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?