AHCA Healthcare, part 4

posted in: CYJ Blog, Lifeskills, Wellness

With all the mixed data and messages coming our way about AHCA’s impact in the future, we will focus on some supposed easy fixes offered by Avik Roy, Believe It Or Not, CBO’s Score Of House GOP Obamacare Replacement Is Better Than Expected (Forbes, May 14, 2017). Again, Roy puts the Congressional Budget Office (CBO) numbers in perspective with the CBO having a consistent problem modeling how a competitive, individual insurance market would work by continually revising their estimates for both ACA and AHCA. Roy further stated “CBO coverage estimates could be off by as much as 19 million, . . . and that the real impact of the AHCA on coverage is negative 5 million.”

Now, here is where Roy offers what he calls “easy fixes.” Yet, Roy emphasized that “. . . even with better CBO methods, the AHCA would still cover fewer people than Obamacare. Why? Because, again, according to Roy from Forbes, The Apothecary, “the bill insists on using a flat tax credit that provides the same assistance to someone just above the poverty line that it gives to a family making six figures.” Per Paul Ryan, the GOP reasoning behind this is to provide stronger incentives for those in the poverty range to obtain training and advancement in their jobs so they can get out of poverty, assisted by welfare reform coming next year.

Per Roy, “Because the AHCA also contains valuable tax credits to purchase coverage, it also contains a disincentive to work, albeit one that is smaller than Obamacare.” The outcome will depend on whether premiums are kept attractively low and lowers the uninsured numbers. The opposite can happen if premiums go up and results in more uninsured.

Roy sees another flaw in AHCA and Ryan’s theory. It doesn’t account for the interaction of Medicaid with his tax credits and the sudden (benefits cliff) drop in health insurance subsidies. Roy’s easy fix involves a health reform plan his think tank, Foundation for Research on Equal Opportunity, published, called Transcending Obamacare (Understanding FREOPP’s Obamacare Replacement in 10 Minutes or Less, Dec. 10, 2016). His fix “. . . deploys a system of means-tested, age-adjusted tax credits on a sliding scale that spends less money than Obamacare’s approach, because it phases out at 317 percent of FPL [Federal Poverty Levels] instead of 400 percent. Furthermore, because the plan liberalizes the insurance market and reduces premiums, the plan covers more people than Obamacare while spending less money.”

Roy also see the AHCA containing a strategy that could eliminate the bill’s benefit cliff (Improving the American Health Care Act for Vulnerable Populations, March 7, 2017). Focus is on a “. . . means-tested, age-adjusted tax credits that the bill uses as a transition from Obamacare to the AHCA’s flat credit system. All you have to do is keep the transitional system—perhaps with some tweaks in response to its fiscal effects—and never go to a flat tax credit. Those means-tested, age-adjusted credits could help the AHCA cover as many, if not more, people than Obamacare, and at lower cost.”

Roy also thinks Republicans should consider delaying “. . . the repeal of the individual mandate until 2020. He dislikes the mandate like most everyone else. “But over the long term, the AHCA’s system of tax credits will be more successful if it begins with a carefully designed transition away from Obamacare . . . Delaying the mandate repeal to 2020 would likely result in even lower premiums after 2020, and therefore higher enrollment numbers. It’s a simple change worth considering.”

Roy continues with the CBO having a “. . . surprising degree of confidence that the AHCA’s policy mix—tax credits more favorable to young people, a 5-to-1 age ratio for premiums, an elimination of actuarial value mandates, and state innovation grants for high risk pools and risk adjustment—would result in a relatively stable nongroup market.” However, Roy thinks the bill’s 30 percent surcharge for buying coverage outside of open enrollment might make the risk pool less stable and should be replaced by a more flexible regime.

You have to wonder, according to Roy, how the bill cutting spending by $1.2 trillion, and taxes by $883 billion, for a net deficit reduction of $337 billion, will impact economic growth and tax revenues. The latest CBO 2017-2026 estimate (May 24, 2017) on net deficit reduction is $119 billion instead of $337 billion. According to conservative tax reform activist Grover Norquist (Americans for Tax Reform, Newsmax), “The CBO guessing how many people . . . lose their health insurance – they are going from estimates that the CBO made that were off by 100 percent on how many people would get healthcare . . . .”

Roy’s bottom line is “Republicans shouldn’t abandon the AHCA because of a superficially unflattering CBO score or its failure to meet their own purity tests. They should work all the more to correct its flaws. If they do, in 2020, the real world very well may vindicate them instead of the CBO.”