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Health care industry anticipates insurance legislation

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The Affordable Care Act witnessed its first existential threat this week as the House was expected to vote Thursday, after the Business Journal’s deadline, on whether to repeal the ACA and replace it with the Republican-backed alternative, the American Health Care Act.

The AHCA has had a turbulent rollout, however, as the nonpartisan Congressional Budget Office and the Joint Committee on Taxation slammed aspects of the plan in a report last week.

“CBO and JCT estimate that, in 2018, 14 million more people would be uninsured under the legislation than under current law,” the analysis states. “Most of that increase would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.

“Following additional changes to subsidies for insurance purchased in the nongroup market and to the Medicaid program,” the report states, “the increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026.”

According to the CBO’s report, the reductions in insurance coverage between 2018 and 2026 would stem largely from changes in Medicaid enrollment — some states would discontinue expansion of eligibility, some states with the intent to expand eligibility would choose not to do so, “and per-enrollee spending in the program would be capped. In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.”

Republicans supporting the AHCA were scrambling this week to revise details of the bill in order to make it palatable enough to pass its first test in the House.

Last-minute amendments to the bill included a promise to expedite the repeal of Obamacare taxes. Those taxes help fund health care credits and would be repealed in 2017 instead of 2018 in order to appease House Republicans who want to see the ACA’s rollback move more quickly.

Another amendment is to allow states to create work requirements for Medicaid eligibility. Medicaid data indicates nearly 80 percent of beneficiaries are in households with a worker and the new amendment would also increase the federal assistance for any state that institutes a work requirement by 5 percent.

Additional tweaks mean federal exemptions would apply to people under the age of 19; heads of households under 20 who are in school or training; those who are pregnant; single parents; and caregivers of children under 6 years old. States would be in control of any additional exemptions.

Finally, an amendment would allow states to shift Medicaid funding to a block-grant system.

For the working poor

Cory Arcarese is the founder and owner of Value Care Health Clinic on the city’s southeast side. She opened the clinic in December 2015, and said 95 percent of the clinic’s patients are Medicaid eligible.

“I knew more people would be covered [through the ACA] but wouldn’t have access to care,” she said. “There are not enough providers who take Medicaid.”

The clinic has grown its census to about 4,000 patients, Arcarese said, adding her model helps keep costs to a minimum. Arcarese acts as the only administrative layer, and all of the care is provided by registered nurses with oversight from a medical director.

“We’re able to function with the reimbursement even though Medicaid reimburses so much lower than commercial payers,” she said. “Commercial payers pay about 120 percent of Medicare rates. Medicaid will pay 85 to 90 percent of the Medicare rate.”

But Arcarese said the direction of health care policy is a concern.

“The new budget calls for a lot of cuts, to include the Medicaid expansion. That means most of our patients,” she said. “It would affect the inroads we’ve made. We’ve done a lot that will help the community as a whole realize lower health care costs long-term. … If you truly want to lower health care costs, you have to stay the course.”

Arcarese has a business and accounting background and acts as a consultant with the Small Business Development Center. She said she is a “middle-of-the-road Democrat,” but she believes in fiscal responsibility.

“[Republicans] are making significant cuts without a real good solution,” she said. “People might think, because of what I do, that I’m a bleeding heart liberal and I’m not. I’m very fiscally focused. I focus on numbers and it has to make financial sense. Republicans have had eight years to come up with a better plan.”

Of the 24 million expected to lose coverage, Arcarese said, “They don’t go away. They go somewhere else, which is to hospitals, and it’s on the taxpayers.”

Arcarese is in the process of converting her business from a for-profit to a nonprofit, and will also seek certification as a federally qualified health center, which would qualify the clinic for federal grants and a higher reimbursement rate.

But the repeal of the ACA would have a sizable impact on her business, she said.

“For a clinic like ours, we would have to make significant changes,” she said. “[Our patients] are not here for handouts; these are the working poor. … I see us going to where we were before the ACA and people declaring bankruptcy because of medical bills.”

Hospitals wary

Chris Tholen, vice president of financial policy at the Colorado Hospital Association, shared many of Arcarese’s concerns. The CHA represents more than 100 hospitals and health systems throughout Colorado and serves as a resource on health issues, hospital data and trends.

“We’re following the AHCA closely and what it means for Colorado,” Tholen said. “We’ve spoken with the Colorado federal delegation several times over the past few months.”

Tholen said, as proposed, the AHCA would appear to reduce coverage for many Colorado residents.

“We’re also watching what this means, from a financial perspective, for our hospitals,” he said.

About 400,000 additional Coloradans have been covered since Medicaid expansion was approved in 2013, Tholen said.

“With [Taxpayer’s Bill of Rights] restrictions of moving from federal to state funding, we have real concerns as to whether Colorado could continue its Medicaid expansion,” he said. “Also, the proposed changes from subsidies to tax credits could have a negative impact on the market, but it’s tougher to understand those numbers right now.”

Tholen said the ACA has improved access to care in Colorado, especially within rural communities and for vulnerable populations.

“The rate of inpatient admissions has decreased, and that is a sign that health care had been improving and Colorado is better managing its chronic patients,” he said.

Removing barriers

Some ACA critics have argued, however, that rural communities were among the hardest hit by the law.

According to figures provided by the U.S. Department of Health and Human Services, more than 80 percent of those purchasing insurance through an ACA marketplace nationwide receive some sort of subsidy. Connect for Health Colorado, the state’s insurance marketplace, showed more than half of Coloradans receive coverage through employers and about 60 percent qualify for subsidies.

But despite varied coverage in most areas, residents in 14 Colorado counties in 2017 have only one choice of insurer through the state’s exchange.

The GOP earlier this year also seized upon opportunities to point out astronomical premium hikes. Colorado health exchange consumers saw premiums increase about 20 percent, a bit below the national average of 25 percent.

Despite the price hike, in the first month of open enrollment this year, Coloradans selected 37,948 medical and dental insurance plans, compared to 30,777 plan selections in November 2015.

And Coloradans purchasing insurance through Connect for Health Colorado were luckier than many. Alabama saw premium increases of 36 percent. Georgia, a 32 percent hike. Those insuring through Illinois’ exchange saw a 44 percent increase. Minnesota, as much as 67 percent.

Paul Prentice, an economist and fellow with the Centennial Institute at Colorado Christian University, said he was disappointed that there wasn’t much discussion of repealing and not replacing the ACA, but added that some of the GOP’s proposals should be a boon for otherwise stifled businesses.

The employer mandate under the ACA, for instance, requires business owners to insure employees if there are 50 or more of them.

“By getting rid of the employer mandate, it will ramp up hiring,” Prentice said. “A lot of businesses are staying below the 50-person limit.”

Prentice said employers will also allow employees to work more hours since coverage for full-time employees is required.

“At least the two job-killing provisions of the bill will be removed,” he said. “That’s somewhat good news.”

Prentice also advocates for opening up insurance marketplaces across state lines, which would facilitate competition, as well as putting patients in control of their own health care spending via pretax Health Savings Accounts.

But Arcarese doesn’t buy the job-killing argument.

“I don’t believe it’s stifling business,” she said. “Fifty people is a big company. And there are ways around that number. You can have an umbrella company with subsidiaries that each have 49 employees, and it’s perfectly legal.

“For me, it’s about doing the right thing and corporate ethics. I’m of the mindset that if you’re a business owner, health insurance should be part of the cost of doing business.”

Tholen said, “In order to care for patients, we believe they need insurance coverage. Coverage leads to better health. Regardless of the ACA or the AHCA, the goal of all insurance is to provide good coverage to the entire population — all Colorado residents.”

But Tholen added there’s never been so much uncertainty.

“I’ve been in health care 20 years and I’ve never seen as many unknowns as we see today.

“And it’s not just for the next year or two — but the next 10 years.”

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