The hands of the Deathwatch Clock have been moving back for some time now, signaling that your reporter believes the chances for ACA repeal have steadily receded.

The reason is clear – killing ACA would be politically devastating for Republicans, especially Republicans in vulnerable election districts. Two months ago I predicted ACA would not be repealed due to the political cost; if anything I feel more strongly today.  Here’s why.

1. The President has acknowledged healthcare is enormously complicated.  Who knew? of course, MCM’s faithful readers knew…
2. Governors could not come up with any consensus on what a replacement plan would look like, components thereof, funding, or even how to treat Medicaid.
3. There is no consensus between Republican Congresspeople or Senators, with the Senate’s key leadership expressing notable reluctance to repeal without an agreed-upon replacement plan ready for a vote.
4. Democratic Senators are – so far – standing unified in their opposition to repeal/replace.  Without at least 8 Democrats, a replacement is a non-starter.

So, what’s going to happen?

Here, in order of likelihood, are my best guesses.  I reserve the right to change the order based on future developments – or the lack thereof.

• Minor tweaking
  Republicans will futz around with the mandate, premium supports, Medicaid funding, and a few other less-important aspects, call it a huge improvement, and be done. Dems will support these changes, as they’ve been trying to get their R colleagues to do this for years.
• Nothing
  Attempts to tweak ACA will come to naught as the House Freedom Caucus and arch-conservatives in the Senate will refuse to do anything until their party delivers on its campaign promises to “rip it out root and branch”.
• Bigger tweaking
  Remember – ACA includes major changes to Medicare reimbursement, medicaid expansion, the individual mandate, a variety of taxes and fees, medical education funding, and on and on.  It does NOT lend itself to big tweaks, but some Republicans are hellbent on doing whatever they can that doesn’t require any Democrats to support it.  For example, use reconciliation rules to block grant or per-capita cap Medicaid

When will this occur?

Next year is looking more and more likely, however insurers selling via the Exchanges will need some assurances within a month if they are going to feel any degree of comfort in setting rates.

Those assurances are anathema to the Freedom Caucus, so we may see a fist fight between that faction and more centrist Republicans in the House.  The centrists will win that fight.

So, expect no practical changes to ACA thru the end of 2018.  There will be much window-dressing as Republicans seek to show voters that they delivered on their promises, but it will be just that – window-dressing.

What does this mean for you?

Likely no major changes till 1/1/2019 – if then.

Two immutable truths were behind much of ACA’s original construction. These same truths are giving Republicans seeking to repeal/replace major heartburn.

First, healthcare is the single largest part of America’s economy.  One out of every six (soon to be five) dollars flows thru the healthcare system.

“Controlling cost” really means someone is going to make less money. 

As most of you reading this get a big chunk of your income from healthcare, that’s a problem. For politicians trying to come up with a plan to reform the reform, solving healthcare means some very, very powerful entities are going to get screwed. 

The question is, which ones?

• Hospitals are often the largest single employer in an area.
• Pharma is hugely profitable and pharma workers are very well paid.
• Medical device and equipment companies are similarly disposed and their employees similarly compensated (the largest employer in our town is WelchAllyn)
• Healthcare professionals enjoy good incomes and generally good working conditions (full disclosure – our daughter and her husband are both ER RNs)
• Healthplans have generally done well under ACA – remember the Exchanges are just a small part of their overall business.
• Taxpayers, who don’t want to pay higher taxes

You can’t cut costs without cutting hospital revenues, reducing doctors’ incomes, lowering pharma prices, or slashing profits for device companies. (Healthplans are a bit of a separate issue as their gross income is based on underlying costs, so if healthcare costs go down, so do their revenues).

The power of the healthcare lobby is beyond measure; three years ago the industry spent over a half-billion dollars on lobbying in DC.  Pikers.  Last year,

• pharma and medical device companies alone spent $244 million.
• Hospitals and nursing homes laid out $94 million. 
• Health professionals – $84 million.
• Healthplans – $76 million.

So, which one of these incredibly well-funded and well-connected stakeholders is going to willingly give up a few tens of billions of dollars to keep your insurance costs and taxes down?

Put another way, are you personally ok with a lower paycheck?

Truth Two – Older people vote, younger people don’t.

(credit US election project)

If you’re trying to keep insurance costs low, you have to get more healthy people (i.e. younger people) into the pool to help pay costs for us older folks.  To get more people to buy insurance, you have to keep premiums low.  The best way to do that is by allowing a big premium disparity between older and younger folks.

Currently, ACA only allows insurers to charge old folks 3 times more than young ones. The result – insurance for younger people is higher than it would be if healthplans could split the population into, say, five “age bands” and charge older people 5 times more than the youngest. Sure, it’s likely a lot more young people would sign up if their premiums were lower – and they would be – about 15 percent lower.

But if they do, the oldest people – who are about 2.5 times more likely to vote than the youngest group – are going to be hopping mad. Estimates are premiums for the older group would jump 22%.

What do these Two Immutable Truths mean for you?

It could mean your income drops a lot, your taxes go up, your premiums go up or down, your stock portfolio suffers…

Net is, to “fix” healthcare someone’s ox is going to be gored.  And pissed-off oxen are scary indeed.

The net – we’re further away from repeal and replace than we were even a week ago.

The details

There’s been a good deal of understandable confusion about the fate of ACA; first it was going to be repealed on Day One of the new Administration, then January 27 was the day, now it’s either sometime late this year or early next. Or perhaps, not.

What’s indisputable is this;  undoing ACA and “replacing” it with legislation that will reduce costs, increase coverage options, and not leave anyone with coverage today uninsured is not possible – unless drastic cost-reduction measures are implemented, measures that are anathema to free-market Republicans.

Republicans sought to use the budget reconciliation process to undo much of ACA, figuring that would allow them to kill components such as the mandate that are particularly offensive to the GOP, while working on a replacement bill that might or might not be passed with a final “repeal” bill.  As reconciliation bills can’t be filibustered, the initial step in the repeal process passed easily.

But here’s the problem – the proverbial clock is ticking, and the longer this drags on, the less likely it is a Repeal/Replace bill will happen.  

First, insurers MUST have some idea what will happen in 2018 before they can come up with rates for coverage in the Exchanges. And they need to know this by May 3 – at the very latest.

Second, Governors need to know what’s going to happen with Medicaid. Seniors need to know what their Medicare Advantage costs will be.  Hospitals need to know what they will get paid for Medicare, Medicaid, and in DSH and other payments before they can set prices.

As has been well-documented here, there’s little consensus among Congressional Republicans on what a replacement would look like. And there are a bunch of other high-priority bills that are must-pass; tax reform, budget, spending and the like, all of which will take a lot of time off the legislative calendar.

And there’s this – Once a budget resolution for 2018 is passed, the current ACA reconciliation bill is null and void. While it’s possible Republicans delay the Fiscal Year 2018 resolution as they try to cobble together a replacement bill, this will greatly complicate the legislative process, likely hinder another key priority – tax reform, and as of today there’s no consensus even among Republicans on what “replacement” would look like.

While it’s theoretically possible Republicans pass another reconciliation bill for the FY 2018 budget year to further kick the ACA can down the road, it’s highly unlikely.

Lots more detail on this here.

What does this mean for you?

Yes, it’s certainly possible ACA will be repealed and replaced. Just a little less possible with each passing day.

Happy Monday!  Up here in the northeast we’re still digging out from a major snowstorm that’s a long way from being over.

I’ll make a lousy analogy; that’s pretty much what’s happening in DC.  For local governments, getting the snow off the streets is the political test that ensures mayors another term, or ends their political career.

Healthcare is the national equivalent, with a rather important difference.  Unlike snow removal, healthcare is devilishly complicated.  It’s not just coordination of more plows, salt, drivers, and tow trucks.

Premium subsidies are one example.  About $9 billion goes towards helping poorer folks pay their deductibles, copays, and other costs.  Back when Republicans were in the opposition, they sued the Obama Administration to block those payments. If the suit were to succeed today, insurers would suddenly find themselves forced to:

• come up with the $9 billion out of their own pockets or
• terminate coverage for millions of members.

Not surprisingly, Republicans have apparently decided to keep paying the premium subsidies for the time being.

Kicking-the-can-down-the-road doesn’t do anything other than prolong the inevitable, which, stated simply, is this: Congressional Republicans are stuck.  It’s not possible to ensure poorer folks keep their coverage while reducing costs and de-regulating the health insurance markets.

Pre-election promises that voters can “Have their cake, Eat it too, and Not get fat” are coming up against the hard reality that healthcare is really complicated; and insurance companies, pharma, doctors, and healthcare systems are in business to make profits.

For insurers to be profitable, they have to:

• enroll lots of people by charging premiums low enough to
• get enough healthy people to join so they can pay for sick peoples’ care, yet
• set premiums high enough to pay pharma and healthcare providers so those industries make a profit;

Without premium subsidies, lots of lower-income people can’t afford insurance, insurance companies can’t afford to insure those people, and more and more healthy people will drop coverage. Republicans’ apparent decision to maintain premium support will keep things calm for now.  The individual market looks pretty stable – rate increases have stabilized and enrollment, despite Republicans’ efforts to hinder sign-ups, is adequate.

Eventually the healthcare “snow” is going to pile up deep enough that Congress is going to have to start plowing.

Either that, or this…

What does this mean for you?

Don’t expect much REAL progress on healthcare legislation in the next month or two.  Or maybe even longer.

Got your shovel ready?

The news from the White House is the “replacement” isn’t going to appear until the end of this year – or perhaps sometime in 2018.

That’s a very good thing.

For those that have been following our ACA Deathwatch, that is no surprise.  In fact it’s a good thing, as the plans proffered by Ryan, HHS-Secretary-designee Price, and various other Republicans are short on details, conflict with Republican Governors’ wishes, and would result in major disruption to health insurance markets and imperil the Medicare Trust Fund.

There is no consensus among Republicans around key aspects of a replacement plan or the timing thereof. The White House’ latest announcement is at odds both with previous statements that the replacement bill would be released right after Tom Price’s confirmation as HHS Secretary, Speaker Ryan’s commitment to introduce a bill in March and Majority Leader McConnell’s promised timetable.

Here are the key problems facing the Repeal-and-Replace crowd.

• ACA is NOT a bunch of totally separate and stand-alone laws, regulations, fees, taxes, policy requirements, and standards. The fees, taxes, and reimbursement changes provide funding for Medicaid expansion, Seniors’ drug costs, premium support, technology, guideline development, and hundreds of other initiatives, many close to the heart of really powerful constituencies.
  Republican leaders who once hooted at the length and complexity of the ACA bill are now learning that fixing healthcare is, shockingly, really complicated.
• Republican Governors are quite concerned that a replacement will drastically cut funding they rely on for Medicaid, community health centers, public health, and other budget-critical programs. They expanded Medicaid based on a promise that the Feds would pay almost all of that cost; none of the plans currently under discussion live up to that promise.
• AARP is marshalling its very large and very vocal membership to complain about higher premiums for the 50-64 year old group that would result from changing age bands and reductions to Medicaid that would hurt dual-eligibles.
• Budget hawks are stuck because repealing ACA – or even just the taxes that are part of ACA – would lead to Medicare insolvency as early as this year.
• Most troubling of all – loss aversion.  Now that people have coverage, they will be furious if Republicans don’t deliver on their oft-stated promises to reduce costs, preserve coverage, and expand choice.  And no, the attempts by politicians to wordsmith their way out of this commitment by talking about “healthcare access” and “access to insurance” will NOT placate voters who lose coverage.

This last is the key.

The political cost to Republicans of failing to deliver on an impossible campaign promise will be high indeed.  For now, they are going to push the deadline out as far as possible, perhaps pass a repeal-in-name-only bill, then wait till after the mid-term elections – or even the next presidential election – before doing anything serious.

What does this mean for you?

Republicans won’t pass and sign a true repeal bill for months.

After a few days of wonderful California weather and Golden State hospitality its back to work.

There’s been so much coming out of DC on all manner of topics healthcare has been somewhat under-covered.  No worries – I got this.

Quick take is Senate Republicans are no closer to a repeal today than they were a month ago. In fact, the “repeal clock” has moved backwards over that time as key Senate Rs have realized repeal is fraught with political landmines.

This bubbled up publicly when Sen Alexander, Chair of Senate HELP Committee and Sen Hatch got into a disagreement over Hatch’s push to repeal the tax provisions of ACA now, then work on a replacement later.

Hatch’s move would have effectively forced many insurers to drop their insureds’ coverage this year, as without premium support low-income insureds would have no funds to cover their share of the premiums deductibles, etc. Insurers would be faced with the need to either a) come up with the money themselves or b) drop out of coverage leaving insureds without coverage.

Alexander’s position was strengthened yesterday by multiple announcements from big insurers about likely withdrawals from the individual markets, as well as news that both the Senate and the House have scaled back plans to do a big bill to repeal and replace ACA.

What does this mean for you?

ACA Repeal is NOT a done deal.

Here are questions you may want to ask about what a “repeal” and “replacement” will do.

1. What will happen to your premiums?
   If more young people sign up, premiums for us older folks go down. If there is no mandate to buy insurance (and the continuous coverage requirement is far weaker than a mandate), insurance premiums for the 50+ crowd are going to go up – a lot. That’s because healthy seniors will decide the premiums are too high, so the only folks that will buy insurance will be the sick ones.  Insurers know this, so they will either a) exit the market; b) raise premiums to the moon; c) drastically limit coverage for specific medical conditions like heart disease or cancer; or d) go bankrupt.
2. Is your medical condition still covered?
   ACA requires almost all insurance plans cover all physical and mental health conditions under the essential health benefits requirement. Replacement plans under consideration have no such requirements, allowing insurance companies to exclude specific types of treatment, specific conditions, types of providers, etc.
3. Is addiction treatment covered?
   Currently mental health coverage is required for most employee and individual plans. Given the huge problems we face with opioid and crystal meth addiction, will a replacement plan require coverage for those seeking to end their addiction? Before ACA, about a third of individual insurance plans didn’t cover addiction treatment. And you can bet your house “replacement” insurance plans wouldn’t offer coverage…
4. Can insurers limit coverage for medical diagnoses or conditions?
   Under ACA, there are NO lifetime or annual caps for specific medical conditions. The “replacement” plans allow insurers to set arbitrary caps for any diagnosis – cancer, heart disease, orthopedic injuries, or any other category they define.
5. What happens if you lose your job and can’t afford to pay for individual health insurance while you are looking for work?
   Under the replacement plans, if you have a “gap in coverage” where you don’t have health insurance, when you apply for new coverage your insurer doesn’t have to cover your pre-existing medical conditions, and/or they can charge you higher rates.
6. Who pays for emergency care for those without health insurance?
   Before ACA family insurance premiums included about $1000 for the additional cost of indigent care due to cost-shifting.  If the number of uninsureds grows – as it most certainly will – they will get care at hospital emergency rooms (hospitals are required to care for anyone presenting with emergent needs regardless of insurance status). So, this “hidden tax” will almost certainly increase your premiums.
7. Will you be able to buy cheaper insurance from out-of-state health insurers?
   No.  There are three states that allow that today – and NO out-of-state insurers are selling across state lines.