Three ways Republicans could better reform the ACA
In last Sunday’s Denver Post, John Ingold wrote a front page story entitled “The Faces of Medicaid.” In this story he compassionately described a little girl who was disabled, a boy with severe autism and a senior suffering from the Alzheimer’s disease. Ingold highlighted their dependence on Medicaid, a shared federal/state partnership that provides a health care safety net for the poor and disabled. The Republican-led Congress is now considering significant reforms to Medicaid due to its sky-rocketing costs as part of efforts to repeal and replace the Affordable Care Act (ACA), better known as Obamacare.
Historically, Medicaid is a “shared” costs program with the states and the federal government each paying about half its expenses. The Republican proposal moves Medicaid from its current archaic fee-for-service system to one where states can choose to either accept a fixed capitated amount per enrollee, increased annually by a formula of medical inflation plus one percent per year, or a block grant. Under the block grant, states would receive much more flexibility in how they manage the delivery of care for their Medicaid population and provide relief to their budgets by reducing the cost of delivering medical care. However, for vulnerable patients, like the ones highlighted in The Post story last Sunday, there remains the uncertainty of how changes to Medicaid may impact their access to care. Not surprisingly, the uncertainty of how changes to their care will affect them and their families has created an environment of anxiety and fear of the unknown.
The irony of this is that none of the programs described by Ingold were part of the ACA. What the ACA did was to create the Medicaid expansion program. Medicaid expansion added an entirely new class of recipients to Medicaid by making eligible able-bodied individuals, without dependent children, who earn up to 138% of the federal poverty level. The ACA’s Medicaid expansion program has increased the number of Medicaid enrollees across the country by almost a third and is the main driver of Medicaid’s dramatic increase in spending.
On Tuesday, I sent a letter to Speaker of the House Paul Ryan and Senate Majority Leader Mitch McConnell suggesting that Republicans revisit their approach to ACA reform and break it into three separate initiatives. The first would limit changes to Medicaid to only the ACA-created Medicaid Expansion program and apply any savings as an offset for the taxes and penalties that impact working and middle class families; the second bill would move all other ACA-related taxes out of the health care debate and into the pending tax reform bill; and the third would address the failing health insurance exchanges where individuals not eligible for Medicaid and who do not have employer provided health insurance now go for coverage. This part should be negotiated in a bipartisan manner outside of the filibuster-proof budget reconciliation process.
Medicaid expansion: As noted above, the traditional Medicaid program is a shared responsibility with costs divided about evenly between the federal government and the states. Under the ACA, the Medicaid expansion program has the federal government’s share starting at 100% and phasing down to 90% by 2020. It makes no sense to me that the federal government would favor able-bodied adults over all other Medicaid recipients, such as disabled children, whose costs are reimbursed at 50% by the federal government.
The ACA’s Medicaid expansion needs to revert to the standard Medicaid cost shares that the states receive for all other Medicaid enrollees. This could be done by phasing it into effect by allowing all Medicaid expansion enrollees up to January 2020 to remain at the 90/10 split indefinitely while all new enrollees from January 2020 are at the standard reimbursement rate for each respective state (50% in Colorado).
Tax reform: There are 21 taxes and penalties in the ACA, many of which have nothing to do with health care. The ACA taxes on higher income Americans, such as the 3.8% surtax on net investment income, are better addressed in the impending tax reform bill, not during the health care debate.
Health insurance reform: The ACA promised lower health insurance rates but we all know that never materialized. Now the health care exchanges, created under the ACA, are failing as health insurance carriers are losing money on the plans offered through the exchanges — with more and more of them dropping out of the program. When there are no carriers willing to provide policies for a certain state or region serviced by an exchange, the program collapses and consumers lose the ability to buy income-adjusted subsidized policies. I believe this is an area where Republicans and Democrats can come together to find a bipartisan solution that works to lower health insurance costs while maintaining consumer protections such as preexisting conditions.
Right now we in Congress have a bipartisan opportunity to “fix” the many problems Americans have in obtaining access to affordable health care and to responsibly address the unsustainable cost of the ACA’s Medicaid Expansion.
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