Opinion: Review of the Proposed American Health Care Act and Impact on our North State

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On the eve of the House Republican Plan – called the American Health Care Act, or AHCA – we will see one of the most major moves to reverse the coverage gains of the Affordable Care Act.

The ACA had primarily three targets:

(1) private health insurance reform (e.g. defining what a minimum mix of benefits in a plan should be; prohibiting the use of pre-existing conditions, etc.)

(2) the creation of Health Exchanges (i.e. Covered California in our state)

(3) expansion of Medicaid (Medi-Cal in our state).

All of these focus areas of insurance/coverage are very complex and inter-related. However, it is not only complex, it is also very personal to most people. The very complexity of how we as a society provide health insurance coverage is at the heart of why we struggle with understanding it. We are also the most expensive county in the world when it comes to healthcare costs at about $9,000 a year per resident, and about $2,500 a year more than the next country on the list. It has also been documented that for all the money we spend, we are not even close to being in the top 10 – let alone the top one or two – in health outcomes.

That all said, the House-proposed AHCA makes some major bets on issues of risk, choice and costs. On the risk front, the AHCA will eliminate all health insurance mandates, both for individuals as well as companies. The hope is that if there was a way to make insurance cheaper and put in a penalty for last-second, “when-you-absolutely-need –it” coverage penalties, then you will get enough younger/healthier people to join in the marketplace without mandating them. The way you lower coverage costs is to primarily cut benefits in your plan package, and/or lessen how much the insurance company has to insure the benefit plan (the less they provide the more out of pocket you must provide). The other premise that selling insurance over state lines, while sounding reasonable, has not worked out that way in states that allow this. In fact, no out-of-state plan has moved into these places, and even if they did, local providers will not sign on with “cut-rate” plans because of the shortages in health professionals, and therefore services in our area does not force them to do this. If the young and healthy do not sign up, the health plans will respond in one of two ways: (1) leave the market; (2) price the product much higher to mitigate the risk.

The Congressional Budget Office (CBO) has indicated a 15-20 percent increase in the first couple of years and then has it leveling off after that. The use of “high risk pools” could have an impact on underwriting and the cost of policies if they are used to reduce the risk of very expensive patients buying into the market, but then again, most states – including California – have tried high-risk pools without much success.

How private insurance responds to the potential new reality will be pretty quick as they will be deciding soon if they will do any underwriting in the Exchanges in 2018.

The Exchanges have had their issues from the poorly launched program in the beginning to the narrow choices of insurance products, particularly in rural areas such as ours. Some states – like California- have done a reasonably good job of getting decent, competitive pricing in most sub-markets, in part by attracting a healthy enough younger population to join.

One of several challenges to the use of Exchanges has been costs. Two factors influence costs. The first is that the United States healthcare system is excessively expensive for lots of reasons (e.g. technology, drug costs, high specialty to primary care ratio of clinicians, etc.). The second is that the more comprehensive to make the required benefit packages, the more expensive it is. For those who received subsidies under Covered California, for the most part their insurance was affordable. These subsidies were tied to income, age and location of coverage, among several other factors. However, if your income was above the ceiling, you paid the full bore of that insurance. For those who had fairly “skinny” coverages – i.e. light on benefits and in some cases only coverage for major medical/catastrophic care – sticker shock was very real.

What the ACHA is proposing is to essentially lessen the requirements of what is in the minimum benefit package, use competition (where it exists) to drive some prices down in markets and to do away with the income, age and location adjustments for subsidies. Instead it proposes strictly a tax credit system that provides anyone, up to certain income, somewhere between $2,000 and $4,000, based upon age, to help offset insurance costs for people who individually buy health insurance. The one big push-back so far on this issue is for people in the 50-64 age brackets (before Medicare kicks in). At the high end of the tax credit of $4,000, this would result in covering less than one third of the cost of coverage in most markets. This would be a substantial reduction in subsidy compared to the ACA. The House Republicans are already making adjustments to their plan (bouncing it to the Senate) and talking about adding some additional subsidy for this older cohort given that this group tends to vote and be a pretty forceful political block if unnerved.

For the younger population, it is uncertain if the $2,000 tax credit is meaningful enough to have them purchase coverage. As noted, many area saying no, that the penalty for not purchasing coverage and later signing up when you absolutely need to (a 30 percent increase in your annual premium) is such that sign ups, over the short to medium term, will significantly drop off, making the cost of health insurance for the other more older and potentially sicker cohorts that much more expensive as insurance companies adjust to this reality.

Finally, the impact to our region will be most felt by changes to the Medicaid program (Medi-Cal in our state). The traditional funding formulas and regulations, as well as further expansions under the ACA, have been played out to a huge degree in our state. Our federal matching share for those very low income individuals (under 100 percent of federal poverty) is at a match rate of 50 percent federal, 50 percent state. Given the millions of Californians who meet these low-income thresholds, this adds up to billions in our state budget. To keep costs down, the Governor and the Legislature has historically depressed payment rates to providers/hospitals and others, to among the lowest in the United States. In addition, the ACA did expand Medicaid by including single adults and other sub-populations who met the income requirements and increased eligibility to 138 percent of Federal Poverty. They also relaxed some of the eligibility rules in Republican Congressman Doug LaMalfa’s district. This expansion of ACA coverage has resulted in over 75,000 people gaining new Medi-Cal coverage, with another 25,000 gaining coverage through the Exchanges.

The proposal by the House Republicans on reshaping the Medicaid program is among the threatening of changes to the state of California, including our region, and to many of the people who have gained coverage, some for the first time in their lives. Rather than a shared program, financed by each, the ACHA proposed to fix Medicaid payment to the state by a “per capita cap” reimbursement that provides a fixed amount by the number of people enrolled, adjusted by an inflation factor, known to not meet the historical health care inflationary rates. There are other provisions that greatly reduce federal support of the Medicaid program that I will not get into here except to say that these changes represent one of the greatest shifts of financial risk from the Federal Governments to the states seen in many decades. The tools that governors will have, as costs will exceed adjustments because of new technologies and as costlier drugs appear, etc., is to curb or limit eligibility, invoke enrollment limits, benefits reductions, further reduce payment to providers, etc.

Governors, particularly those from Medicaid expansion states, including Republican governor’s, realize the pain they will be taking on. They are of course asking for more flexibility, likely so that can effectively respond so as to manage the cuts, reductions and generalized pain that will come from rising costs and insufficient support from the Federal Government.

So why does Medicaid matter to those with private insurance in our community? Well, one in three people in our region relies on it. Many jobs are created or supported by this program. Medi-Cal, despite its very poor reimbursement rates, does allow our communities to respond to at least some of the mental health and substance abuse needs all around us. For children in school, a third to a half or more of kids gets their wellness care including immunizations, screenings, dental care, etc., paid through the Medi-Cal program. As much as 60% of all births are paid for by the Medi-Cal program. For institutional providers like area hospitals, reimbursement compared to those who are uninsured is at least a stable additional source of income to help cover costs. In conversations with area hospitals, the expansion of Medi-Cal to more people has been a huge improvement in their ability to manage services and costs. In addition, as we compete for physicians and other clinicians, a very high mix of uninsured (it was around 24 percent of our population before the ACA) makes it that much harder to recruit clinicians, including specialist physicians that everyone benefits from at one time or another.

The CBO estimates that the net impact of the proposed AHCA will be a net loss in coverage of over 24 million legal residents in the US over 10 years, most in the first few years.

In our Congressman’s district, it is projected that around 65,000 people will lose their coverage if the AHCA is enacted as it stands. Partnership Health Plan, the local Medi-Cal Managed Care plan, estimates that in Shasta County alone, a severe reduction in coverage of Medi-Cal would mean the loss of around $146 million annual dollars in our local economy and the loss of more than 900 jobs. Moreover, for those who lose coverage, the human cost is priceless, particularly if you have a chronic disease or face the onset of cancer or an accident needing hospitalization.

In short, the AHCA represents very little good for this region as it stands.

Dean Germano is the chief executive officer of Shasta Community Health Center in Redding.

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39 Responses

  1. Beverly Stafford says:

    What was Trump’s comment?  “Who knew this could be so complicated?”

  2. cheyenne says:

    When I lived in Shasta County, before I was hired by the school district, I had no medical insurance.  I worked at low paying jobs but when I, or my family members, needed major healthcare I could obtain “Share Cost Med-Cal”.  Basically Med-Cal would fix my co-pay based on my income and I would receive a Med-Cal card good for two months.  In that two months we would see doctors, dentists and eye care.   Has that changed?

  3. Rod says:

    Dean Germano, respectfully.

    WRONG, WRONG, WRONG.  The ACA is an indoctrination into socialism.  America can be destroyed by you.  Hospital administrators are in fact traitors.  Get a new job, if you can.

    Survival of Americans through insurance is corrupt and contemptible.  Survival of the fittest is the American way.  The insurance racket is the only talking point of the ACA.  18% of America’s GDP is directed towards healthcare.

     

  4. Steve Towers Steve Towers says:

    Mostly, I mourn what working class and middle class Trump voters have done to themselves. Obamacare needed to be fixed, not junked. Trumpcare will be more expensive, less inclusive, more fragile, and less protective. That’s not me concluding that—it’s the CBO, and Mr. Germano above.  Trumpcare represents a direct reversal of the transfer of America’s vast wealth that Obamacare entailed—our Congressional district stands to lose almost $150 million in funding and almost 1,000 good-paying jobs.  Yet congressman Dougie LaMooch supports Trumpcare. I feel genuinely sorry for Trump’s Chumps here in Shasta County and the surrounding counties. Prepare to get hosed, bigly.

    But my darker demons say: Bring it. Bring the insurance dis-enrollments, the higher premiums, the lower benefits, the eliminated protections from pre-existing conditions, the tax cuts for the rich, the bloated contracts for military industrialists, the exploding federal deficits, the wars of distraction in which the children of the wealthy will not fight and die—bring on the whole shiteree.

    Let’s just go where this goes, and see if the people who support this crass, self-serving, incoherent, megalomaniacal schweinhund ever wake up and smell the coffee.  (I doubt it.)

    • Rod says:

      Good stuff.

      Is it that only old-timers can understand the quicksand we’re floating on?  Aren’t we actually comparing the advancement of socialism as a replacement for free-market choices?

      Insured healthcare for all Americans, what a sweet sounding idea.  Insurance and medical industries love it.  Who’s gonna pay for it?  Healthy folks self-insure.

      • Larry Winter says:

        And let’s get rid of that Big Government law that requires hospital emergency rooms from accepting all comers regardless of their ability to pay.  Talk about nanny state, sheesh!

      • Steve Towers Steve Towers says:

        Rod — Here’s how your self-insurance (a.k.a., being uninsured) works for the rest of us:  You pay nothing. If you get seriously ill or injured, you go to the emergency room and the rest of us pay for your care via higher premiums, while you continue to pay either nothing or a nominal fraction of the cost.

        Or, if you’re true to your ethos, you don’t go to the emergency room at all and you croak.  Which happens…..pretty much never.

        Kicking people off of their subsidized insurance plans and having them forced into the above-described choices is the heart of the GOP plan.  And according to the CBO, most of us will pay up to 20% more for our premiums in the near future, forcing many people to take higher deductibles to keep overall costs down, which leads to people rationing their own healthcare (because they can’t afford to max out their yearly deductibles).  So your doctor tells you that you need an MRI, and you look at the huge co-pay and say, “I think I’ll pass.”  Or you look at the $400 out-of-pocket for blood pressure medication and don’t fill the prescription.

        The big winners with the GOP plan—of course—are rich people, who get a big tax cut.

        Make no mistake—I am not defending the insurance industry.  The biggest blunder with Obamacare was the attempt to garner GOP votes by preserving the role of Big Insurance.  That didn’t work, and we’re stuck with high for-profit insurance premiums, the worst ratio of dollars spent directly on healthcare relative to premium costs in the Western World, and middling-quality healthcare by almost all metrics.

        We’re getting screwed, and the GOP plan is: Wouldn’t you prefer screwed-er? 

        • Rod says:

          Good stuff.

          You do realize health insurance is a very recent phenomena?  It’s failing.

          We’ll need to either devise a way to afford run-away medical costs or go on strike.  It’s cheaper to self-insure than buy the gimmick of mandated insurance.  There’s no reasonable mind that thinks insurance is a necessity….it’s an option, or at it’s best a perk of employment.

          Government can’t cover the expense,  there’s too many people.  The logic is simple, lessen the need or the cost.  Nobody discusses this fact.

          Cost is our only viable control.  Insurance is raping Americans, it has to go.

           

           

           

    • Larry Winter says:

      Susan Sarandon had a similar viewpoint thinking that electing Trump might just be a slap in the face, wake up call kind of thing.

    • Beverly Stafford says:

      As I listen to Sean Spicer and Paul Ryan spin Trumpcare, my thought was that the man in the Oval Office plus so many in Congress are wealthy; therefore it only follows that their thinking is, “It’s only money so what’s the problem?”  If they never had to be concerned about choosing between paying the grocer or the utility company, they can’t possibly understand what middle- and poor-Americans are up against.  And, of course, they all have platinum insurance plans unlike 98% of us.  I see no alternative but to wait and see.

      • K. Beck says:

        The truly rich, the 1% (including the man in the Oval Office), do not buy medical insurance. If they have a problem, and must go to the hospital, they “negotiate” with the hospital, then pay cash. They pay cash when they visit a MD. In the long run it saves them money. If I was in the 1% I would do the same thing. You then have all the very best medical care money can buy. And you don’t make insurance companies rich.

  5. Howard Lucas says:

    Two options that would reduce the medical costs significantly  covering all in our country:

    Extend Medicare to all.

    Single Payer for all.

    This would cut out much of the expense going to  private insurance related expenses.  This has been known for a long time….Why are we hood winked…and why is so much effort spent in debunking this options.

    • Steve Towers Steve Towers says:

      Most of Western and Northern Europe have such plans.  They receive more return on each dollar paid in the currencies of care and treatment.  The quality of their healthcare is substantially better by almost all metrics.  They have healthier outcomes.  They’re happier, too.

      Elsewhere, too.  New Zealand’s annual cost per capita is 38% of our cost—they pay $3,500 per year per person in healthcare taxes instead of $9,500 per year per person in insurance premiums. And they’re healthier and happier with their healthcare.

      But it’s socialism—no getting around that.

    • K. Beck says:

      The insurance companies will NEVER let everyone go to Medicare or Single Player, which are pretty much the same thing,  happen. This is why we have the ACA to begin with. Insurance is a huge business and they have the “ear” of the Republicans, who think there should be no government at all.

    • K. Beck says:

      Ask Rod & Beverly.

  6. Kath Surbaugh says:

    Socialism, done right, is like our Unemployment program in California.  It is a system with simple, easy to understand rules, clear schedules of benefits, duration and requirements for eligibility — all done on line or by mail.  No big, temperamental bureaucrats sitting in the way, pulling strings depending on their whims and hormone imbalances — like building inspectors can and do, for example.  Fear of snotty people with a guaranteed bi-monthly paycheck standing in one’s way is what we all hate and fear about socialism, isn’t it?  We’ve managed, quite well as a state, to cut out that sort of “discretion” in DMV, UI, DI — We need to do the same in Health Care.  Cut out the excess costs of gimmicks like C-PAPs (which go for about $1,000. and are about as technically complicated as a transistor radio) and $50. band aids, stop paying insurance middle people to broker who gets what and how much when, cut out the maize of codes that slick operators live to manipulate (so that a half-hour in-office procedure ends up being billed for $15-20 grand) and let us go forward to clean up all the layers of abuse that now are built in to the “profit motive” of a bunch of Wall St. portfolios that have nothing whatsoever to do with you and me staying well and healthy.

    • Rod says:

      Socialism is forever, unemployment is a temporary support.

      Have your ever heard of the USSR?  It failed. It was written about and theorized until the Soviets jumped onboard.  I can’t imagine a worse lifetime than the oppression of socialism.

      Freedom of choice is best for America.  To insure or not to insure is best for America.  My best health insurance option is being healthy and avoiding the slavery of insurance.

       

    • Beverly Stafford says:

      Ditto.  Well stated.  My only objection to being a MediCare recipient – well,  besides being old – is that I have been turned away for health care by, so far, the office of one of our City Council persons and three urgent care facilities.  I knock wood for my good health because there are probably other offices that would deny me if I called.  It’s a shame that the very first question one is asked when making a medical appointment is, “What is your insurance?”

      • K. Beck says:

        I believe you can NOT take Medicare. I don’t think you are forced into it. By all means be uninsured. However, if you make that choice don’t expect the rest of us to pick up your transportation to the ER, or the ER/Hospital expenses when you d0 become ill. Perhaps, you and Rod can get all your friends together and make a pact to take care of each other when you become ill. Sorry, but I am tired of paying for people who refuse to have medical insurance. I know there are poor people who cannot afford insurance. The ACA is meant to take care of them. Remember this when you become ill. Please. Do us all a favor.

        • Rod says:

          Here’s your favor K.

          Self-insured by me, equates to me, that I’ve devoted a lifetime to paying my bills as I go.  I’ll be 72 in May, I Have zero debt.  In other words, I’ve negotiated  for a lowed amount in exchange for paying in full all medical bills.  I repeat,  I’ve self-insured for less than the cost of insurance extortion.  Why?  I’m a free man who has amassed a nest-egg of savings.

          People who can’t take responsibility for their own existence………….

           

          • K. Beck says:

            Good for you. Really. Unfortunately not everyone, most people, in fact, can not do that. This is something you seem to fail to understand.

          • Larry Winter says:

            “People who can’t take responsibility for their own existence………….”

            Well Rod, take that to the polls and see how far you get.  Standing on a pedestal and pounding your chest without a spasm of coughing, at 72, might impress some people, myself included, but to think your life could be used as a template for everyone is delusional.

          • Steve Towers Steve Towers says:

            Nobody is self-insured in this country so long as it’s the law that those without insurance must be treated if they roll into an emergency room.  That includes you, Rod.  You are self-insured only in the sense that you haven’t yet availed yourself of the treatment that the rest of us pay for.

          • Rod says:

            You’re right Larry,  I don’t think my life should be an example to follow for anyone.  I offer the example for open minded folks to think about.

            —————————————————————————————

            Steve,  I’m self-insured.  You’re twisting reality.  I collect my Social Security/Medicare and treat the remainder of survival as a personal goal.

            I simply call it, taking care of myself.  Have you tried to do that?

             

      • Dick says:

        Did those urgent cares actually deny you service, or ask you to pay Medicare rates at time of service and then deal with Medicare yourself because they don’t accept “assignment”? If they denied you service please name them as I’m sure other Medicare patients would be interested in that information.

        • Beverly Stafford says:

          Dick, not only did the receptionists say they didn’t accept Medicare, I asked if I could pay cash and was told they couldn’t accept cash either.  This was for an infected finger not some huge major medical problem that would have cost big $$$. I could have forked over a couple hundred dollars from my wallet.  All of the centers were located on the west side of Churn Creek.  The first one was next to Wilda’s.  The receptionist suggested that I try Focus which had changed from walk-in to appointment only.  The third was between Focus and the one by Wilda’s.  Some months later, I was in Redding and had a medical concern that I thought should be seen so I called Pulse to see if they accepted Medicare.  No problem.

          • Dick says:

            @Beverly: Interesting. If I ever need one of those places now I know where not to go. Last I heard Hilltop will charge Medicare rates and then you submit the claim. They will take real cash/plastic/check but I’ve never been there.

      • Beverly Stafford says:

        My ditto remark was for Kath Sturbaugh’s post not for Rod’s.  Rod’s post appeared between my comment and Kath’s post.

  7. Rick Rataj says:

    Thanks Dean Germano for giving a local perspective on what the AHCA would mean for Shasta County. Well done.

  8. cheyenne says:

    The GOP just pulled the ACA rewrite.  Trumps immigration ban has been stopped by lawsuits.  Trump is giving up on a lot of things he said he would do because he can’t, or never could, do.  What the liberals can’t seem to understand is that the anti-Clinton vote elected Trump.  Not the dwindling number of white male knuckle dragging rural racists.  Instead of worrying about Trump and the GOP, the Democrats need to worry about who their next candidates are.  Bernie Sanders is back and Elizabeth Warren never left.

    • Steve Towers Steve Towers says:

      Oh, I think liberals are painfully aware that the anti-Clinton vote elected Trump (or more accurately, Trump was elected by the anti-Clinton vote added to the anti-everything vote). Remember, the liberals were in Bernie’s corner, and they never really warmed up to Hillary.

      It’s puzzling that with an unlikeable, thick-skulled, bumbling patsy like Trump as a foil, nobody is stepping up for the Democrats. Chuck Schumer is holding his own leading the Demos in the U.S. Senate, but Nancy Pelosi couldn’t get House Democrats—or Americans in general—galvanized against someone who had been videotaped stomping puppies. Cranky old flannel-clad woodworker Bernie in 2020? Really? Elizabeth “Mother Jones” Warren and her rote recitations of tired liberal clichés? It’s hard to believe the Demos don’t have a young, smart, engaging U.S. Senator or governor out there who’s ready to rise to the top.

      • Beverly Stafford says:

        Maybe all the smart, young, engaging U.S. Senators are giving up on the Democratic party and are embracing a truly viable third moderate party.  Wishful thinking.  A person who would get my vote is pro-choice and anti any further gun control (and for repealing much of what is on the books), and I don’t find either emerging.

        • Rod says:

          We’re in good luck Beverly.  Today ND became the 12th state to grant “constitutional carry” of concealed weapons by law-abiding citizens.  We should press for our 2nd amendment rights to be returned here in CA.

          Law-abiding citizens is the key.  Felons and illegal aliens need not apply.

          We would live in a better community where all law-abiding scorpions each carried it’s own stinger.

           

          • Larry Winter says:

            Hey Rod, law abiding citizens can obtain a CCW in California now.  A fellow I work with is an instructor here in Trinity County.  He’s giving classes all the time.  Or are you saying these classes are too burdensome to be Constitutional?

          • Rod says:

            Relax Larry,  I have the “Constitutional Carry” in my personal list of things to support.  The requirement of a CCW permit is unconstitutional,  our 2nd amendment is clearly written and easy to live with when respected.

             

          • Larry Winter says:

            If the 2nd Amendment is clearly written, why did you say felons need not apply?  Where in the 2nd Amendment did you glean that from?

      • K. Beck says:

        I disagree about the Dems (or, perhaps those you call “liberals”) understanding why they lost.

        Go here: http://robertreich.org

        Scroll down to: My Visit to Trump’s Washington, MONDAY, MARCH 20, 2017

        Read #10.

        Enough said.

         

         

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