Extra $8 billion may push House repeal bill over the finish line, despite policy doubts
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May 03, 2017 01:00 AM

Extra $8 billion may push House repeal bill over the finish line, despite policy doubts

Harris Meyer
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    A last-minute proposal to add $8 billion in funding to help cover people with pre-existing medical conditions has boosted the efforts of House Republican leaders to win support from moderates to pass their Affordable Care Act repeal-and-replace bill.

    But both conservative and liberal health policy experts question how the new program would work, and whether it would be enough money to do the job—even combined with the $130 billion already proposed in American Health Care Act to stabilize the individual insurance market and protect people with pre-existing conditions.

    House GOP leaders hope to have enough votes to pass the bill Thursday, before members take off for a weeklong recess. As of Wednesday afternoon, they had not released full details of the amendment.

    "Eight billion dollars is not enough money," said Gail Wilensky, a Republican health policy expert who headed the Medicare program under President George H.W. Bush. "I don't think it changes the concerns people have."

    Some insurers are skeptical as well. "It's unclear what difference the amendment makes, besides leaving the funding for high-risk pools and pre-existing conditions marginally less underfunded," said Meg Murray, CEO of the Association for Community-Affiliated Plans. The additional funding "is a blip compared with the damage the bill does to the healthcare system."

    The AHCA would give states great leeway in how to use the various pots of market stabilization money. Under the bill's broad language, they could use it to establish reinsurance programs; provide direct financial assistance to consumers, insurers, and providers; fund healthcare delivery or wellness promotion programs; or set up high-risk pools to cover people with expensive medical conditions.

    High-risk pools in nearly three dozen states had a troubled history in the years before the ACA was implemented. It's estimated such pools would need $15 billion to $33 billion a year in public funding to provide adequate coverage. The AHCA funding would fall short of that. Many analysts believe reinsurance programs similar to the ACA's offer a more cost-effective approach.

    Experts also question what would happen after the $138 billion in total federal funding ran out in 2026. "Maybe states would assume those costs after 2026," said Joe Antos, a conservative health policy expert at the American Enterprise Institute. "But practical politics suggests that well before the end of the 10 years, other things would have to be done so states wouldn't be condemned to fiscal hell."

    The $8 billion proposal was offered Tuesday by Rep. Fred Upton (R-Mich.), an influential House veteran who previously had come out against the recently revised AHCA on the grounds that it "torpedoes" the ACA's protections for people with pre-existing medical conditions.

    Upton was one of many House members worried about the impact of last week's amendment to the bill. That amendment, sponsored by Rep. Tom MacArthur (R-N.J.) and backed by House ultra-conservatives, would allow states to obtain waivers from key ACA insurance rules requiring health plans to cover 10 essential benefits, barring insurers' use of pre-existing condition screening, and limiting how much insurers can vary premiums based on age.

    After House leaders accepted Upton's proposal for the additional $8 billion in funding, he and Rep. Billy Long of Missouri, who also had opposed the bill because of the pre-existing condition issue, announced they were flipping to yes votes. That's even though Upton had said a few hours earlier that "more money does not do the trick" in changing his negative view of the bill. The flip brought House leaders closer to the 217 votes they need to pass the bill, though a number of Republicans remain undecided.

    At least partly to win more political support, House Republicans previously had offered a series of provisions to fund measures to stabilize the market and protect people with various health needs and conditions. That included $100 billion from 2018 through 2026 for a "patient and state stability fund," which would require states to offer matching funds eventually reaching 50%.

    During the first two years of that program, states could participate in a federal reinsurance plan. After that, states could apply for federal funds to establish their own high-risk pools or reinsurance programs, help consumers with high premiums or deductibles, subsidize insurers and providers, or even fund direct delivery of services. The bill offers no details on how the risk pools would work or who would be eligible.

    House Republicans later added $15 billion in funding through 2026 to enhance benefits for maternity care and mental health and substance abuse treatment, which critics said would be eroded under the legislation. Next they added another $15 billion for a so-called invisible high risk pool to compensate insurers that signed up sicker members.

    "The statutory language doesn't specify in any detail how this money is spent," said Edwin Park, vice president for health policy at the liberal Center on Budget and Policy Priorities. "This is truly a slush fund that is trying to deal with the wide array of market problems created by the House bill, without ensuring that those funds are spent as intended."

    States would face a big challenge, Antos said. "They'll look and ask, 'Exactly how do we do this?' You don't want to be the guinea pig that tries it out first."

    It would be better if Congress consolidated the various market stabilization provisions in the House bill into a single, streamlined reinsurance program, rather than relying on high-risk pools or other mechanisms, said Joel Ario, managing partner at Manatt Health and a former HHS official in the Obama administration.

    He noted that the proposed $138 billion over 10 years is a lot more funding than the $20 billion over three years allocated for reinsurance under the ACA and could have a substantial impact on keeping premiums down.

    "This should be made into a coherent reinsurance strategy," Ario said. "Then everyone can stay in the standard insurance pool and no one with pre-existing conditions is punished by being pulled out into a separate, unequal system."

    The need for the new market stabilization and reinsurance programs would be driven at least partly by how many states sought waivers from the ACA insurance rules, thus necessitating new protections for people with pre-existing conditions.

    Larry Levitt, a senior vice president at the Kaiser Family Foundation, predicted that a large number of states would seek waivers, under pressure from insurers wanting to sell cheaper plans to healthier consumers.

    If that happens, the AHCA's various provisions for helping people with high medical costs would become crucial. Still, there's broad agreement that the additional $8 billion makes little difference, except perhaps politically.

    "It won't go very far," Ario said. "But it was enough for Upton to change his mind."

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