BY JAY GREENE
Staff Blog : Health care
Michigan’s health care community and Gov. Rick Snyder are pretty much unified in their opposition to Republican efforts to repeal the Affordable Care Act and replace it with something that even President Donald Trump has characterized in principle as “mean.”
The U.S. Senate’s “Better Care” bill, which was introduced last week and delayed Tuesday until after July 4 by Senate Majority Leader Mitch McConnell, would ultimately cut Medicaid nationally by more than $800 billion by 2026 — $9 billion in Michigan — and lower refundable tax credits by up to 15 percent to individuals making less than $41,600 annually, essentially making health insurance unaffordable for tens of thousands of Michiganders.
The CBO said proposed Republican-drafted bills in Congress also would cut taxes by $1 trillion to the wealthy, health insurers, medical device makers and others over 10 years while potentially eliminating 22 million people from Medicaid and private health insurance coverage.
For Michigan, the policy would decimate the Health Michigan Medicaid expansion and potentially eliminate the 650,000 new recipients under Obamacare and probably cut in half the 350,000 people purchasing private individual health insurance on Healthcare.gov, the so-called Obamacare exchange.
A new analysis of the Senate bill by the Urban Institute shows that nearly 25 million would lose coverage by 2022. Michigan’s uninsured rate could increase to 19 percent from 6.5 percent as about 1 million people would lose Medicaid and private health insurance coverage.
The Republican bills — the American Health Care Act in the U.S. House and the Senate’s Better Care Reconciliation Act of 2017 — do have some safeguards, but not many and not nearly sufficient to protect coverage for up to an estimated 1 million Michiganders.
If approved, Trumpcare, as some are calling it, would place the ball squarely in the court of a future Michigan Legislature that would be asked not only to increase state taxes to pay to maintain coverage for 2.5 million people on Medicaid, but also whether to keep mandating Obamacare’s 10 essential health benefits that include mental health, emergency and maternity care. Federal waivers could be sought that, theoretically, could allow Michigan to attempt to maintain its current system, if it desired and had funding available to pay for it.
U.S. Rep. Fred Upton, R-Kalamazoo, told me he is optimistic a future state Legislature would protect Medicaid and health benefits for individuals.
However, State Sen. Mike Shirkey, R-Clarklake, current Senate health policy chair, said the Republican bills “are moving in the right direction.” But Shirkey said he doesn’t believe the bills provide enough “latitude and flexibility to design plans for (the Healthy Michigan) Medicaid plans.” He also never answered me directly as to whether he thought a future Legislature, on its own, would act to protect gains made by Obamacare and fix the individual market.
Others like Marianne Udow-Phillips, director of the Ann Arbor-based Center for Healthcare Research and Transformation, say the possibility of Michigan legislators stepping up to the plate with potentially $1 billion in state taxes each year is wishful thinking.
“This current Legislature will not approve additional funds for Medicaid,” Udow-Phillips said, adding she can’t envision any future Legislature in Michigan taking action, either.
What Michigan stakeholders say
Ever since Obamacare was enacted in 2010, hospital, physician, health insurance and safety net providers in Michigan have incorporated ACA provisions into their business models and are making it work for their patients and customers.
On Wednesday, Gov. Rick Snyder said in a statement to Crain’s: “We’re still doing a full review, but I have serious concerns with what’s in the Senate bill, as I did with the House version. I’m not sure it’s a good outcome for Michigan at this point in time, but we’re continuing to work on a detailed analysis of what will happen with the Healthy Michigan program and will convey our concerns to members of the Senate prior to any vote.”
The national parent organizations of both the Michigan State Medical Society and the Michigan Health and Hospital Association have come out in strong opposition to both the House and Senate bills.
Brian Peters, MHA’s CEO, said the state hospital association is opposed to the Senate bill for a variety of reasons.
“The bill would have a devastating impact on the health and coverage of 22 million Americans, nearly one million of whom live and work in Michigan and are covered by the Healthy Michigan plan or private plans on the exchange,” Peters said in an email to Crain’s.
The Commonwealth Fund has estimated that uncompensated care costs in Michigan hospitals would increase by 134 percent, or about $7.5 billion over 10 years, an amount that surely would be added to premium costs of everyone with health insurance in Michigan and restrict the ability for hospitals to expand charity care and community benefit programs.
“This plan calls for deep cuts to Medicaid, threatening care for vulnerable populations, such as children, the elderly and the disabled. This legislation is not the path our state and country should pursue as we work together to keep our citizens healthy and heal the minds and bodies of those who are sick or injured.”
Peters said Congress needs to go back to the drawing board and fix the Affordable Care Act. “We urge elected officials to work with stakeholders to protect the health care coverage so many men, women and children rely on every day for their health and well-being,” he said.
The board of the Michigan State Medical Society hasn’t taken a formal position on the House or Senate health care bills, but MSMS believes patients should have access to coverage they need, according to a statement to Crain’s. MSMS said it supports Medicaid expansion, protections for patients with pre-existing conditions and reforms to increase physician workforce and drive down health care costs.
“Health care reform must always be implemented in a way that puts patients first,” MSMS said. “Any changes considered must enhance patient care, protect and strengthen the physician-patient relationship, and ensure every American has access to the coverage they need.”
MSMS said Obamacare was far from perfect and should be improved. “Numerous factors, including drug pricing, prior authorization requirements, onerous red tape and regulations and other contributors continue to drive up the cost of health care for everyday families, and require serious reform.”
The board of the Michigan Association of Health Plans, which represents 13 managed care organizations, also hasn’t taken a formal position on the Senate’s Obamacare replacement bill.
But Executive Director Dominick Pallone said MAHP has serious concerns with how the Medicaid provisions would reduce state funding and effectively end Healthy Michigan Medicaid, increase hospital uncompensated care and boost the number of the uninsured.
“We are thankful that the U.S. Senate has announced that they will take additional time to review the legislation,” Pallone said in an email to Crain’s Wednesday. “MAHP urges the U.S. Senate to continue to provide funding for cost sharing reduction subsidies and to take efforts to stabilize the individual market in order to avoid further disruption to the more than 300,000 Michiganders who purchase their health care coverage through the individual market.”
Small business split
Some small-business owners have complained over the years about rising premiums and time-consuming regulations. While many already provide health insurance to their workers, owners never liked the Obamacare mandate that companies with more than 50 qualified full-time workers offer health insurance. Their employees naturally have another opinion.
But even the Small Business Association of Michigan, which has often criticized Obamacare for not working to hold down premium increases on small businesses, doesn’t support current bills in Congress.
Scott Lyon, SBAM’s senior vice president, said he believes Republicans this year in the House and Senate are making the same mistakes as the Democrats did in 2010 with health care reform legislation.
“They are reforming or re-reforming the financing of health care and ignoring the reality that the issue is in costs within the delivery system — hospitals, doctors, pharmacy and the rate of usage,” said Lyon.
Data from the National Small Business Association shows that small businesses have been concerned about rising health care costs and premiums the past five years. However, NSBA data shows opposition to Obamacare appears to be diminishing.
While NSBA hasn’t taken a position on the House or Senate health care bills, NSBA supports eliminating the employer mandate and the health insurance tax contained in Obamacare, said Molly Day, vice president of public affairs. The association also supports expanding health savings accounts and flexible spending accounts and maintaining the Obamacare age-rating band ratio at three to one, which means older people can’t be charged more than three times what younger people are charged.
For example, a 2015 NSBA survey found negative experiences with the individual market exchanges declined to 20 percent in 2015 from 28 percent in 2014. Still, negative experiences with Obamacare continue to outpace positive experiences in most categories, the survey found.
Day said NSBA hasn’t taken a position on the House or Senate health care bills. However, NSBA supports eliminating the employer mandate and the health insurance tax contained in Obamacare. It also supports expanding health savings accounts and flexible spending accounts and maintaining the Obamacare age rating band ratio at three to one.
Senate and House bills call for the age ratio expanded to five to one to lower prices for younger and healthier workers to encourage them to purchase insurance, which would improve the risk pool. But the negative effect would be to price older workers, ages 50 to 64, and those with such serious chronic conditions as cancer, out of the insurance market. That effect also would improve the risk pool and potentially lower premiums for those remaining in the individual market. But it would increase the uninsured rate, causing many more unnecessary deaths, insurance and medical experts say.
However, the National Federation of Independent Business on Thursday asked U.S. Sens. Gary Peters and Debbie Stabenow to vote for the Senate’s Better Care Reconciliation Act. The NFIB cited as a major benefit the repeal nearly $1 trillion in taxes and lift the Obamacare mandate penalties that “have suffocated” small businesses for almost a decade.
“Obamacare has been a disaster for small businesses in Michigan. Repealing the taxes and the mandate penalties is a high priority for small business owners, and they are paying close attention to how our Senators in Washington vote,” said Charles Owens, the NFIB Michigan state director.
NFIB contends Obamacare has been “smothering growth and job creation.”
On the other hand, a small unscientific survey released last week of 100 small business owners in Michigan found that 25 percent believe that repealing Obamacare would have a negative effect on their business operations, while 18 percent said it could have a positive effect. The survey was conducted by Womply, a San Francisco-based software and data technology company serving small businesses.
Next steps
McConnell said he plans to ask the CBO to take a look at a revised Senate bill over the July 4 weekend with the intention of voting on the bill next week.
Experts suggest McConnell will add $100 billion or $200 billion in Obamacare tax savings to the bill to ease the effects of the Medicaid reductions to state budgets, fund more opioid treatment and help stabilize the individual market somewhow, but it will be far less than what is needed over the long-term to reduce individual health insuance premiums, which is the main and obvious problem with Obamacare.
Udow-Phillips said she believes Republicans have one last chance to come together to what she says is “repeal and cut” Obamacare in July or the moment will be lost for the year.
“This bill is not about providing what most consumers wanted, which was lower premiums, lower co-pays and lower deductibles,” she said. “This will not do that, just the opposite. The goal for the Senate is to cut federal Medicaid spending and give tax breaks” to the wealthy.
If the Republican bill is approved, Shirkey said he doesn’t know whether future Michigan legislators will approve additional taxes to continue funding Healthy Michigan at current levels. He said the state should seek additional federal waivers to continue to tweak Healthy Michigan and integrate Medicaid physical and behavioral health services, a separate issue he has been championing.
“We need to be allowed full rein to design (Medicaid coverage for Michiganders). It would result in fewer people covered (by Medicaid) in Michigan, which Healthy Michigan was designed to do,” he said.
Looking to the future, Shirkey said the state of Michigan shouldn’t be required to financially support people on Medicaid “into perpetuity.” He said there should be stronger incentives built in for people on Medicaid to rotate off when they find good enough paying jobs and purchase individual private health insurance.
I don’t have the exact statistics, but I believe nearly half of the non-elderly people on Medicaid are employed. Many just simply work at minimum wage jobs or just can’t afford health insurance. Another good percentage of those on Medicaid are the elderly in nursing homes. A recent New York Times story said 1.4 million seniors are in nursing homes with many of the bills paid for by state Medicaid programs.
Greg Moore, a health care attorney and co-chair of the behavioral health care practice group Dickinson Wright in Troy, said both the Democrats and the Republicans have missed the boat on health care reform.
“The only thing since 2010 they have been talking about is payer reform — who will pay the bills,” Moore said. “There is very little talk about delivery reform. If states were permitted to run their own program, they would have a great deal of flexibility to reform their systems. … What they should do first is fix the delivery system.”
But there is a real possibility that if Republicans can’t agree on a Obamacare replacement bill that moderate Republicans and moderate Democrats could forge a short-term fix to Obamacare this summer, said U.S. Rep. Dan Kildee, D-Flint.
Upton thinks that is possible because he believes there could be enough Democrats and Republicans to find common ground. McConnell even suggested this possibility on Thursday if Republicans can’t come together on the replacement bill.
Under a developing bipartisan plan, Kildee laid out several potential fixes to Obamacare.
The first and immediate and short-term fix would be for Congress to appropriate about $7 billion to authorize cost-sharing reduction subsidies. Several Republicans have already suggested this.
Since March, these subsidies have been withheld by the Trump administration for a variety of reasons, but health insurers say not authorizing their payments creates uncertainty in the markets and has resulted in a doubling of the average proposed rate increases for 2018 individual health insurance policies.
As a longer-term solution to the individual market, Kildee suggested encouraging younger and healthier people to enroll by increasing federal subsidies. New rules should allow insurers to offer more bare-bones policies, possibly modifying the essential benefits requirement for younger people or actuarially structuring plans to pay less than the 60 percent minimum of total costs Obamacare requires.
Another fix would be to increase the financial penalty — the dreaded but necessary individual mandate — for individuals not purchasing health insurance. This would cause more people to purchase health insurance, spread financial risks and lower premiums for all in the individual market.
Third, increase competition in the health insurance market by allowing for a public option in certain states where health insurers need competition. Michigan is not one of those states as there are more than 10 health insurers competing for patients.
What is the public option? It would allow people to buy into Medicare program earlier than age 65. There are many ways to do this, including just allowing it for ages 55-64, but it would give people more choices of insurance and lower costs.
“This would create a better pool in the individual market to hold down rates,” Kildee said. “We need to accept reality. We need more healthy people in the individual market” to balance risks.
Whatever is done in the next several weeks, I hope politicians remember that they were sent to Washington to fix problems for citizens, not win political points to retain power for themselves and their big-dollar campaign funders.