Here is a thought problem. Imagine a fair and just distribution of health care, in a society in which you don’t know the position you will have. You might be rich, you might be poor. You might be red, yellow, brown, black or white. You might be healthy or sick; genetically prone to alcoholism or longevity. You might be educated or ignorant; fundamentalist Christian or Muslim; racist or unprejudiced. With regard to your position in this society that you are creating, you are blind. Now, build that health care distribution system.
This is not the problem the Republican-controlled Congress is considering. The problem before them is how to repeal the Affordable Care Act (ACA) and get their bill, the American Health Care Act (AHCA), passed and signed before Easter, in the face of a 4-vote shortfall in the Senate and massive opposition from the public—since the Republican plan is projected to throw 10-15 million people off health insurance and reduce the federal insurance available to everyone. The White House recognizes this goal may not be achievable or even desirable. On March 8, Jim Acosta tweeted this:
— Jim Acosta (@Acosta) March 9, 2017
Why the GOP so desperately wants to snatch away health insurance from millions of Americans, at a higher cost than providing Medicare for all, is a question with several answers. Some Republicans believe that health care should only be provided by the free market and not by government. Other congressional Republicans probably recognize that they will not be able to make their daily fundraising nut without the approval of Big Pharma, the health insurance industries, and Wall Street. For example, Congressman Mike Burgess (R-TX) believes that the individual mandate is “freedom-killing,” “immoral,” and “unconstitutional.” But keep in mind, Burgess’ top campaign donors are drug companies, HMO’s and doctors. Others still may be concerned about the federal deficit.
Finally, there are a significant number of congressional Republicans responding to their fundamentalist, Christian voters who believe that God has cursed minorities and assigned women a role subservient to men. Granting them equal rights and federally subsidized health insurance is not, in their view, part of God’s plan.
The GOP plan calls for repeal of the individual mandate. The individual mandate is the part of the ACA that requires most US citizens and noncitizens to have health insurance conforming to certain standards. The Henry J. Kaiser Family Foundation estimated that in 2016 there were 11,527,766 enrolled in the ACA. People without health insurance (except those exempt from the mandate) pay a penalty to the Internal Revenue Service. The penalty is the greater of either (1) $695 for every uninsured adult in the household (for 2016), plus half that amount for each child, or (2) an income-based assessment set at 2.5 % of the household income above the filing threshold. The penalties are subject to caps.
According to the Congressional Budget Office, repeal of the individual mandate would cause a “substantial reduction” in the number of people with health insurance:
Another analysis by Avalere Health and McKinsey and Company, and presented to the National Governors Association in February, showed what would happen to a hypothetical state that had 300,000 insured through the individual market in addition to an expanded Medicaid program. In such a state, individual market enrollment would fall 30% and 90,000 people would become uninsured. Another 115,000 people would risk losing coverage because they had enrolled in Medicaid and were not likely to find an affordable private plan.
The report also estimates that in states that did not expand Medicaid — mostly those with Republican governors – even more people would lose coverage, up to half the number of people currently insured through the ACA.
Reagan-Era Block Grants Exhumed
Avalere also estimated that the GOP proposal to turn Medicaid into a block grant program would significantly cut its funding.
The ultimate outcome of the GOP’s AHCA will be the end of Medicaid. “It’s not hyperbole to say this bill ends the Medicaid program as we know it,” said Aviva Aron-Dine former senior counselor to former Health and Human Services Secretary Sylvia Mathews Burwell.
You may recall block grants from the 1980’s. Part of the Reagan White House’s program to shift the management of federal funding to states, block grants were marketed by the administration as a way of giving the states and cities the freedom to decide how to spend federal funds.
But those block grants ultimately did not deliver the advertised benefits, mainly because the amount of federal funding delivered by block grants was never as much as state governors expected. Congress, in fact, imposed increasingly stringent and limited requirements on qualifications for block grants and reduced the available funding year after year. Block grants did not grow because Congress and the White House preferred categorical grants – grants dedicated to specific purposes, such as building a port or a highway – for the very reason that states preferred block grants: control of the money.
About 70 million Americans are currently covered with health insurance through the Medicaid program. More than 11 million of these got coverage after the ACA went into effect.
Specific grants increase the federal government’s control over how the money is supposed to be used, and federal officials do not trust state governments. Democratic governors, for example, might use block grants to fund Planned Parenthood, or birth control, or sex education for teenagers, or clean needle programs.
Today’s AHCA would, however, greatly diminish opportunities for people to receive Medicaid at all and reduce the likelihood that the coverage they do get would be enough to pay their medical bills. It would end the current federal support for Medicaid expansion in 2020. It would also replace federal payments to states with fixed payments capped per person, which will probably not meet any real person’s actual health care needs. And it would make it impossible for Medicaid recipients to use their insurance at Planned Parenthood because the legislation bans Medicaid payments to “prohibited entities,” a description in the legislation specifically targeting Planned Parenthood.
In fact, today’s Medicaid block grant proposal is Reagan’s block grant proposal exhumed. Like Reagan’s proposal (S. 1377, 97th Congress), the GOP’s current health care bill would place an upper limit on the federal contribution to Medicaid expenditures. Planned cuts like these are how block grants make future federal budget projections look so good.
Given that the growth in Medicaid spending seems mostly due to an increase in the number of people benefiting from the program, one of the few ways to cut spending is by reducing that number.
And Then There Are The Voters
The GOP has another problem (see below chart). Over a million more Republicans than Democrats are enrolled in the ACA.
Of the 11,527,766 estimated ACA enrollees, 6,329,100 currently live in the 241 GOP congressional districts. For example, Vice President Pence is slated to go to Kentucky to drum up support for the GOP health care plan. The population of Kentucky, aged 18 and over, is 3,316,096. In 2016, more than 650,000 adult Kentuckians had Medicaid — and were eligible only because Kentucky elected to expand its Medicaid program. That’s 20% of Kentucky’s adult population.
Trump himself is planning to go to Nashville, Tennessee on March 15 to rally support for the GOP plan. He is slated to speak at the Nashville Municipal Auditorium, capacity 9,700. Tennessee’s Medicaid program, TennCare, serves approximately 1.5 million people, or 20% of the state’s ~6,600,000 population.
TennCare covers 50% of the state’s births and 50% of the state’s children. More than 66% of Tennessee voters oppose repeal of the Affordable Care Act without a replacement. The GOP candy to the American public consists of “reduced” premiums and an end to the requirement to buy the individual mandate, but it’s hard to find the sweets when low-income and senior citizens, those least able to manage, will have to pay more for their premiums.
In addition, under the GOP plan, people who let their coverage lapse for 2 months will see a 30% increase in premiums, and there is no requirement that the mentally ill or people with addictions retain coverage.
— Patrick J. Kennedy (@PJK4brainhealth) March 9, 2017
With targeted threats and promises of generous campaign support from the Republican National Committee and private contributors, the White House and GOP may eventually convince the Senate’s independent Republican thinkers to support what some have called “Obamacare-Lite.” If the Congressional Budget Office report, due early next week, scores the AHCA as increasing the deficit, under Senate rules it will require 60 Senate votes for passage. This would, of course, allow Democrats to sink the bill in the Senate.
The Republican repeal and replace juggernaut will probably continue until it is spangled and striped with enough amendments to resemble Medicaid reduction legislation, with caveats and conditions that make later legislatures responsible for dealing with the fallout. Obamacare will be changed but probably not as much as the GOP and the current White House occupant would like. But it’s worth pointing out that the amount of money and time spent undoing the ACA, which Republicans swore to do in 2010, makes the current GOP plan even more expensive than universal Medicare for all.
For Universal Single-Payer Health Care, Look To California
The Californians for a Healthy California Act, SB 562, introduced on February 17 by state Senators Toni Atkins and Ricardo Lara, takes the first step toward comprehensive, universal single-payer health care and a health care cost control system for all 38 million California residents. The CHCA would state the intent of the state legislature to enact such legislation. The bill is currently in the state Senate’s Rules Committee and will be assigned to the Senate Health Committee by March 17.
The California Nurses Association supports the CHCA. They have, in fact, been proposing ballot initiatives and legislation for single-payer health care in the state for years.
California has been proposing health care reform legislation since 1918 but let’s look at the last 25 years. In 1992, Sen. Nick Petris introduced a single-payer bill in the state legislature while state Insurance Commissioner John Garamendi created a plan for universal coverage with a modified single-payer approach, which also passed. Republican Gov. Pete Wilson vetoed them both. In 1994, Proposition 186, a single-payer ballot initiative, was defeated with massive opposition from the insurance industry.
Then in 1998, state Senator Diane Watson introduced SB 2123, a bill calling for establishment of a universal single-payer system in the state because “the existing private/public system of insured health programs [was] inefficient, confusing and inadequate.” The bill also called for the Legislative Analyst to find methods to finance universal care.
In 2002, after completing a study of the various models for health care financing, the Lewin Group and AZA Consulting reported that more people could be covered for more services and for less money with a carefully designed single-payer system. In 2003, state Senator Sheila Kuehl introduced a single-payer bill, SB 921, which passed the full Senate and the Assembly Health Committee but got no further.
In 2005, the Lewin Group reported that if a single-payer system were to be implemented in 2006, California would save $8 billion in the first fiscal year and $344 billion between 2006 and 2015—while covering all California residents with high quality health care.
In the 2005-2006 legislative session, Sen. Kuehl introduced a new bill, The California Health Insurance Reliability Act, SB 840, which managed to pass both houses, making California the first state in U.S. history to pass single-payer legislation. The bill was ultimately vetoed by Gov. Arnold Schwarzenegger. Sen. Kuehl reintroduced SB 840 in the 2007-2008 legislative session. Again, the bill passed the legislature, and again Gov. Schwarzenegger vetoed it.
In 2009, Sen. Mark Leno reintroduced the California Universal Health Care Act as SB 810, which passed the full Senate and Assembly committees in 2010 but did not go to the Assembly floor. He reintroduced the bill in the 2011-2012 but it failed by two votes in the Senate.
This brings us to the present and the Californians For A Healthy California Act, SB 562. “If we are truly going to get health care for every Californian, we are going to have to invest in guaranteed healthcare for all,” said co-author Sen. Ricardo Lara (D-Bell Gardens). “We’ve reached this pivotal moment and I thought to myself: ‘Look, now more than ever is the time to talk about universal health care.’ Quite frankly, we have to cut out the insurance company waste and duplication.”
Co-author Sen. Atkins, (D-San Diego) echoes Lara’s concerns. “In light of threats to the Affordable Care Act,” she said, “it’s important that we look at all options to expand and maintain access to health care. The Californians For A Healthy California Act is an essential part of that conversation.”
The CDC reported that under the ACA, California’s uninsured rate dropped from 17 percent in 2013 to 7.1 percent in 2016, a record low. The national uninsured rate is at an all-time low of 8.8 percent, down from 14.4 percent in 2013.
If Congress repeals the ACA, 3.7 million Californians enrolled in the Medi-Cal expansion would lose coverage, and another 1.2 million individuals enrolled through California’s health benefit exchange, Covered California, would lose federal subsidies that make private health insurance more affordable, according to the UC Berkeley Labor Center for Health Policy Research. In addition, 209,000 jobs would be eliminated and the state economy would lose $20.3 billion in GDP.
In San Diego County, Sen. Atkins’ home, 259,236 low-income adults who are enrolled in the ACA Medi-Cal expansion would lose their health insurance (nearly 8% of the county population). In addition, 106,340 low- and middle-income residents would lose federal subsidies that help make insurance more affordable. $1.3 billion in GDP would be eliminated from the county economy under the ACA repeal.
Sen. Atkins recognizes the impacts of the loss of ACA funding as well as the need for single-payer health care in California. “SB 562 is a policy bill,” she told Garnet News. “It expresses legislative intent. It may be a two-year bill. If it passes this year, then we would work on language for funding and implementation.
Where’s the Money?
At issue is finding potential sources of funding for the CHCA—$40 billion in total, according to the Legislative Analyst’s Office.
Sen. Kuehl’s 2005 bill included a thorough analysis of revenue sources, with cost-saving policy measures that appear even more significant today:
- Reduction of administrative costs. There are between 10,000 and 20,000 public and private health insurance plans. Between 25 and 40% of every dollar spent goes to administration, not care. In other nations, 5-10% goes to administration and 90-95% to care.
- Bulk Purchasing. California has 38 million people and is the fifth largest economy on Earth. By using its bulk purchasing power, California can be an exclusive purchaser of drugs and durable medical equipment, saving $5.2 billion in the first year alone. Such a move is revenue-neutral for the pharmaceutical industry but with expanded coverage, the industry would stand to add 11 million new Californians presently without coverage.
- Payroll taxes. Instead of premiums, Kuehl’s bill proposed that employers would pay a payroll tax equal to approximately 8% of wages. The employee payroll tax would be approximately 3.5%.
“I think the time is right to truly consider it,” Sen. Atkins said. “Californians have had a taste of coverage with the Affordable Care Act. And people don’t want to lose coverage. I think now we have to have a Plan B. Yes, it will be just as complicated to implement as Plan A, the ACA. I also recognize that $40 billion is not chump change. It will take massive reform to cover that $40 billion. But there are many ways to approach this, and we have started talking with experts in medical finance, doctors, economists, and policy analysts. With our economy, we have the leverage. We can restructure. We have the values, the tech savvy, the business and finance people. If any state can do this, California can.”
The Californians For A Healthy California Act may win approval before the Republicans’ own American Health Care Act. While many California legislators want to save the ACA, given the current Congress and administration, this seems unlikely. Now, public discussion is the state is focusing on whether Californians will be better served financially and medically by the GOP’s proposed federal reforms or by its own state initiative. If the ACA is repealed, in whole or in part, the question will then be whether the state will manage to implement a Plan B, or, as we like to say in California, Affordable Care 2.0.
– Martha E. Ture