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Here's what could happen to your health care under AHCA

May 19th | Erica Martinson, Alaska Dispatch News Print this article   Email this article  

WASHINGTON — The U.S. House-passed health care legislation to repeal and replace parts of the Affordable Care Act is likely to offer little relief and ultimately higher costs for Alaskans.

Alaska has some of the most expensive health insurance in the nation, leaving many in the state with an appetite for change. But a close look at the changes offered by the bill on offer revealed few solutions welcomed by Alaska's Republican political leaders.

The legislation's most prominent provisions put new decisions in the hands of states, so the results depend on how the administration of Gov. Bill Walker reacts.

To be sure, the bill is not a done deal. Members of the GOP-majority Senate have said they will craft their own legislation, and changes are expected.

But here's what the American Health Care Act would do for Alaska:

How will it affect the cost of health insurance?

The most significant cost impacts to Alaska by the AHCA, as passed, would be for the 14,000 Alaskans enrolled in the exchange market. About 90 percent of Alaskans who buy insurance from the exchange qualify for subsidies, according to Premera spokesperson Melanie Coon.

Premera is the only health insurance company remaining on Alaska's market, a common problem in low-population states and counties.

Under the ACA, tax subsidies include considerations for cost and geography. The AHCA shifts subsidy-qualifications to age and income. For Alaskans, that means a much smaller cut off the top of very expensive insurance.

Currently, a family of four qualifies for subsidies with an annual income as high as $121,520. Not so under the AHCA.

But changing how the subsidies are calculated would bolster costs for Alaska consumers far more significantly than any other state in the nation. Ultimately, Alaskans would pay an average of $12,599 more per year of out-of-pocket for health care costs, according to the Center for Budget and Policy Priorities.

"This age band and the way it's going to hurt individuals on the average is just, it's mind-boggling," said Lori Wing-Heier, director of the state Division of Insurance.

"And with the proposed cuts that they're making, we have really got to analyze this in every scenario they can put up, to say, 'OK, they've given us the flexibility; we're going to fight for the funding,' " Wing-Heier said.

But since the changes wouldn't be phased in for a few years, those who buy on Alaska's individual market shouldn't be worried about an immediate leap in their bills (if the bill passes the Senate).

"Your Premera coverage is still in place and should remain unchanged through the end of this year," according to Len Sorrin, who leads Premera's congressional affairs team.

The AHCA does include two new pots of money. One $85 billion addition is aimed at helping older Americans pay insurance premiums.

Another funding source of $130 billion would be parceled out to states to create high-risk pools for high-cost patients. (More on that in a bit.)

It is unclear how much of those funds could end up in Alaska, but experts think it is unlikely to make up the difference, particularly in a state where residents are suffering from insurance prices many feel are too high already.

Alaska's state-implemented reinsurance program stemmed the out-of-control rising costs on the individual market with a $55 million state subsidy for the market.

Individual plan costs had risen 37 percent in the second year, and 38 percent in the third. Premera would have raised prices 42 percent in 2017, the company said, were it not for the supplemental reinsurance plan.

Instead, costs to consumers went up 7 percent. The plan "will keep rates manageable for 2018" too, said Premera's Coons.

One thing the House bill does for sure: repeal the mandate that Americans buy insurance or face an IRS-imposed fine.

Instead, the House bill would let insurance companies apply a one-year 30 percent surcharge to premiums of people who've had a lapse in coverage. The intention is to dissuade people from waiting until they're sick to buy health insurance.

Does the bill strike protections for Alaskans with pre-existing conditions?

Not exactly.

Without a doubt, one of the most popular ACA provisions is one that bars insurance companies from refusing coverage to people with pre-existing conditions. These conditions can run the gamut from asthma to cancer.

There is no explicit list of pre-existing conditions in the House health care bill. Presumptions about what is included are based on the insurance industry's long lists of conditions used to refuse coverage in the past.

The bill does not repeal that provision outright, but it does allow states some flexibility on the matter: An insurance company could charge more for people with pre-existing conditions, but not outright refuse them service, if the state has set up a separate program, like a "high-risk pool," for those patients.

Charging more could effectively price a person out of the market. A high-risk pool is an insurance group set aside for the highest-cost patients who would otherwise place a strain on the individual market.

The nonpartisan Kaiser Family Foundation estimates about 107,000 nonelderly Alaskans have "declinable" pre-existing conditions based on insurance companies' practices before "Obamacare."

There is a separate funding mechanism included in the House bill to help states pay for this, but it is unclear whether that amount of money would be sufficient to make it worthwhile for Alaska.

Many experts say the $80 billion in the bill is nowhere near the amount needed to cover the millions of Americans who buy coverage on exchanges and have chronic, pre-existing conditions.

What about maternity care and annual checkups? Will Alaskans be able to buy "disaster" insurance again?

It depends on the state government.

A central provision of the ACA was a 10-point list of something called "Essential Health Benefits." It's a list of services health plans must provide for the insured, including emergency services, maternity and newborn care, mental health treatment, lab services and preventive "well" visits to the doctor.

In some areas, before the ACA, it was difficult or impossible to buy a plan that included, for example, maternity care if it wasn't required.

The idea behind many of the requirements, particularly preventive care, was to get people to "use" their insurance and create a relationship with a primary care doctor. That, in theory, would keep people with minor ailments like strep throat out of the (costly) emergency room.

According to Wing-Heier, that's one of the key issues where Alaska still needs work to bring down costs. Many people still don't understand their deductibles don't apply to many aspects of preventive care, and "where they can access primary care," Wing-Heier said.

"And so I think that as the state, as the providers, that we need to do a better job of educating consumers of how to access health care. Utilization is a big factor in what's driving the cost of health care in Alaska," Wing-Heier said.

But one result of adding essential health benefits under "Obamacare" was Alaskans can no longer buy "disaster" insurance plans — bottom-of-the-barrel cheap plans with extremely high deductibles meant to keep a person from going bankrupt if they got cancer or were in a horrible accident.

Unless Alaska chooses to make changes, the federal essential health benefits categories will remain the standard.

States can get a waiver to set new standards if they "publicly attest its purpose for doing so (to reduce the cost of health-care coverage, increase the number of people with health-care coverage, etc.) and it must specify the benefits it will require instead of the federal standard," according to House Republicans' description of the law.

Gov. Walker is going to want to look at the option of opening up essential health benefits, but it seems like an unlikely outcome, Wing-Heier said.

Coverage for mental health issues — including addiction — is "very important to Alaska," she said. And the governor's opioid initiatives are "so contrary to opening that up and taking that coverage away right now that we may very well keep the essential health benefits as they are."

Alaska will have to ask: "Do you want to take away the individual mandate? Do you want to get rid of the small employer mandate? Do you want to look at pre-existing conditions?" Wing-Heier said.

But "at this point we are just not anticipating on any of the items that they've allowed us the flexibility on to change anything, because we can't see anything right now that's beneficial to consumers, as far as the essential health benefits, or the small employer mandate," Wing-Heier said.

But Wing-Heier isn't entirely writing the idea off. The state government is looking for some way to bring more young, healthy people into the market, she said.

What about Medicaid?

There's no way around it — the House bill is designed to eventually reduce the number of people on Medicaid, including in states like Alaska, which recently expanded its pool of people on the federally paid plan.

In its estimates covering the original draft of the AHCA, the Congressional Budget Office said the bill would cut about $839 billion from Medicaid over 10 years. The cuts are largely financed through tax cuts for Americans making more than $200,000 a year and medical industries.

"Our plan responsibly unwinds 'Obamacare's' Medicaid expansion," according to the House GOP. "We freeze enrollment and allow natural turnover in the Medicaid program as beneficiaries see their life circumstances change."

There are 182,924 Alaskans on Medicaid, and 32,958 of them were added to the program after Sept. 1, 2015, as part of the expansion to add people slightly above the poverty line. To date, the federal government has paid more than $445 million in claims for the expansion population alone, according to the Alaska Department of Health and Social Services.

The program would institute a block-grant program, giving states a set amount of funds and letting the state decide whether to cut benefits or cut the number of people covered.

What about Alaska's reinsurance program? Unclear, but it could be in trouble.

Alaska passed legislation to infuse $55 million into the state exchange for two years to keep it afloat. The plan is for the federal government to take over that funding stream, if and when Alaska is afforded a "waiver" that allows the state entry to a fund available under the ACA.

That same pot of money may not be explicitly available under the AHCA. But Health and Human Services Secretary Tom Price is still expected to sign off on it soon, and all indications are the Trump administration is generally in support of the waiver.

But Alaska's lawmakers will have to fight to make sure it all pencils out in the fine print.

I have employer-sponsored insurance. Could the bill have an impact on that?

Maybe. This is yet another area where it depends on what the states do.

ACA banned insurance companies from instituting lifetime limits on insurance benefits, and set limits on annual out-of-pocket-spending. That includes plans offered through employers, which is where more than half of Alaskans get their coverage, according to a University of Alaska study.

Those provisions, however, apply via the essential health benefits section of the law, according to Matthew Fiedler of the left-leaning think tank Brookings Institution.

"Thus, as the definition of essential health benefits narrows, the scope of the ACA's guarantee of protection against catastrophic costs shrinks as well. In the absence of any essential health benefit standards at all, these protections would effectively disappear because they would apply to an empty set of health benefits," Fiedler said.

 

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