“This Will Wreck Health Care” — Richard Kirsch on Obamacare’s Replacement

House Republicans on Monday took the first step to make good on their vow to scrap Obamacare by unveiling the American Health Care Act (AHCA). The hundred-plus page bill retains several highly popular Obamacare features albeit in far unfriendlier forms. Those include a version of tax credits that penalizes low-income patients; a diluted prohibition against insurers from discriminating against pre-existing conditions; and the ACA’s allowance of children to stay on their parents’ plans until they’re 26.

The plan, which also defunds Planned Parenthood, eliminates both the individual coverage requirement as well as the ACA mandate for businesses with 50 or more full-time employees to offer workers insurance. Losers would include the sick, seniors, women and working families, as the young and healthy leave the risk pool; winners will be the wealthy and large drug and insurance corporations.

Also See: The GOP’s Radical Health Care Surgery

But for states like California, which has led the country in taking advantage of the ACA’s expansion of Medicaid to provide health coverage to its neediest residents, it is the Republican termination of that expansion in 2020 and the cap on Medicaid at cost per-person — rather than actual health spending — that will prove the more toxic pill to swallow.

“Speaker Paul Ryan’s plan to shred the Affordable Care Act is a hard-right wish list that will cover fewer people and cost more, and a huge step backward from our goal of universal health care,” California State Senator Ricardo Lara (D-Bell Gardens) declared in a Monday statement that compared the House plan to his own February bill calling for a single-payer health-care system in California.

President Trump, who has repeatedly promised since the election to come up with better coverage for at least the same number of people as Obamacare, but with a cheaper bottom line, immediately endorsed AHCA, while Republican hardliners, libertarian think tanks and right-wing news outlets roundly ridiculed it as “Obamacare-lite.”

The bill spent Wednesday in House committees as Republicans swatted back a flurry of amendments by Democrats, waiting on cost and impact numbers that won’t be fully crunched by the Congressional Budget Office till early next week. In the meantime, nobody knows the true number of how many Americans the Republican plan will force back into the ranks of the uninsured.

Richard Kirsch believes they will be well into the millions.

A former senior fellow at the Roosevelt Institute, Kirsch not only led the political fight for the passage of ACA as the national campaign manager of the progressive grassroots coalition Health Care for America Now, he literally wrote the book on comprehensive health-care reform. His 2012 account of ACA’s passage was published in Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States.

Capital & Main spoke to Kirsch by phone about what is known thus far about the Republican proposal.

Capital & Main: What will be the impact for a state like California?

Richard Kirsch: It’s a huge, huge hit. The Medicaid expansion, the tax credits, the per capita [costs], the capping of Medicaid — this will blow an enormous, enormous hole in California’s budget, putting huge pressure on the state to cut education, to raise property taxes, to raise other taxes. It’s devastating and yet given that the state only recently found budget stability, to throw it back to all the problems the state had before it raised enough taxes to [stabilize] its budget.

Is there any good news here?

Kirsch: Well, the good news is that they can’t do some of the worst things they want to do, like eliminate the requirement that insurance companies have certain benefit levels, without Democratic votes in the Senate. But that’s really minor because even though it doesn’t eliminate those requirements, it still allows insurance companies to pay very little of those benefits. And you could say that it’s not as bad as the bills that [House Speaker Paul] Ryan and [then-Georgia Republican Representative Tom] Price introduced when Obama was in the White House. But it’s still awful.

Trump promised replacing Obamacare with a plan that would provide cheaper, quality health care coverage for all the Americans currently being served by ACA. Does the Republican plan deliver that?

Kirsch: No. Millions of people will lose their coverage. The president wanted to lower premiums and deductibles, and most people will effectively pay much higher premiums. This plan is all about super, super-high deductible health care.

The plan also rolls back the ACA Medicaid expansion in three years and gets rid of the individual coverage mandate that was anathema to hardline Tea Partiers, but which was deemed essential by Obamacare to hold premium costs down. Where is that kind of math going to lead?

Kirsch: It’s going to totally wreck the insurance markets, because they’re not requiring people to buy coverage, which is essential to keep healthy people in. So right away, more healthy people start dropping out. And they’re going to stop requiring health-care plans to cover a lot of the costs, so there will be plans that are worse plans, and again, more people will drop out. Eventually, they’re going to drastically reduce the tax credits that most people get, which will raise the costs of premiums, and so more healthy people will drop out. That’s a classical death spiral. The cynicism here is they’re not reducing the premiums until 2020, so, not including this year, they’re having two more years. The other basic math is that this bill takes health care away from millions of people and slashes Medicaid in order to give enormous tax cuts to the very wealthy and to drug corporations and insurance corporations. There’s even a special tax break for insurance company executives.

Obamacare revolutionized the health-care provider side of the equation by incentivizing accountability and building capacity for whole person care. Will that disappear?

Kirsch: No. There’s only certain parts of the law that can be repealed without Democrat support [in the Senate] through the special budget process known as reconciliation, which only takes 51 votes. All the changes that encourage value-based care and encourage health care providers to focus more on quality, less on quantity can’t be touched without Democratic support, which Republicans would never get. That [includes] things like the benefit package and the fact that insurance companies can’t stop paying and can’t [institute] lifetime or annual limits. [But] the foundation for those reforms is having almost everyone covered. What we’ve learned in health care is that you have to get everyone into the system in order to start focusing on finding ways to effectively control costs. [AHCA] is going to wreck both the Medicaid expansion and the tax credits that have led to 20 million people being covered. It’s going to undermine the ability of the providers to actually move towards more value.

Essentially this plan is going to result in paying higher premiums for coverage that does less. How many people will effectively be priced out of coverage?

Kirsch: We don’t know how many millions will lose coverage yet, because the official scorekeeping will be done by the Congressional Budget Office. And at this point — which is unprecedented —Republicans are planning to actually start passing the bills through committee without even getting the official score on whether this will increase the deficit and how many people will lose coverage.

What does an end to the Medicaid expansion mean for low-income families or, say, health care for the homeless?

Kirsch: Medicaid expansion is actually the biggest way that most people have gotten coverage through the Affordable Care Act. Of the 20 million people who have gotten coverage, 11 million have gotten coverage through Medicaid expansion. Ending that provision alone, once it goes into effect in 2020, will take away health coverage from more than half of the people now on the ACA. They’re doing more than just that. [Republicans] are also radically changing the way Medicaid is funded by the federal government. That’s how they finance these big tax cuts for the wealthy and corporations, by slashing Medicaid funding to the states.

Right now, the federal government pays a percentage of whatever the cost states have in providing Medicaid, but in the future the federal government will cap the amount per person it’s willing to pay. Effectively that will mean hundreds of billions of dollars less to the states. It also means that if there’s an opioid crisis, a Zika crisis, any kind of public health care crisis that raises the cost of providing care, the states will have to pay for it all without any help from the federal government.

ACA also provided tax credit subsidies based mostly on annual income. The Republicans had been expected to simply eliminate income as a determinant in favor of age. Could you explain what we ended up with?

Kirsch: Under ACA, the amount of subsidy — a tax credit you get to help pay for your coverage — right now depends on your family size, income, where you live. Under the Republican bill, the tax credit would be a fixed amount based on your age, not your income. And the amount would no longer depend on where you live. They would, for upper income people, start phasing it out, but for most people, it’s the same amount regardless of how much you make, it only depends on your age. It also does something else: Right now, under the ACA, insurance companies can’t charge senior citizens more than three times what they can charge a younger person. [Republicans] would allow insurance companies to charge seniors five times as much as a younger person. So seniors get twice the credit but can be charged five times as much, and it doesn’t matter what their income is if they make less than $75,000 a year. It not only it decreases it, it increases the amount people pay for coverage, particularly for older people, people between 50 and 65, and particularly for people who live in places like California where there are higher medical costs. You can actually go online and figure this out.

Isn’t this asking for trouble down the line, particularly with something like the Medicaid cap? Won’t costs change as time goes by?

Kirsch: Well, yeah. All this is trouble down the line in every way. Basically, the tax credits are much less and over time they’re only increased by the Consumer Price Index — and medical costs go up much higher than the Consumer Price Index, and insurance plan premiums go up much higher than the Consumer Price Index. So the amount of financial help the families will get paying for coverage is going to be cut drastically and then be cut more over time compared to the Affordable Care Act. Basically, people are going to have to pay more for less, because what insurance companies are going to do is sell plans that cover less and less of the medical bills. Instead of right now, [where] the average plan that’s sold at the ACA covers a little more than 70 percent of your health care costs, insurance companies can start selling plans that only cover 30 percent or 40 percent — really just catastrophic plans with really high deductibles.

Out-of-pocket costs will go up.

Kirsch: It’s going to go crazy. And there’s a program now that helps moderate-income families pay for high out-of-pocket costs, but the Republicans are ending that program.

What about pre-existing conditions? How does the Republican plan differ from Obamacare’s ban on penalizing patients that are already sick?

Kirsch: Republicans can’t take away the pre-existing condition protection, because they need the Democrats to do that. So instead what they’re doing is saying for any reason you lose coverage for more than two months — say you lost a job — then you can get hit with a 30 percent surcharge on your health-care premiums. The fact that you can [means] you have to get hit — the insurance companies have to charge you 30 percent. It’s not a choice. Insurance companies have to charge you 30 percent more on your health care premiums, and it also encourages states to put people who have a lot of high medical costs into what they call high-risk pools. And those high-risk pools have a history of total failure: high premiums, high deductibles and long waiting lists.

How big of a step backward from Obamacare are the Republicans taking us? Will we be back to where we were pre-ACA?

Kirsch: Well, no. The only reason we’re not back to where we were, pre-ACA, is that [the AHCA] still keeps tax credits for health coverage even though it dramatically cuts them. It still keeps federal regulation and benefits and insurance company practices. Because it keeps those, it’s not going all the way back to where we were pre-ACA. And there are other good things, like the improvements to the Indian Health Care Improvement Act, that the ACA did, which the Republicans can’t repeal, although what people in Indian country will tell you is, slashing Medicaid is a huge, huge hit on Native American health care. So it’s not a total step back to pre-ACA, but it’s still really awful.

It sounds like Republicans got rid of as much as they thought they could get away with.

Kirsch: We’ll see what they get away with. They did as much as they thought they could get away with under the Senate rules, basically. There’re other things they would have liked to do. I mean, if they could have just repealed the ACA, they might well have done that and tried to put in the most minimal thing possible as a replacement. But they can’t do that without Democratic votes. They’re doing as much as they can to basically wreck health care and give huge tax breaks to rich corporations.