What the Senate ACA Repeal Plan Means for PA
A draft of the U.S. Senate GOP plan to repeal and replace Obamacare is out in the open. Overall, the bill is a step in right direction. The plan fundamentally reforms Medicaid and reduces Obamacare taxes, but stops short of repealing the root cause of skyrocketing costs- voluminous mandates.
Here are six key provisions that will affect Pennsylvanians:
Historic Medicaid Reform
- Reforms Medicaid's open-ended funding structure to protect the program for future generations.
Current Medicaid spending is on an unsustainable path that will require reducing provider payments or reducing benefits absent reform. Pennsylvania Medicaid spending is projected to grow at 6.7% annually over the next five years while the economy grows at 2%.
Under today's rules, the federal government contributes 58% of each dollar spent. This system encourages states to prioritize quantity of care over quality of care. Moving to a per-capita cap in 2020 for each Medicaid enrollee (with some exceptions) requires states to provide quality care AND control costs.
Additionally, the proposal links the growth of the per-capita caps to regular inflation after 2025. This ensures Medicaid grows with the economy and could help put downward pressure on health care prices across the board.
- Provides Medicaid flexibility to improve the quality of care.
Surging spending has not translated into better healthcare outcomes. Instead, the bill gives states flexibility to implement pro-patient ways to improve Medicaid and move more people to independence. For maximum flexibility, states can choose a five year block grant option. States can also apply work requirements for some populations and pursue additional reforms through a streamlined waiver process, such as, robust choice counseling, HSAs and state efforts to coordinate benefits and eliminate the “welfare cliff” patients experience.
- Phases out Medicaid expansion's higher matching rate.
Under the ACA, states were incentivized to cover able bodied adults making under 138% of the poverty line with generous federal matches. In fact, 2017 is the first year that Pennsylvania is responsible for footing any of these costs (the federal government is covering 95% this year and 90% by 2020).
For traditional Medicaid patients, low income moms, kids, and the disabled, the federal government only pays about 58%. That means states are encouraged to put services for the able-bodied first, since they pull down more federal funds. The Senate proposal eliminates this perverse incentive by phasing out the enhanced match; 85 percent in 2021, 80 percent in 2022, and 75 percent in 2023. It's up to Pennsylvania to keep able-bodied adults enrolled in Medicaid or return to the program's original focus.
Other Major Provisions
- Eliminates many taxes.
The legislation eliminates the most notorious ACA taxes, including the medical device tax, effective January 1, 2018; the Medicare tax on “high-income” individuals, effective January 1, 2023; the tax on tanning services, effective September 30, 2017; and expands Healthcare Savings accounts (HSAs)
- Effectively repeals the individual and employer mandate.
Proponents of the ACA have decried the expected rise in the uninsured under repeal plans, but the projected uptick isn't caused by people getting “kicked off” their plans. Rather the CBO estimates millions of people will voluntarily forgo insurance, including practically “free” Medicaid. What does that say about the value of exchange plans? What does that say about the quality of Medicaid?
- Creates special funds for states.
The proposal contains a $62 billion stability fund for states. States can apply for funding (with a required state match by 2022) to help those pre-existing conditions, lower premiums or subsidize providers. The proposal also appropriates $2 billion to help states fight the opioid epidemic in fiscal year 2018.
There is no question the ACA has failed. Recent federal data shows the average monthly premium for an individual in Pennsylvania went up 120 percent from 2013 to 2017! Giving Congress the power to make health care decisions for everyone didn't work. The U.S. Senate proposal begins to shift many of those decisions back to the states. It’s up to Pennsylvania to take full advantage the flexibility this plan provides and return decisions to doctors/patients and ultimately drive down the cost of health care.