelines set forth by
medical and specialty organizations and there is a bad outcome for the patient because of the
denial the Insurance company will be liable
If people are allowed to actually choose what works best for them and they know the true uninflated costs, there will be a movement towards affordable, quality accessible healthcare – which is what everyone wants.