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Posts tagged Affordable Care Act

Iowa can fix health marketplace

Posted November 2nd, 2017 to Blog

Guest post by Sarah Lueck, senior policy analyst at the Center on Budget and Policy Priorities. She wrote this piece originally for CBPP’s “Off the Charts” blog. Find the original post here.

Iowa Can Strengthen Health Insurance Market Without Harming Consumers

October 24, 2017

Now that Iowa has withdrawn its request for a federal “1332 waiver” to allow it to change its health insurance market, some state officials are blaming what they say are overly strict federal requirements for approving such waivers. But, in reality, those requirements served their intended purpose of protecting consumers. While Iowa’s individual market faces challenges, Iowa consumers will benefit from the fact that the marketplace coverage on which they have come to depend will still be available when open enrollment begins on November 1.

In its waiver, Iowa proposed eliminating the Affordable Care Act (ACA) marketplace that consumers have used since 2014 to apply for coverage and subsidies, creating one standard health plan for all individual market consumers, providing a flat premium credit based on age and income to every enrollee (including those with high incomes), and establishing a reinsurance program to shield insurers from the financial risk of high-cost enrollees.

Federal law requires states to show that their section 1332 waivers will provide coverage that’s at least as affordable and comprehensive as under current law and will cover as many people, without increasing the federal budget deficit. These “guardrails” helped protect consumers from Iowa’s severely flawed proposal:

  • Iowa’s waiver would have made it harder to sign up for coverage. The waiver would probably have raised the number of uninsured individuals by making enrolling far more cumbersome. Iowans now use HealthCare.gov to receive a federal determination of eligibility, pick a plan, and then go directly to the insurer’s website to pay the first month’s premium — often in one sitting. Under the waiver, enrollees would have had to visit a new website to complete an eligibility application, wait up to ten days for the state to respond by mail, and then find an insurer or an insurance agent to actually help them enroll in a plan.It was far from clear that the state’s website would be ready in time, or that thousands of Iowans could complete this lengthy, multi-step process in the six-week open enrollment period. On top of that, the waiver would have eliminated automatic re-enrollment for current marketplace consumers.
  • Iowa’s waiver would have made health care less affordable for many. The waiver would have required everyone with incomes over 200 percent of the poverty line to enroll in a plan with a $7,350 deductible. Under the ACA, Iowans with incomes up to 250 percent of poverty can get cost-sharing reductions, which lower their deductibles and co-payments. And Iowans at all income levels can buy a “gold plan” with a $1,000 deductible in 2018, which wouldn’t have been an option under Iowa’s waiver.
  • The state’s unrealistic funding assumptions would have put coverage and care for even more Iowans at risk. The waiver relied on unrealistic assumptions about the cost of the proposed changes, as outside analysts found and the Trump Administration’s response to Iowa implied. Had the waiver received federal approval, the federal government would have been legally precluded from providing more funding than Iowa would receive under current law. That would likely have left the state with a funding shortfall, forcing it to make cuts in 2018 by reducing people’s coverage, raising premiums or cost-sharing charges, or reducing enrollment.

Iowa’s marketplace will be open for new enrollment on November 1. Iowa’s decision to drop the waiver clarifies that individual market consumers can shop for coverage using HealthCare.gov, just as they have for several years. An insurer, Medica, has proposed plans in all of the state’s 99 counties, and most of the available plans have lower deductibles than those that would have been available under the waiver.

While Iowans are understandably concerned about reported premium increases, an estimated 75 percent to 80 percent of Iowans in the ACA-compliant individual market will be eligible for premium tax credits that grow in response to premium increases, limiting consumers’ costs to a set percentage of their incomes. Also, many people with low incomes can enroll in a “silver plan” with reduced deductibles and other cost sharing due to the ACA’s cost-sharing reductions.

After withdrawing its waiver, Iowa can now turn to more practical and less disruptive proposals to improve affordability and increase competition in its insurance market. Like other states’ individual markets, Iowa’s market has been hurt by Trump Administration actions that undermine the ACA marketplaces. For example, Medica reports that about one-fifth of its proposed rate increase reflects the risk that the federal government would stop reimbursing insurers for cost-sharing reductions, as the Administration has chosen to do. In addition, Iowa’s individual market has experienced greater challenges than most other states’, in part reflecting Iowa’s policy choices. To address these challenges without undermining coverage for current marketplace consumers, Iowa should consider:

  • Creating a reinsurance program similar to Alaska’s, which would reduce premiums for Iowans with incomes too high to qualify for marketplace subsidies. A reinsurance program was one element of the Iowa waiver, but the state could easily implement it without the waiver’s harmful changes.
  • Phasing out more pre-ACA plans (“transition” and “grandfathered” plans) as soon as possible. These plans are exempt from many of the ACA’s consumer protections and continue — several years after the law’s implementation — to keep healthier enrollees away from the ACA marketplaces. About 76,000 Iowans are expected to remain in these plans in 2018, compared to 51,000 to 55,000 who are expected to enroll in the marketplace. That pushes up premiums for ACA-compliant plans because these plans attract fewer of the healthier potential enrollees than otherwise, and it thus creates an uneven playing field for insurers that might otherwise participate.
  • Avoiding actions that would further skew Iowa’s risk pool. Gov. Kim Reynolds said Monday that “short-term” health insurance that doesn’t meet ACA standards could be a solution for Iowa consumers in 2018. That refers to President Trump’s recent executive order< directing federal agencies to (among other things) consider ways to make short-term plans, which currently may last no more than three months, last nearly a full year, which would make them a full-scale alternative to the ACA market — even though they don’t have to cover the ACA’s essential health benefits such as maternity care and mental health treatment, and even though they can base premiums on people’s health status. That’s not a good solution for Iowa. Making short-term plans more widely available would pull even more healthy consumers out of the ACA market, dramatically increasing the state’s already serious challenges while leaving many consumers in extremely skimpy plans and leaving those in ACA-compliant plans with even higher premiums.

About those 10 reasons, Senator …

Posted September 22nd, 2017 to Blog

Senator Chuck Grassley of Iowa has made the point himself: The Cassidy-Graham bill to repeal the Affordable Care Act (ACA) has many deficiencies.

“I could maybe give you 10 reasons why this bill should not be considered,” he told Iowa reporters.

So, let’s look at some of the reasons, on the merits, why people might have concerns about Cassidy-Graham.

  1. People with pre-existing conditions would lose access to health care. Protection of these people assured now under the ACA would be left to state decisions, with states already cash-strapped.
  2. Many who became eligible for coverage through the Medicaid expansion of the ACA would lose it. In Iowa, about 150,000 people gained coverage by this expansion.
  3. It would change Medicaid expansion to a block-grant program that provides states no flexibility to deal with recessions or prescription drug price increases.
  4. Medicaid for seniors, people with disabilities, and families with children would be capped on a per-person basis. Anything higher would be left to the states to provide. There is neither any assurance states would want to do that, or even be financially able to do so.
  5. Iowa would be marched to a $1.8 billion cliff in 2027 under this bill, with federal support dropping sharply. For context, that is the equivalent of about one-fourth of the current state budget.
  6. Millions would lose insurance coverage. While we’re still waiting for the estimate from the Congressional Budget Office, past repeal proposals show this. And, since this bill offers nothing beyond 2027 for the Medicaid expansion, via block grant or otherwise, the prospect of 32 million people losing coverage (as demonstrated in estimates in previous ACA repeal legislation) is very real.

In Iowa? The graph below shows how Iowa’s uninsured population has dropped with the advent of the ACA, or Obamacare. Census data show uninsurance in Iowa dropped by nearly half in just three years, by about 116,000 — from 8.1 percent uninsured in 2013 to 4.3 percent in 2016.

So, this is a good start on why Iowans might be concerned about Cassidy-Graham — a last-ditch effort to rush into law radical changes in the way millions nationally and over 100,000 in Iowa gained access to health care in just three years.

We invite Senator Grassley to add to the list and get us to the full 10 reasons he suggested that might cause concerns about this bill.

Or better yet, maybe together in a deliberative process that involves everyone, we can come up with a list of 10 things that any health care policy should address.

Surely the list would include insuring more people, assuring more with practical access to health care when they need it, improving public health and reducing costs. We invite Senator Grassley to that discussion.

Mike Owen, Executive Director of the  Iowa Policy Project
mikeowen@iowapolicyproject.org


Focus on fixing insurance exchange

It’s time for Iowa’s congressmen and senators to start working on immediate measures to strengthen the health care system, and specifically the health insurance exchange, or marketplace. The obsession of some with bills to repeal and replace Obamacare has been a distraction from that task.

In recent days, bipartisan groups have sprung up in both the House and the Senate to begin developing legislation to stabilize the insurance market. These groups recognize the immediate need for measures to ensure that federal payments continue for cost-sharing reductions (CSRs) that help low-income people afford their copays and deductibles. Without the assurance that these payments will continue, premiums will rise sharply.

The president has threatened to continue his efforts to sabotage the Affordable Care Act (ACA) by ordering an end to CSRs. This threat has already prompted Medica, the only Iowa health insurance company still offering plans on the exchange, to plan for another premium increase.

The bipartisan efforts to shore up the insurance exchanges could include another important measure: a reinsurance program that would reduce the risk that a small number of high-cost customers will cause insurance company losses. The “million-dollar customer” has been cited as a factor contributing to the decisions of Wellmark and Aetna to exit the Iowa exchange. Reinsurance would establish a national pool to cover high-risk cases; this would allow companies to remain in the exchanges without drastic premium increases on everyone to pay for those few cases.

The Senate’s attempts to repeal and replace failed because they were wildly unpopular. These measures would have resulted in over 200,000 Iowans losing health insurance; would have effectively ended the expansion of Medicaid that covers thousands of low-wage workers; would have reduced Medicaid benefits for thousands of seniors, children, and people with disabilities; would have raised premiums and deductibles; would have gutted protections for persons with pre-existing conditions; and would have provided billions in tax cuts to wealthy individuals and corporations.

Another attack on coverage: Graham-Cassidy

Pragmatic efforts to stabilize the health insurance market stand in stark contrast to a last-ditch attempt to repeal and replace Obamacare that surfaced this week: the Graham-Cassidy plan. Like the previous failed bills, this plan would end the Medicaid expansion that now covers 150,000 Iowans.

Unlike previous repeal and replace bills, the Graham-Cassidy plan would also end the premium assistance that makes health insurance affordable to tens of thousands of low and moderate income Iowa families. While it replaces ACA funding of premium assistance and Medicaid expansion with a block grant, it provides no guarantee that the states will use that block grant to make health insurance affordable to those who need help the most. And the bill would further destabilize the insurance market by ending the mandate to purchase insurance, while making it more expensive, leaving insurance companies with the sickest and costliest customers.

The problems with the insurance exchange in Iowa are fixable. Let’s see if our Senators and Representatives actually try to fix those problems instead of using them as an excuse to fund tax cuts to the wealthy by forcing tens of thousands of Iowans off their health insurance.

Peter Fisher is research director of the Iowa Policy Project.

pfisher@iowapolicyproject.org


Why Governor Reynolds is wrong

Posted July 21st, 2017 to Blog

As it has become clear that Iowa state leaders need to be more engaged publicly on the national health care debate, it was surprising to see Governor Kim Reynolds’ take on it.

“I’m focused on the things I can control.”

Well, if that is the standard for where the Governor should speak up, lock the office door and throw away the key. That’s not the way government works — or is supposed to work — in our American and Iowa tradition.

The Governor in our system has an important and powerful role, but rarely a controlling one.

What the Governor is not acknowledging, though she surely knows to be the case, is that her position is perhaps the best pulpit in the state of Iowa for speaking up on behalf of Iowans, to our elected representatives in the House and Senate in Washington, and to the President of the United States.

If she cannot speak for the people of Iowa, who will do so?

What is clear from the debate thus far in Washington is that more than 200,000 Iowans will lose health insurance if the current Affordable Care Act is repealed without a meaningful replacement.

In fact, the latest estimate from the Urban Institute finds 229,000 fewer Iowans would be insured in 2022 than if the ACA were kept in place — but the state would spend $29 million more as federal spending dropped by 28 percent.

The Governor’s comments to reporters repeated inaccurate talking points about ACA, avoiding both the state’s own role in undermining the individual insurance marketplace, and the principal way Iowans would lose insurance: the loss of the Medicaid expansion. That one piece of the ACA covers 150,000 Iowans now and is projected to grow to 177,000 in two years, but goes away under the Senate and House plans.

So, whether Governor Reynolds likes it or not, what is now a federal issue will become a state issue.

Right now, the things she has more direct influence upon are state budget choices, many of which already are difficult.

Imagine how much more difficult those choices become with 200,000 more people uninsured. What will the state do to make up for it? What budget control — or families’ control over their health care options — would be lost? Some members of the Legislature already are calling for a state-run program to step into the void.

If Governor Reynolds is uncomfortable with any of these possibilities she could call her friends Senator Grassley and Senator Ernst, or gather the microphones and cameras and raise awareness about the stakes for all Iowans.

Again, there are members of the Legislature weighing in on that score as well. Perhaps they recognize that persuasion, and pushing for a critical mass of support behind an idea, is where “control” emerges.

 

owen-2013-57Mike Owen, executive director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

 


Health exchanges: Why not fix?

Posted July 12th, 2017 to Blog

What would be your response if someone said to you: “The transmission in my car needs an overhaul. This just proves vehicular transportation doesn’t work, so I am going to get rid of my car and my pickup, even though the truck is still running fine.” You would probably think they were crazy. Why not just fix the car’s transmission?

Yet this is the logic being put forward by Senator Grassley and many others as they seek to repeal Obamacare. Yes, we have a problem with the insurance exchange in Iowa, where we now have just one insurance company offering policies. But instead of pursuing solutions to that problem, our representatives are using it as an excuse to repeal Obamacare, including the Medicaid expansion, which has nothing at all to do with the insurance exchange and in fact is still in good running order.

The lack of insurers in the Iowa exchange is largely a self-inflicted problem. Insurers have left the market in part because the state of Iowa did so little to encourage people to sign up, and to provide assistance in navigating the exchanges. Iowa was also extremely generous in allowing people to continue with existing poor-quality insurance.

The problem was worsened by President Trump’s efforts to sabotage the exchanges during the final weeks of the annual sign-up in January by banning all advertising and encouraging people to think Obamacare was going to end. As a result, the number enrolling in the exchanges, which had been on a pace to exceed that of the previous year, ending up falling short.[1] Too few younger and healthier people enrolled, leaving the insurance companies with older and sicker people.

There are solutions to this problem. Both the Iowa Insurance Commissioner and Iowa Democrats have proposed measures to solve the exchange problem at the state level. But the House and the Senate bills repealing and replacing Obamacare, instead of shoring up the exchanges, repeal the individual mandate. Analyses of their replacement provisions predict that they would worsen the problem instead of solving it, leaving the exchanges with even fewer healthy individuals.[2]

Now about the pickup truck. The Senate’s Better Care Reconciliation Act (BCRA) would likely result in 232,000 Iowans losing health insurance coverage over the next five years.[3] Three-fourths of them would become uninsured because of the loss of Medicaid, the rest because of cuts in premium assistance for policies purchased on the exchange.

Iowa expanded Medicaid eligibility (with 90 percent federal funding under Obamacare) to include low-income non-elderly adults, most of whom are working in low-wage jobs with little or nothing in benefits. The BCRA would effectively end the Medicaid expansion for about 177,000 Iowans.[4] This will hit rural Iowa the hardest, and it will undermine the finances of rural hospitals.

The Medicaid expansion has nothing to do with the health insurance exchanges. Our representatives should stop using a fixable problem with the exchanges as an excuse for passing a broad bill that ends health insurance for tens of thousands of Iowans.

[1] Center on Budget and Policy Priorities, Sabotage Watch: Tracking Efforts to Undermine the ACA. http://www.cbpp.org/sabotage-watch-tracking-efforts-to-undermine-the-aca

[2] Jacob Leibenluft and Aviva Aron-Dine. Senate Health Bill Can’t Be Fixed; Reported Changes Would Not Affect Bill’s Core Features. Center on Budget and Policy Priorities, July 10, 2017. http://www.cbpp.org/research/health/senate-health-bill-cant-be-fixed

[3] Linda Blumberg et al. State-by-State Coverage and Government Spending Implications of the Better Care Reconciliation Act. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2017/rwjf438332

[4] Robert Wood Johnson Foundation and the Urban Institute. The Impact of Per Capita Caps on Federal and State Medicaid Spending. March 2017.

Peter Fisher, Research Director, Iowa Policy Project & Iowa Fiscal Partnership

pfisher@iowapolicyproject.org


Any way you cut it — Americans lose health coverage

Posted June 26th, 2017 to Blog

First, let’s make no mistake: Both the Senate and House bills to repeal and replace the Affordable Care Act (ACA) represent substantial cuts in health coverage, including Medicaid.

People will lose coverage, have less coverage, and/or pay more for it. This is a public policy choice being offered in the drive to repeal ACA’s enhancement of insurance coverage for millions of Americans. In Iowa alone, uninsurance dropped from over 8 percent to 5 percent in just two years.

It is at best disingenuous for anyone to suggest otherwise, or to downplay the cut. Those who want to promote this legislation, for whatever reason, have to own the impact. If they’re afraid of the political disadvantage of admitting it, that’s another story.

The stakes for some 200,000 Iowans are significant, jeopardizing recent health-care coverage gains and putting vulnerable Iowans at risk. An Iowa Fiscal Partnership report from Peter Fisher of the Iowa Policy Project sets the context for this week’s discussions in the Senate.

A new report from the Center on Budget and Policy Priorities (see graph at right) shows how the Senate bill would drive up costs for the 31 states that — along with Washington, D.C. — expanded Medicaid under the ACA.

For Iowa, the estimates are daunting: In 2021, Iowa would have $54 million more in costs, and in 2024, $395 million more — a 315 percent increase.

That CBPP report is part of the exceptionally good information available even in the short time frame we have to understand what is emerging from the backrooms of Washington, out of public view.

See these reports, just produced in the last couple of days by tremendously reputable organizations:

This is our business. We can demand to know the facts and we might just want to know them before the Senate votes — even if some in the Senate might be uncomfortable with that.

By Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org


IFP News: ACA repeal plans jeopardize health care gains in Iowa

As Senate builds legislation in secret, House approach hits Iowa hard 

Full report (or 10-page PDF)

IOWA CITY, Iowa (June 22, 2017) — Proposed legislation to repeal the Affordable Care Act (ACA) jeopardizes Iowa’s recent health coverage gains and puts the state’s most vulnerable residents at risk.

A new Iowa Fiscal Partnership report shows the stakes for Iowans — particularly seniors and rural Iowans — are significant. Losses of federal subsidies to obtain individual insurance are disproportionately greater in rural counties, and for seniors, under the legislation.

Besides those inequities, the report by Peter Fisher of the nonpartisan Iowa Policy Project (IPP) notes cuts in health coverage for vulnerable Iowans come in exchange for “billions in tax cuts to wealthy individuals, drug companies, and insurance companies.”

“Supporters’ promises of more state flexibility and individual choice ring hollow,” Fisher said, adding flexibility “means an enormous cost shift requiring the state to spend millions more and cut services. Meanwhile, ‘choice’ for thousands of Iowans would be stark: go without health insurance that had become unaffordable, or go without basic necessities such as food.”

The report focuses on the impact of ending the expansion of Medicaid to low-income adults and placing a “per capita” cap on benefits in the regular Medicaid program.

In addition, the House bill would:

  • Permit states to undermine current protections for patients with pre-existing conditions;
  • Shift federal Medicaid funding to a per-capita formula that does not reflect actual costs, particularly in difficult economic times or epidemics, or for patients needing higher-cost care.
  • Ignore coming higher costs in aging states, like Iowa, for coverage of the senior population.

As Fisher notes in the report, the Medicaid expansion “greatly increased access to health coverage in Iowa’s rural areas, where the percent of non-elderly residents who were uninsured was cut nearly in half between 2013 and 2015.”

These are the kinds of gains threatened by the American Health Care Act (AHCA) and the similar legislation emerging in the Senate.

“President Trump was happy with his crowd of 6,000 last night in Cedar Rapids, but many times more Iowans could lose health care under the House-passed American Health Care Act,” said Mike Owen, executive director of IPP.

“Today, we are learning of the plan that was hatched behind closed doors in the Senate. That proposal needs to be judged not against the low bar set by the House plan for the health coverage in our national safety net, but against the expanded role for Medicaid that provides coverage for 150,000 Iowans under Obamacare.

“Any legislation that takes Iowa backwards — by shifting federal Medicaid costs to the states, ending the Medicaid expansion, placing kids, seniors, and people with disabilities who depend on Medicaid at risk, and increasing out-of-pocket costs for low-income Iowans — is unacceptable.”

Fisher’s report includes estimates by the Urban Institute that 191,100 Iowans could lose Medicaid coverage under the House plan — or 38 percent of non-adult enrollees now served. Only 11 states have a greater share of their Medicaid enrollees in jeopardy of losing coverage.

A principal reason many of the enrollees have gained coverage is the Medicaid expansion, in which expanded federal subsidies to states encouraged 31 states and Washington, D.C., to offer Medicaid eligibility to more residents. The AHCA — and the emerging Senate proposal — would dramatically phase down the amount of federal dollars that states receive to cover new enrollees, including people who come off Medicaid and need to go back.

To maintain the expansion, Iowa would have to spend an additional $192 million in 2021, nearly tripling what the state spends now on that population.

The higher state cost would come from the state making up the difference between the subsidy under current law — 90 percent federal share of the cost — and the regular Medicaid reimbursement of 58.5 percent for Iowa. Expansion states like Iowa would have to determine whether to pay the additional cost and cut other programs (and/or raise taxes), or reduce Medicaid services to keep their budgets in balance.

“By 2023, the state’s additional cost would be $335.8 million, a 288 percent increase over current spending on the expansion population. It is highly doubtful that the state would find that much more in its budget for Medicaid,” Fisher wrote.

Owen noted Census data have shown Iowa uninsurance dropped from 8.1 percent in 2013 to 5 percent in 2015, largely due to the Medicaid expansion.

“Not only would changes proposed in the AHCA reverse these gains, but they would end Medicaid as we know it,” Owen said. “These changes would virtually guarantee gaping holes in the nation’s safety net for vulnerable Americans in many states, and push enormous new costs onto state budgets already stretched thin.”

The Iowa Fiscal Partnership (IFP) is a joint initiative of the Iowa Policy Project and another nonpartisan organization, the Child & Family Policy Center in Des Moines. Iowa Fiscal Partnership reports are at www.iowafiscal.org.

 

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AHCA would hit Iowa hard

Coverage losses in House AHCA sets low bar for Senate, White House;

AHCA would impose dramatically higher costs for Iowa and Iowa residents

Basic RGB

 

News release

By Peter Fisher

The American Health Care Act (AHCA) passed by the House of Representatives would cut health insurance for nearly 200,000 Iowans in order to provide billions in tax cuts to wealthy individuals, drug companies, and insurance companies. Moreover, instead of fixing the problems with Iowa’s health insurance exchange, it would make those problems worse. As the Senate uses this legislation as the basis for its own proposal, supporters’ promises of more state flexibility and individual choice ring hollow. So-called “flexibility” means an enormous cost shift requiring the state to spend millions more and cut services. Meanwhile, “choice” for thousands of Iowans would be stark: go without health insurance that had become unaffordable, or go without basic necessities such as food.

The AHCA would fundamentally change Medicaid in two ways. First, it eventually would end the Affordable Care Act — or Obamacare — expansion of Medicaid, through which 150,000 low-income Iowans have gained coverage. Second, the AHCA would cut federal funding for the overall Medicaid program, which would force Iowa to find an estimated $336 million more in the state budget for 2023 in order to maintain current eligibility. Given Iowa’s chronic budget shortfalls, this is very unlikely to happen. As a result, the state would likely be forced to restrict Medicaid eligibility and cut benefits to children, the elderly and the disabled.

Altogether, some 191,100 Iowans — 38.1 percent of the nonelderly adult enrollees now served — could lose Medicaid under the House plan, according to new analysis by the Urban Institute.[1] This would make Iowa one of the biggest losers nationally, as only 11 states have greater shares of their Medicaid enrollees in jeopardy of losing coverage. Nationally, the loss is set at 1 in 4 enrollees.

The AHCA hits rural and elderly Iowans the hardest, both from the cuts in insurance subsidies and the cuts in Medicaid. In Iowa’s 78 counties outside metropolitan areas, a family of four with $40,000 income would face an average net increase in premiums (after subsidies) of $7,607 per year; their cost would about double. For an elderly couple with the same income, the increase would average $14,582. The likely loss of the Medicaid expansion would disproportionately harm rural Iowans, who are more likely to have health issues and difficulty paying for health care.

One of the most disingenuous claims by AHCA architects is that Americans with pre-existing medical conditions — now protected by the ACA — would keep that protection under AHCA. In fact, AHCA creates a state option to let insurance companies charge higher premiums and scale back coverage of now-required “essential health benefits.” The requirement that insurance companies cannot deny coverage is a hollow one, if they can simply price people out of it, or drop benefits they do not want to cover. And the fig-leaf funding provided by the bill would not nearly compensate for the costs to the millions facing these higher prices, including 1.3 million persons in Iowa with pre-existing conditions.

AHCA problems do not end there. The quality of health insurance policies is sure to decline as states choose to waive requirements for essential health coverage. By allowing states to eliminate the federal “essential health benefits,” the AHCA would permit employer plans to reinstate annual or lifetime benefit limits, and to stop capping out-of-pocket maximum for certain coverage. This would put millions again at risk of catastrophic costs and medical bankruptcy.

The AHCA Would End Medicaid as We Know It

The AHCA makes two very significant changes to Medicaid. It alters the way states are reimbursed for the Medicaid expansion population, and it changes the way the overall Medicaid program is financed.

Traditional Medicaid consists primarily of health insurance for low-income children, some parents of those children, low-income seniors, and the disabled. About 3 in 8 children in Iowa, 286,000 in total, get health care through Medicaid. One in 4 Iowans with a disability receive Medicaid, about 90,000 individuals. And about 46,000 seniors receive Medicaid to pay for nursing home care, or in-home care that allows them to remain in their homes.

Currently, the federal government pays about 58.5 percent of the cost of traditional Medicaid in Iowa. When recession hits, or an epidemic of flue or opioid addiction strikes Iowans, the federal government automatically matches any needed additional Medicaid payments. Under the ACA, a significant expansion of Medicaid brought health coverage to an additional 150,000 low-income adults in Iowa, with the federal government covering 90 percent of the cost.

AHCA Would Likely Force an End to Iowa’s Medicaid Expansion

The ACA extended Medicaid eligibility to adults with incomes up to 138 percent of the poverty level (about $16,600 a year for an individual) in states that agreed to take part. The majority of those adults are working, most likely at low-wage jobs without meaningful or affordable health insurance, if health insurance is offered at all. In Iowa, nearly 9 in 10 adult Medicaid recipients are in working families, and 7 in 10 are working themselves.[2] Nationally, the majority of working Medicaid recipients were in full-time jobs; of those not working, most were in school, were caretakers for a relative, reported an illness or disability that prevented them from working, or were unable to find work.

In Iowa, about 150,000 adults gained health insurance through this expansion as of 2016.  That number is expected to grow to 177,000 by 2019.[3] Some were previously covered by Iowa Care, a program with limited benefits that ceased to exist when those individuals were moved to the full Medicaid expansion program, known as the Iowa Health and Wellness Plan. The expansion has been a major success. In the 31 states that adopted the Medicaid expansion the percent of non-elderly adults without insurance was cut in half — from 18 percent to 9 percent. [4]

Some proponents of the AHCA have stated that “no one will be thrown off Medicaid.” This is not accurate. Under the ACA, the federal government paid the entire cost of covering those enrolled in the Medicaid expansion through 2016, and at least 90 percent going forward. Beginning in 2020, the AHCA would repeal that high match rate for any new enrollee, including anyone currently in the program who does not maintain continuous enrollment.[5] In practice, most recipients use Medicaid for relatively short spells, due to unemployment or other financial setbacks. As Medicaid recipients cycle on and off the program, within just a few years, the vast majority of those now covered by the Medicaid expansion will no longer be eligible for the enhanced federal match. The nonpartisan Congressional Budget Office estimates that in just five years, fewer than 5 percent of those in the expansion would remain on Medicaid.[6]

This means that under the AHCA, Iowa would have to come up with 41.5 percent, instead of 10 percent, of the cost of the Medicaid expansion, because the federal match would fall from 90 percent to the state’s regular rate of 58.5 percent.[7] To maintain current eligibility with the lower match, Iowa would have to dip into its own revenue to come up with an additional $192.5 million in 2021, an increase of 191 percent.[8]  By 2023, the state’s additional cost would be $335.8 million, a 288 percent increase over current spending on the expansion population. It is highly doubtful that the state would find that much more in its budget for Medicaid.

Per Capita ‘Cap’ Funding Would Shift Costs to States

The second major cut to Medicaid under the AHCA is a dramatic shift in how the overall Medicaid program is funded. Currently the federal government pays 58.5 percent of total Medicaid costs in Iowa, regardless of how those costs rise due to a recession, rising health costs or new health care crises. Under the AHCA the federal contribution will be set at a flat per capita amount. The Medicaid population will be segmented into five groups based on eligibility: those with a disability, the elderly, non-disabled children, non-disabled non-elderly adults, and the non-elderly adults in the Medicaid expansion group. Caps would start with federal Medicaid spending in 2016 and then rise each year, at a slower rate than Medicaid per beneficiary spending is currently projected to rise.

As a result, the federal government would save billions of dollars through the shift to per capita funding, with the amount growing substantially over time. The projected federal savings will come at the expense of state budgets and the low-income individuals served by Medicaid. It is unlikely that state spending will rise to fully offset the loss in federal funds. The state would then have to cut benefits, eliminate optional Medicaid programs, or restrict eligibility.

There are several reasons why the disparity between actual per capita costs and the per capita reimbursement will widen over time. First of all, the annual growth rate in Medicaid costs is expected to exceed the inflation factor that will be applied to the per capita cap. Second, within each eligibility group, there are likely to be demographic shifts toward higher-cost individuals, particularly the elderly. Actual health costs will also be driven up by such factors as:

  • New medical procedures or devices that are more effective, but more costly
  • Medical emergencies, such as an outbreak of the flu, or the Zika virus
  • Health care crises such as the epidemic of opioid addiction.

Probably the most important danger with the AHCA per-capita cap is the “demographic time bomb.” The population is aging, in Iowa and throughout the country. As the Baby Boomer bubble works its way through the elderly population, seniors will become older on average. The share of Iowa’s seniors who are age 75 or older is expected to rise from 42.6 percent in 2020 to 47.3 percent by 2030, and then 55.7 percent by 2040.[9] This is significant because Medicaid spending per capita is much higher for the “old old” than for the “young old.” Average Medicaid spending per recipient for those age 85 or older is 2.5 times the amount spent per recipient age 65 to 74.[10]

Growth in the per capita Medicaid reimbursement for the elderly population will be based forever on Iowa’s level of spending for all seniors as of 2016, before the boom in Medicaid’s aging population. The rising cost of Medicaid for seniors, as they become on average older and sicker, will not be matched by the federal government. That will stick the state of Iowa with higher costs, cause cuts in benefits to seniors, or both. One program that could very well end up on the chopping block is in-home health care, an important program that allows seniors to receive needed services while remaining at home, rather than in a nursing home, which is more expensive.

None of this is a fluke, or an unintended consequence of the AHCA. To the proponents, it is a measure of the success of that legislation — to shift costs and risk from the federal government to the states, health-care providers, and to the low-income populations served by Medicaid. The states will have to make the hard choices — who gets served, who gets cut. The elderly and the sick will suffer the consequences.

In the long term, a shift to per capita caps could be even more detrimental because they present a clear target for federal budget cuts. This potential is evidenced by President Trump’s recently released budget. Even before the AHCA is introduced in the Senate, the President has proposed to reduce the growth rate for the per capita caps in future years, below the rate in the House bill.[11]

The Cuts to Medicaid Would Hurt Rural Iowa the Most

The Medicaid expansion greatly increased access to health coverage in Iowa’s rural areas, where the percent of non-elderly residents who were uninsured was cut nearly in half between 2013 and 2015.[12] Those historic gains in coverage are threatened by the AHCA. Rural residents are more likely than urban residents to have a disability or other health issue, to be unemployed, or to be poor. In other words, the need for Medicaid is greater.

Private Insurance Would be More Costly to Millions, Leaving Many Uninsured under AHCA

The Affordable Care Act (“Obamacare”) barred insurance companies from a number of harmful practices that used to be common in the individual market. Insurers used to be able to leave out benefits, such as prescription drugs and maternity care, but now must cover a comprehensive set of 10 “essential health benefits” and cap the amount of deductibles and other out-of-pocket costs each person can be required to pay each year under their plan. Insurers also used to be able to impose limits on benefits that they would pay out each year or over a person’s lifetime, leaving people exposed to catastrophic costs even though they had coverage. Insurers also must issue insurance to anyone, regardless of pre-existing conditions, and cannot vary premiums only by gender or health status. People in their 60s cannot be charged more than three times the premium of people in their twenties for the same plan; older people used to have to pay far more. To make these protections possible, the ACA required people to purchase insurance or pay a penalty. Without that requirement, healthy individuals would wait until they got sick to purchase insurance, and without healthy individuals in the pool, the insurance market would not be viable. ACA subsidies help low- and moderate-income people pay their premiums; cost-sharing subsidies help reduce deductibles and other out-of-pocket costs for low-income people.

The House-passed AHCA would immediately repeal the requirement for individuals to have coverage or pay a penalty, causing an estimated 20 percent increase in individual-market premiums in 2018, all else equal.[13]  The bill would also drastically reduce the help that modest-income people get with paying their premiums, deductibles, and other costs. Insurers would still have to issue plans to everyone, regardless of health status, but they would have be given other tools to reduce their coverage of people with medical needs. The bill would allow insurers to offer only high-deductible plans, and not plans with lower deductibles that are now required in the marketplaces. The bill would allow insurers to charge older people up to five times more than younger people for the same plan — far greater than the current ratio of three to one.

In addition, the AHCA creates state waivers that would allow insurers to further roll back consumer protections — waivers that about half the states, including possibly Iowa, would be expected to take.[14] All told, the individual insurance market would look much like it did prior to the ACA, with far fewer people covered and people with pre-existing conditions blocked from getting affordable coverage that meets their needs.

The AHCA Allows States to Lower Insurance Standards

States could apply for three important waivers under the AHCA:

  • Starting in 2018, states can allow insurers to charge older people even more than five times what younger people pay, further raising premiums for seniors purchasing coverage individual market.
  • Starting in 2019, states can allow insurers to charge to effectively end the pre-existing condition provisions of Obamacare; states could allow insurers to charge higher premiums to people based on their health conditions.
  • Starting in 2020, states can eliminate the requirement that insurers must cover 10 categories of essential health benefits in individual and small group insurance plans.

About 1.3 million Iowans had pre-existing conditions that could have disqualified them from health insurance in 2009, according to the U.S. Department of Health and Human Services.[15] Of those, 174,000 are children, and 319,000 are age 55 to 64,[16] the group facing the highest premiums on the private market under the House-passed AHCA. Iowa could, of course, keep the ACA pre-existing condition protections in place to protect those with pre-existing conditions, who represent about half of the entire population under age 65. However, the state would be under heavy pressure to seek one or more waivers to permit insurers to sell lower-premium, skimpier coverage that might attract healthier people — even tough the House bill would remove the penalty for being uninsured and people would get far less help paying their premiums.

Protections against Catastrophic Costs Could Disappear

While the Obamacare prohibition on lifetime or annual limits on benefits would technically remain in place under the AHCA, this applies only to coverage of the 10 essential health benefits. States could obtain a waiver to remove some or all of those essential benefits from the required list. This would allow insurance companies to impose annual or lifetime limits on payments for benefits no longer defined as essential. Similarly, the Obamacare requirement that policies limit maximum spending by individuals on deductibles and other out-of-pocket costs each year protects people from catastrophic costs, but this provision again applies only to the essential health benefits.

To see how this could work in practice, suppose a state receives a waiver to remove maternity care from the list of essential health benefits for policies issued in that state. Insurance companies might still offer policies that include maternity care. But those policies could now limit what they will pay when an enrollee has a baby, and they could exclude maternity services from the plan’s out-of-pocket maximum. This in turn puts the enrollees at risk of catastrophic costs, which could lead to medical bankruptcy. For example, a child birth that requires a C section, or a few days of care in the neonatal intensive care unit, could easily cost over $200,000. A person with maternity coverage might find herself to be responsible for most of that cost, because there is no out-of-pocket maximum for the insured, but there is a limit on what the insurance company will pay.

Even people with employer coverage could find weakened protections against high cost sharing under the AHCA. That is because the ACA prohibition against annual and lifetime limits, as well as the cap on yearly cost-sharing amounts, applies to virtually all private insurance plans. About 1.1 million Iowans would have a policy with a lifetime benefit limit were in not for the ACA.[17]

The AHCA Drastically Changes Insurance Premium Subsidies

Under current law, premium credits are available to people with low or moderate incomes, to help make it affordable to buy a plan. The credits are based on enrollees’ incomes as well as the actual cost of the premium for a plan in the place the person lives. The ACA also provides cost-sharing reductions (CSRs) that lower deductibles and co-payments that people with low incomes pay under their marketplace plans. In 2016, the average Iowan purchasing insurance on the exchange who was eligible for the credit had to pay only 29 percent of the premium, the rest being covered by the credit.

The AHCA would substitute a flat tax credit that is the same regardless of income, and regardless of whether someone lives in an area with high premiums or low premiums. The size of the credit varies only by age, from $2,000 for persons under 30 to $4,000 for those age 60 or older. For the average Iowan purchasing insurance with subsidies, the effect of the AHCA is to increase overall costs by $3,900 per year. Premiums would increase nearly $300, the tax credits would decline by $2,685, and cost sharing in the amount of $926 would be lost.[18]

For older Iowans, who face much higher health insurance premiums to start with, the AHCA would cause a staggering increase in costs. A 60-year-old pays on average just $1,183 in net premiums, after credits, under the ACA. But under the House bill, that net premium would jump to $9,614, an $8,431 increase.[19]

These averages conceal wide variation across counties in Iowa, with rural counties generally hit the hardest:

  • For a family of four with $40,000 income, the increase in the family’s costs under the AHCA varies from $1,100 to $10,050. In 63 of Iowa’s 99 counties, the loss of premium subsidies would exceed $8,400, and all but six of those are rural counties. (See map below.)
  • For an elderly couple with no children at home and with the same $40,000 income, the AHCA would cause them to lose premium assistance ranging from $5,940 to $17,830. In 63 counties the premium credit loss would exceed $15,700, and once again, all but six of those counties are rural.

If we focus instead on the 20 counties where the credit loss would be the smallest, both for the family of four and for the senior couple, we find 12 of those 20 counties are in metropolitan areas.

In the map below, the lighter-shaded counties, with black lettering, are those where the tax-credit losses in 2020 are projected under AHCA to be above $8,000 for four-person families with $40,000 income, and above $15,000 for 60-year-old couples with $40,000 income. The light-yellow counties are in metro areas; the light-green counties non-metro areas.

170621-ahca-metroSource: Henry J. Kaiser Family Foundation

The average premium increase in Iowa’s 21 metro counties (those within one of the nine Census-designated metropolitan areas) is $3,517 for the family of four, $9,150 for the senior couple.  For the 78 non-metro counties, the average premium increases would be $7,607 for the family of four (about double), and $14,582 for the senior couple.[20]

The AHCA Provides a Windfall for Corporations and the Wealthy

The ACA is financed in large part by two Medicare taxes that fall only on individuals with incomes above $200,000 or couples with incomes above $250,000. The AHCA would repeal these taxes.  Millionaires would get 79 percent of the benefit if these taxes were ended.[21] The 400 richest households in the country would receive a $2.8 billion windfall, for an average tax cut of about $7 million a year for each household. The AHCA also repeals taxes on insurance companies, pharmaceutical companies, and other corporations.

The AHCA Would Not Fix Iowa’s Insurance Exchange Problems

Iowa’s insurance exchange is in trouble as insurers exit the market. The principal reason is that too few young, healthy individuals purchased insurance on the exchange. While this has been something of a problem nationally, it is more severe in Iowa. Few Iowans eligible to purchase plans through the exchange actually did so: In 2016, only 20 percent of eligible marketplace enrollees actually purchased insurance, compared to a national average of 40 percent.[22] This is due in part to poor outreach by the state to inform consumers about the benefits of enrollment — and the state even turned down federal funds for this purpose in 2013.

In addition, the ACA was designed to eliminate poor-quality health insurance plans that covered too few health benefits, capped insurance company payouts, or had no limits on a patient’s out-of-pocket expense. But individuals could seek a waiver that would allow them to retain their old policies — plans that did not meet new standards for benefits or pre-existing conditions — Iowa’s insurance regulators were very generous in allowing such waivers.[23] As a result, many young, healthy people kept their old plans because they were cheap. Without those people in the exchanges, the insurance companies offering ACA plans were left with a pool of people who were sicker, older and cost more to cover. Compounding the issue in Iowa, the state’s largest insurer, Wellmark, opted to continue covering tens of thousands of individual-market customers on their old plans and also decided not to offer coverage through the exchange for the first three years. This likely contributed to the relatively low portion of Iowans moving to ACA coverage through the exchanges. In recent years, Wellmark has had more enrollees in its pre-ACA plans than the total number of all exchange enrollees, splitting up the state’s individual market.[24]

There has been speculation about the impact on the Iowa exchange because of one very expensive patient, whose health bills exceed $1 million per month. That person was insured by Wellmark, and when Wellmark pulled out of the exchange after only one year, other insurers may have feared they would have to insure that person, a deterrent to their market participation.[25]

One potential solution to this problem is a reinsurance pool, and though one exists under the ACA, it will not kick in until 2018. The uncertainty surrounding the future of the ACA only adds to the risk that insurers see if they remain in the market. The AHCA solution is to put the high-cost individuals in a state high risk pool. The AHCA, however, provides only about a third to a fifth of what is needed to fund insurance for all who need it; the result would be very high premiums for those in the pool, or millions left out of coverage.[26]

Meanwhile, the Iowa Insurance Commissioner has filed a plan to salvage the Iowa exchange by requesting a waiver under the Affordable Care Act.[27] There would be a single insurance plan available throughout the state, similar to the mid-level or “silver” plan now available on the ACA marketplace. The plan would cover the ACA’s 10 essential health benefits, and retain protections for pre-existing conditions without any annual or lifetime benefit caps. The proposal also incorporates an element of the AHCA, raising the age ratio, so that premiums for older Iowans would increase more. Premiums would rise for all age levels, as would the credit, which would be based on income just as it is under the ACA. The net premiums would be higher; for example, a family of four at 200 percent to 250 percent of the poverty level would pay $212 more per month, a 53 percent increase, while a couple in their late 50s would pay $236 more per month, an 82 percent increase. The state’s largest insurer, Wellmark, has said it would offer the plan in all 99 counties if the proposal is approved in a timely fashion.[28]

Conclusion

The Iowa experience should serve as a warning to other states about what will happen if the AHCA becomes law. That’s because the AHCA would allow all states to waive requirements about essential health benefits, and if they do so that will bring back cheap policies with poor coverage, caps on benefits, and no ceiling on out-of-pocket costs. In other words, states will be free to abandon the principle of one large pool of insured, and instead segment the market, encouraging the young and healthy to buy these cheap policies allowed under the waiver. This would leave the older and sicker on the better policies that remain compliant with the ACA. That in turn may cause insurance companies to abandon such compliant policies, leaving the states back where they were before health care reform.


[1] John Holahan, Linda J. Blumberg, Matthew Buettgens and Clare Pan. Impact of the AHCA on Federal and State Medicaid Spending and Medicaid Coverage: An Update. Urban Institute. June 2017. This analysis assumes that states drop their ACA low-income adult Medicaid expansion population and cut Medicaid enrollment among other non-elderly adults to fully compensate for federal Medicaid funding cuts due to reduction in expansion matching rate and to per capita cap. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2017/rwjf438186

[2] Rachel Garfield, Robin Rudowitz, and Anthony Damico. Understanding the Intersection of Medicaid and Work. Issue Brief. Kaiser Family Foundation, February 2017. http://www.kff.org/medicaid/issue-brief/understanding-the-intersection-of-medicaid-and-work/

[3] John Holahan et al. The Impact of Per Capita Caps on Federal and State Medicaid Spending.The Urban Institute. March 2017. www.urban.org/sites/default/files/publication/89061/2001186-the_imapct-of-per-capita-caps-on-federal-spending-and-state-medicaid-spending_2.pdf

[4] Matt Broaddus and Edwin Park. House Republican Health Bill Would Effectively End ACA Medicaid Expansion. Center on Budget and Policy Priorities. June 6, 2017.

[5] Anyone who has not been enrolled in Medicaid for two months is considered a new enrollee under the AHCA.

[6] Of those enrolled in the Medicaid expansion at the end of 2019, when the federal 90 percent match is scheduled to end, fewer than five percent would still be on Medicaid by the end of 2024. Congressional Budget Office, “American Health Care Act,” March 13, 2017. https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/americanhealthcareact.pdf

[7] The matching rate, or FMAP, for fiscal year 2018 is 58.5 percent. http://www.kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

[8] Matt Broaddus and Edwin Park. House Republican Health Bill Would Effectively End ACA Medicaid Expansion. Center on Budget and Policy Priorities. June 6, 2017.

[9] University of Virginia, Weldon Cooper Center for Public Service, Demographics Research Group. http://demographics.coopercenter.org/national-population-projections/?q=demographics/national-population-projections

[10] Matt Broaddus. Population’s Aging Would Deepen House Health Bill’s Medicaid Cuts for States. March 24, 2017. Center on Budget and Policy Priorities. http://www.cbpp.org/blog/populations-aging-would-deepen-house-health-bills-medicaid-cuts-for-states

[11] Edwin Park. “Trump Budget Cuts Medicaid Even More than House Health Bill, Showing Danger of Per Capita Cap.” Center on Budget and Policy Priorities, May 23, 2017. http://www.cbpp.org/blog/trump-budget-cuts-medicaid-even-more-than-house-health-bill-showing-danger-of-per-capita-cap

[12] Kaiser Family Foundation. Changes in Insurance Coverage in Rural Areas under the ACA: A Focus on Medicaid Expansion States. May 4, 2017. http://www.kff.org/medicaid/fact-sheet/changes-in-insurance-coverage-in-rural-areas-under-the-aca-a-focus-on-medicaid-expansion-states/

[13] Edwin Park, “New CBO Estimates: 23 Million More Uninsured under House-Passed Republican Health Bill,” Center on Budget and Policy Priorities, May 24, 2017.

[14] Park, op cit.

[15] https://aspe.hhs.gov/compilation-state-data-affordable-care-act

[16] Emikly Gee. Number of Americans with Pre-Existing COnditions by Congressional District. Center for American Progress, April 5, 2017. https://www.americanprogress.org/issues/healthcare/news/2017/04/05/430059/number-americans-pre-existing-conditions-congressional-district/

[17] Loren Adler and Paul B. Ginsburg. Health Insurance as Assurance: The Importance of Keeping the ACA’s Limits on Enrollee Health Costs. The Brookings Institution, January 17, 2017. https://www.brookings.edu/blog/up-front/2017/01/17/health-insurance-as-assurance-the-importance-of-keeping-the-acas-limits-on-enrollee-health-costs/

[18] Aviva Aron-Dine and Tara Straw. House GOP Health Bill Still Cuts Tax Credits, Raises costs by Thousands of Dollars for Millions of People. Center on Budget and Policy Priorities, March 22, 2017.

[19] Aviva Aron-Dine and Tara Straw. House GOP Health Bill Still Cuts Tax Credits, Raises costs by Thousands of Dollars for Millions of People. Center on Budget and Policy Priorities, March 22, 2017.

[20] These are population-weighted averages, computed by weighting the premium increase for a county by its share of the total population in the metro or non-metro counties as of 2016.

[21] Chye-Ching Huang, Chuck Marr and Emily Horton. House GOP Health Plan Eliminates Two Medicare Taxes, Giving Very Large Tax Cuts to the Wealthy. Center on Budget and Policy Priorities, March 20, 2017. http://www.cbpp.org/research/federal-tax/house-gop-health-plan-eliminates-two-medicare-taxes-giving-very-large-tax-cuts

[22] The Henry J. Kaiser Family Foundation. Marketplace Enrollment as a Share of the Potential Marketplace Population.

March 31, 2016.

[23] Catherine Rampell. “Want to know what Trumpcare would do to the country? Look at the implosion in Iowa.” The Washington Post, May 22, 2017.

[24] Andrew Sprung. “Why insurers thrive (or dive) in ACA marketplaces. healthinsurance.org. April 28, 2016. https://www.healthinsurance.org/blog/2016/04/28/why-insurers-thrive-or-dive-in-aca-marketplaces/

[25] Tony Leys. “Iowa teen’s $1 million-per-month illness is no longer a secret.” Des Moines Register, May 31, 2017. http://www.desmoinesregister.com/story/news/health/2017/05/31/hemophilia-patient-costing-iowa-insurer-1-million-per-month/356179001/

[26] Linda J. Blumberg, Matthew Buettgens, and John Holahan. High-Risk Pools Under the AHCA: How Much Could Coverage Cost Enrollees and the Federal Government? Robert Wood Johnson Foundation and the Urban Institute, May 2017. http://www.rwjf.org/en/library/research/2017/05/high-risk-pools-under-the-ahca.html

[27] Iowa Insurance Division. The State of Iowa’s Proposed Stopgap Measure for the Individual Health Insurance Market. June 12, 2017. https://iid.iowa.gov/sites/default/files/state_of_iowa_proposed_stopgap_measure_6.12.2017.pdf

[28] Ed Tibbets. “Iowa floats plan for insurance markets.” Quad-City Times. June 12, 2017. http://qctimes.com/news/local/government-and-politics/iowa-floats-plan-for-insurance-markets/article_27ed8402-ff25-5651-94b2-af42ec5e18ef.html#utm_source=qctimes.com&utm_campaign=%2Femail-updates%2Fbreaking%2F&utm_medium=email&utm_content=A610FFEAA69F54B0BB4F3A1FAD0FDDDEB0B2C7DF

pfisher240200Peter Fisher is Research Director of the Iowa Policy Project, part of the Iowa Fiscal Partnerhsip (IFP). IFP is a joint public policy analysis initiative of two nonpartisan, nonprofit organizations based in Iowa: the Iowa Policy Project in Iowa City, and the Child & Family Policy Center in Des Moines.

AHCA: Shifting Costs to States

FOR IMMEDIATE RELEASE TUESDAY, JUNE 6, 2017

Cutting Medicaid Expansion: Huge Cost Shift to Iowa, Other States

IOWA CITY, Iowa (June 6, 2017) — A new report shows Iowa would have to spend almost three times what it does now to cover low-income adults who would lose health coverage under the House-passed American Health Care Act (AHCA).

To keep up the benefit to those families, AHCA would force Iowa and the 30 other states that expanded Medicaid to absorb a greater share of the cost. The Center on Budget and Policy Priorities (CBPP), estimates the cost to Iowa to rise $192.5 million in 2021.

“This is an enormous cost-shift to Iowa, and we already have seen our state’s leaders cutting back revenues, and trying to cut more. Facing those fiscal constraints already, it is hard to see how the state could pick up those costs, which puts health coverage for many thousands of Iowans in jeopardy,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP).

The new analysis by the Center on Budget and Policy Priorities shows that Iowa’s costs would continue to soar. By 2023, the state would have to find an additional $335.8 million to maintain coverage for people benefiting from the Medicaid expansion. That would be a 288 percent increase from the cost under current rules.

“The real question is whether Iowa’s political leaders on both sides of the aisle are willing to speak up about this to assure Iowa’s senators, Charles Grassley and Joni Ernst, are aware of the decisions being put on state lawmakers’ plates,” Owen said.

Peter Fisher, IPP research director, noted that about 150,000 Iowans benefit from the Medicaid expansion, which was part of the Affordable Care Act (ACA).

“Many thousands of Iowans have health coverage now because of the ACA and the Medicaid expansion,” Fisher said. “As we have stated before, any plan to replace ACA can be judged on how well those gains are maintained.

“The House bill would at best jeopardize the gains, and with higher costs for insurance, almost guarantee far greater numbers of Iowans would be uninsured.”

The CBPP report estimates the bill would jeopardize coverage for 11 million newly eligible low-income adults who enrolled in Medicaid under the expansion.

The report is available at http://www.cbpp.org/research/health/house-republican-health-bill-would-effectively-end-aca-medicaid-expansion.

In states that adopted the Medicaid expansion, the federal government pays at least 90 percent of the expansion costs — an enhanced rate compared to the regular Medicaid program. This change cut uninsurance rates in half for non-elderly adults in Medicaid expansion states, from 18.4 percent in 2013 to 9.2 percent in 2016.

Under the AHCA, however, the federal government would pay only the regular Medicaid matching rate, 58.5 percent in Iowa, for new enrollees beginning in 2020. Anyone whose Medicaid coverage lapses for more than two months becomes a new enrollee. Because Medicaid recipients cycle on and off the program, in the space of just a few years most enrollees would be “new,” and would lose Medicaid coverage altogether unless the state came up with the millions required to keep them on.

With the loss of the Medicaid expansion, the percent of Iowans who are uninsured could rise to levels even higher than existed prior to Obamacare. That is because those individuals who received some coverage from IowaCare, and who since moved to the Medicaid expansion, would not have IowaCare to fall back on when the expansion ends.

The Iowa Policy Project is a nonpartisan public policy analysis organization based in Iowa City. IPP and the Child & Family Policy Center in Des Moines together analyze fiscal policy issues as the Iowa Fiscal Partnership, www.iowafiscal.org.

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Repeal of Obamacare: Following the money

Posted March 21st, 2017 to Blog

Congressional Republicans have proposed replacing the Affordable Care Act, known as Obamacare, with the American Health Care Act, or AHCA. To understand why, suppose we follow the money — who loses, who gains?

On the losing side are thousands of Iowans who would find themselves facing higher costs for health insurance. Consider a married couple with two young children, and with $40,000 annual income. In Iowa’s metropolitan counties, this family’s tax credits for the purchase of health insurance would fall by $3,469 annually. In rural areas, where health insurance is much more expensive, the same family would face nearly an $8,000 reduction in credits — in other words, an $8,000 increase in the cost of health insurance. For couples in their late 50s or early 60s, the jump in costs is much higher: $11,300 in urban areas, over $17,000 in rural counties. (See an earlier IPP report for details.)

The much greater impact on rural Iowans is because the Republican plan gives everyone the same credit, whether they are in a high-cost or low-cost county. While the credit rises with age,  the credits for older Iowans cover a far smaller share of their much higher insurance costs. Overall, the average Iowa family currently receiving subsidies for the purchase of insurance would see a $2,512 drop in the subsidy.[1]

But who are the winners? The Republican plan includes tax cuts primarily for the wealthiest Americans, as well as drug and insurance companies. The 400 highest-income taxpayers nationally would get annual tax cuts averaging about $7 million each. These taxpayers, whose annual incomes average more than $300 million, would receive tax cuts totaling about $2.8 billion a year.[2]

We now know how two of these cuts, amounting to $31 billion a year, would impact Iowans. The Affordable Care Act was financed in part by these two new taxes. One is the Net Investment Income Tax, the other the Additional Medicare Tax. Both fall primarily on the wealthiest. Repeal of these two ACA taxes would shower $116.7 million in tax cuts each year on just 1.9 percent of Iowa taxpayers. A full 92 percent of those tax cuts would go to the richest 1 percent of Iowa taxpayers — those making $444,000 a year or more, and with an average income of $1.17 million. Those taxpayers would receive on average $7,004 a year.[3]

Basic RGB“Follow the money” is good advice. But what you find when you get there is often not a pretty picture.

[1] Aviva Aron-Dine and Tara Straw. House Tax Credits Would Make Health Insurance Far Less Affordable in High-Cost States. Center on Budget and Policy Priorities, March 9, 2017.

[2] Chye-Ching Huang. House Republicans’ ACA Repeal Plan Would Mean Big Tax Cuts for Wealthy, Insurers, Drug Companies. Center on Budget and Policy Priorities. March 8, 2017. http://www.cbpp.org/research/federal-tax/house-republicans-aca-repeal-plan-would-mean-big-tax-cuts-for-wealthy-insurers

[3] Institute on Taxation and Economic Policy. Affordable Care Act Repeal Includes a $31 Billion Tax Cut for a Handful of the Wealthiest Taxpayers. March 2017. http://itep.org/itep_reports/2017/03/affordable-care-act-repeal-includes-a-31-billion-tax-cut-for-a-handful-of-the-wealthiest-taxpayers-5.php

Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org