At this critical time, it is imperative that Iowa's Senators hear from you urging that they reject legislation being considered in the Senate that will utilize per-capita caps to greatly reduce funding for Medicaid and make other changes to the Medicaid program.
These changes would end the Affordable Care Act's (ACA) Medicaid expansion in 2020 and cut billions of dollars from the program, jeopardizing care for millions of our most vulnerable, including children, the disabled and those with chronic conditions.
If passed, this legislation would be extremely damaging to Iowa's health care system by significanty driving up the uninsured rate leaving hundreds of thousands of Iowans without access to Medicaid or private insurance coverage. Further, the legislation contains harmful policies that would reduce federal spending on Medicaid shifting more of the costs to the state. The state's Medicaid budget is already facing significant shortfalls and challenges that would be compounded by this legislation.
This bill will drive up charity care and bad debt for hospitals and will lead to a major increase in the uninsured rate in the state while also ensuring that affordable health insurance coverage remains out of reach for many Iowans in need.
Tell Iowa's Senators that they must work to protect health coverage for as many Iowans as possible.
The Congressional Budget Office (CBO) released its much-anticipated assessment of the House of Representative’s final version of the American Health Care Act (AHCA) this week. The CBO analysis estimates that AHCA would result in 23 million fewer individuals insured by 2026 than if the Affordable Care Act (ACA) were left in place. Overall, 51 million Americans will be uninsured by 2026, according to CBO.
The increase in uninsured Americans will be caused in part because 14 million individuals who rely on Medicaid will no longer be covered. The analysis also anticipates an increase in the number of Americans ages 50-64 who have income under 200 percent of federal poverty levels who will no longer be able to afford insurance.
Despite reducing federal Medicaid spending by $834 billion over 10 years and spending on premium and cost-sharing subsidies by $290 billion by implementing age-based tax credits rather than income-based subsidies, AHCA is estimated to decrease the deficit by only $119 billion. However, AHCA does not save more money because it provides $874 billion in tax cuts by eliminating ACA’s individual and employer mandate penalties as well as a repeal of taxes on high-income earners, fees on manufacturers and elimination of other excise taxes to help pay for ACA insurance coverage. CBO estimates that more uninsured individuals brought about by these changes will result in increased Medicare disproportionate-share payments to hospitals by $43 billion over 10 years.
AHCA provides an option for states to apply to waive many ACA protections. CBO wrote that as much as half the US population will reside in states that choose to implement the waivers foregoing essential health benefits, guaranteed issue requirements and allowing premiums to again be priced by taking into consideration pre-existing conditions. These changes are anticipated to reduce individual-market premiums overall but substantially increase premiums for older, low-income people, many of whom will be priced of the insurance market.
Despite premium reductions in these states, younger and healthier individuals remaining in the market will use tax credits to purchase less comprehensive and useful health insurance products that do not cover major medical costs, CBO concluded. As a result, individuals will incur much higher out-of-pocket costs for maternity, mental health and substance abuse services. For states that do not seek waivers, individual insurance markets will prove more unstable and premiums will quickly become unaffordable.
Overall, the CBO analysis shows that AHCA will not resolve problems with the individual exchange markets or costs of insurance except for younger, healthier individuals in states that seek waivers from ACA protections where premiums will be lower and insurance will cover less. AHCA will create a system where young, healthy individuals will be able to purchase insurance that covers less at the same time the system eliminates older individuals and those who need insurance to cover actual health costs.
This analysis shows there is little actual benefit for younger, healthier individuals on the insurance exchange market in exchange for the devastating impact of hundreds of billions of dollars in cuts to Medicaid payments to states and increased out-of-pocket costs to other consumers. The CBO report confirms that AHCA is bad policy for individuals, state governments and the hospitals that will be tasked with caring for more uninsured individuals while still shouldering $3.4 billion in cuts that made ACA possible and led to significantly fewer uninsured Iowans as well as reduced hospital charity care.
The US House of Representatives voted to pass an amended version of the American Health Care Act (AHCA), a legislative package to repeal and replace parts of the Affordable Care Act (ACA) and make major changes to the Medicaid program. AHCA and amendments passed the House by the narrowest of margins. The fate of AHCA in the Senate in its current form is not yet known.
Changes to AHCA included an amendment that would create a “limited waiver option” for states to opt out of essential health benefits and community rating requirements in an effort to lower the cost of insurance. Even with proposed “high-risk pools” that would theoretically (and temporarily) assist individuals with pre-existing conditions (who otherwise will no longer have coverage under AHCA), these changes would worsen, not improve, AHCA.
According to the Congressional Budget Office, AHCA is expected to increase the number of uninsured by 14 million in 2018 compared to current law and by 24 million by 2026. The largest savings would come from reductions in federal outlays for Medicaid ($880 billion) and the elimination of ACA’s subsidies that help people afford health insurance ($673 billion).
It is important for hospital advocates to continue conversations with their delegation about the fundamental issues with this bill. AHCA does not protect coverage that 200,000 Iowans rely on, makes devastating changes to Medicaid that will harm Iowans, hospitals and the state and maintains significant cuts to hospitals that were put in place to pay for the additional coverage for health care Iowans have come to expect and deserve.
The actuarial firm Milliman released an analysis of the Federal Invisible High Risk Pool (FIRHP) proposal. IHA has reviewed the analysis and has concluded that there are a number of flaws with this plan which will likely lead to payment reductions for hospitals.
The FIRHP is a complicated health insurance option where insurers transfer high-cost and high-risk patients and their dependents into a federal risk pool program. The insurers pay into FIRHP 90 percent of the premium cost for each individual (the analysis presumes that states would be responsible for the remaining 10 percent share, but details are unclear).
This arrangement is considered “invisible” because these patients maintain their health insurance coverage through their original insurance companies and the insurers remain liable for $10,000 in benefits per year with the FIRHP covering the rest. The analysis estimates that approximately 57 percent of those covered by a Marketplace insurance plan today would qualify to be transferred into the FIRHP. As of January 31, when open enrollment ended, Iowa had more than 51,500 individuals enrolled in plans through healthcare.gov.
However, this proposed pool operates differently with regard to how hospitals would be reimbursed. Instead of allowing hospitals to contract with the individual insurers at commercial rates, the high-risk pool plans would pay Medicare rates, which would significantly impact hospitals. According to this plan, all states would be required to participate in the FIRHP and hospitals would have no choice but to accept Medicare rates as payment in full for the claims in excess of $10,000 with no balance billing to patients.
The risk pool uses what’s referred to as an “age curve” to determine premiums. Currently, plans are required to maintain a 3:1 age curve, while this proposal shifts to a 5:1 curve. The analysis states that this will afford larger rate reductions to younger persons and less of a reduction or even an increase for older persons. This change could have an impact on hospital charity care and bad debt figures.
IHA opposes this plan and remains engaged with the ongoing policy debate in Washington, DC.
Maintain coverage for all individuals currently receiving benefits.
Health Insurance Coverage
Health Insurance Marketplace
Medicaid Expansion and Medicaid Restructuring Proposals
Regulatory Relief for Hospitals
Prevent Additional Cuts
An impact analysis of the proposal shows that the AHCA would drastically reduce the number of insured lives across the country, with estimates as high as 24 millions Americans that could lose access to health insurance coverage over 10 years.
In Iowa, this proposal would mean a $137.5 million reduction in federal Medicaid matching dollars for Iowa in the first year, and a $4.5 billion reduction from 2017-2026.
The following impacts were estimated by category of coverage:
Coverage Reduction Category
Lose Medicaid Coverage
Lose Employment Based Coverage
Lose Individual or Marketplace Coverage
TOTAL Increase in uninsured
Current Health Insurance Coverage Statistics in Iowa
(Source: Kaiser Foundation)