Inside: How changes to the Affordable Care Act could affect Arizona.

Similar issue in Arizona in 2000 when sign-ups halted and coverage scaled back

The U.S. House Republican plan to replace the Affordable Care Act would phase out Arizona’s Medicaid expansion after 2020 and limit subsidies that help low-income residents purchase health insurance.

Health-care experts predict the bill could mean fewer people would be covered under the Republican plan.

It’s unclear how much of an effect the changes will have on Arizonans, but a few things are known.

More than 600,000 Arizona residents have gained coverage under the ACA, the 2010 health-care law known as “Obamacare.” The growth came through the federal marketplace that provides subsidized coverage, and also through the ACA’s expansion of the state’s Medicaid system.

Perhaps the Republican plan’s most sweeping effect would be to phase out that Medicaid expansion after 2020 and change how the federal government reimburses states for the federal-state program.

The Medicaid expansion extended coverage to 397,802 adults and 73,224 children in Arizona as of January, according to figures from the Arizona Health Care Cost Containment System.

Changes to that program, like the ones proposed in the Republican plan, could have an enormous effect on those people — and all of the 1.9 million Arizonans who now are covered by AHCCCS.

“It looks like the Medicaid expansion could wither on the vine,” said Joan Alker, executive director at the Center for Children and Families at Georgetown University.

Alker said Arizona has familiarity with what could happen to Medicaid, because Arizona put a similar stop to AHCCCS enrollment once before.

Medicaid changes

In 2000, Arizona voters approved Proposition 204, which extended coverage to childless adults who earned up to 100 percent of the federal poverty level. But the Arizona Legislature froze enrollment for childless adults during the Great Recession when the state could no longer afford its portion of the federalstate program. The Medicaid freeze meant that new sign-ups were halted, and 250,000 adults on the rolls lost coverage when their income or life circumstances changed.

At the time, hospitals reported a spike in newly uninsured residents seeking care at emergency rooms, which led to ballooning uncompensated care.

The GOP plan would take a similar approach, scaling back Medicaid expansion funds in three years. That means federal money for new sign-ups would be halted in 2020, and people would fall off the rolls as they lose eligibility because of higher income or other life changes.

“Over time, all of those people will lose coverage,” said Dana Wolfe Naimark, president and CEO of Children’s Action Alliance.

Some health advocates fear that the GOP bill would ripple beyond those who gained Medicaid coverage from the Obamacare expansion.

Medicaid also pays for low-income seniors and the disabled through longterm care programs. Guaranteed funding for those programs could be jeopardized under a bill provision that would cap funding based on the number of people enrolled with small annual increases, advocates said.

Gov. Doug Ducey’s top health-policy aides warned about the potential risk to states with Medicaid financing reform, stating in a January letter to House Majority Leader Kevin McCarthy, R-Calif., that it would be the “single largest transfer or risk ever from the federal government to states.”

Before the House bill was released, Ducey joined a contingent of Republican governors who lobbied for elements of both financing and flexibility that allowed states more authority in shaping their own Medicaid policies.

Ducey has long been a critic of former President Barack Obama’s Affordable Care Act, but the Republican governor still is evaluating whether the GOP replacement bill is in the best interest of the state, his spokesman Patrick Ptak said.

“We are still reviewing the specific elements of this bill and intend to have feedback,” Ptak said. “In terms of the process, the governor is thrilled repeal of Obamacare is on the way, and he is pleased to have a seat at the table for replacement.”

Health advocates, however, worry that the bill could harm the state’s poor families and children by phasing out the Medicaid expansion and eliminating cost-sharing subsidies.

“This is not reform and this is not efficiency,” said Naimark. “This is a cut, and we see children as targets of this bill.”

Insurance reform

President Donald Trump, House Speaker Paul Ryan and other conservatives have repeatedly cited Arizona’s insurance-rate hikes this year as an example of the need to repeal the ACA. Arizona’s benchmark rate increased 116 percent this year — the nation’s largest average increase — when all but two insurers exited the marketplace.

But because most Arizonans get insurance through an employer or a government program like Medicare, Medicaid or the Department of Veterans Affairs, the rate increases only affected a small percentage of people.

A total of 196,231 Arizona residents signed up for or were automatically reenrolled in a marketplace plan as of Feb. 1.

The vast majority of those people received subsidies based in the form of income-based tax credits that help offset the cost of the monthly premiums. Also, cost-sharing provisions helped defray insurance costs for those who earn up to two-and-a-half times the federal poverty level, or $60,750 for a family of four.

The Republican plan, however, calls for a significant change in how to subsidize these plans.

The GOP plan would eliminate the cost-sharing subsidies for low-income earners. And unlike the ACA’s incomebased tax credits, the GOP plan would link tax credits to a person’s age.

The GOP bill would allow insurers to charge older adults five times more than young adults. Obamacare limits pricing to a 3-to-1 ratio, which critics say inflates insurance premiums for younger adults.

The Republican plan also would repeal the individual mandate that requires most Americans to purchase health insurance or pay a fine. But the replacement plan also would allow insurers to charge higher rates if a person’s insurance coverage lapses.

The plan would keep key parts of the ACA, including provisions that prevent insurers from denying coverage to the sick and allow adult children to stay on their parents’ plan until age 26. Also like the ACA, the GOP plan would require insurers to offer a basic set of benefits, but that requirement may be eliminated as the bill advances.

Last Thursday, two House committees advanced the bill on party-line votes during lengthy sessions. The bill is expected to advance to the House Budget Committee this week, and Speaker Ryan wants a House vote during the week of March 20.

The bill has not yet been evaluated by the nonpartisan Congressional Budget Office. The bill would seek to repeal taxes that fund the ACA, such as taxes on medical devices, health insurers and high-income earners, so it’s unclear how it would be funded.

Blue Cross Blue Shield of Arizona is among one or two insurers still offering marketplace coverage. Blue Cross Blue Shield officials described the GOP bill as the first step in a lengthy and complicated process.

“We will continue to watch closely with the hope that the health insurance market will become more stable and competitive for Arizonans,” said Jeff Stelnik, Blue Cross Blue Shield’s senior vice president of strategy, sales and marketing.

“This is not reform . ... This is a cut, and we see children as targets of this bill.” DANA WOLFE NAIMARK PRESIDENT AND CEO, CHILDREN’S ACTION ALLIANCE