A CLOSER LOOK AT HEALTH CARE ACT

Clearing up, for Coloradans, dfferences between GOP bill and Affordable Care Act

The Congressional Budget Office has not had time to analyze the current version of the American Health Care Act, but here’swhat we knowabout the bill and how itwould impact Colorado. »

The U.S. House of Representatives passed the American Health Care Act on Thursday after a roller-coaster eightweeks in which the bill was introduced, debated, left for dead, amended, left for dead again, amended again and finally brought to the floor for a vote. The nonpartisan Congressional Budget Office has not had time to analyze the current version— that is expected next week. The bill also must pass the Senate and could go back to the House if it sees changes in the upper chamber.

But, in the meantime, here’s what we know about the bill and how it would im- pact Colorado. For more details, the nonpartisan Kaiser Family Foundation has a side-by-side comparison of the AHCA and current law.

The AHCA would eliminate the requirement that people buy health insurance.

The Affordable Care Act, also known as Obamacare, requires people to buy health insurance— what is known as the “individual mandate.” People had to pay a penalty on their taxes if they didn’t. The AHCA would do away with this requirement.

large employers that do not provide insurance to their employees.

The ACA required employers with 50 or more employees to offer health insurance to their workers or pay a fine. The AHCA would slash that fine to zero.

The bill would impose a penalty for people who don’t maintain continuous health insurance.

The AHCA would create a penalty for people who have a gap in their health insurance coverage of 63 days or longer. People buying insurance in the individual market — that is, people who buy their plans on their own instead of getting coverage from an employer or the government — who have such a gap can be charged a “late enrollment penalty” by insurers that could be up to 30 percent of their premium price.

The billwould endMedicaid expansion.

Under the ACA, stateswere given the option of expanding Medicaid to cover low-income people who were just above the poverty level and, thus, not traditionally eligible for Medicaid. For people who fit into this expansion group, the federal government picked up 90 percent of the Medicaid costs. In Colorado, the state and the federal government split the costs 50-50 for people in the traditional Medicaid population.

The AHCA would end the Medicaid expansion in 2020, while grandfathering in those already covered by it as long as theymaintainMedicaid eligibility. However, because people bounce in and out of Medicaid eligibility frequently, the Congressional Budget Office has estimated that the expansion population basically would disappear by 2025.

In Colorado, Medicaid expansion has covered about 400,000 people so far, according to the ColoradoHealth Institute. If the state wanted to continue covering those people at the traditional 50-50 state-federal split, the Colorado Health Institute estimates it would cost about $900 million per year.

The AHCA proposes eliminating the traditional statefederal funding splits and, instead, capping the federal government’s contribution based on how many people are enrolled in a state’s Medicaid program. The Congressional Budget Office estimates that this change, known as a “per capita cap,” would cut $880 billion from federal Medicaid spending between 2017 and 2026. The left-leaning Center on Budget and Policy Priorities has estimated that the per capita cap, alone, would reduce the amount of federal Medicaid money going to the states by $116 billion over the next decade.

About 1.4 million people in Colorado are on Medicaid — that is one out of every four Coloradans. The $9 billion budget for the state department that administersMedicaid is one-third of the state’s entire operating budget. The Colorado Health Institute has estimated that Colorado would lose $14 billion inMedicaid funding by 2030 under the AHCA and that 600,000 fewer Coloradans would be covered under Medicaid by then, compared with current law.

The bill would change how subsidies to buy health insurance are allocated.

Currently, the federal government provides tax credits that help people who buy insurance on their own to pay for their premiums. The subsidies are based on a person’s income and how much a person’s health insurance costs. Subsidies shrink the higher a person’s income goes, and go away entirely once a person makes four times the federal poverty level. (For a family of four, the federal poverty line is a household income of about $24,000 per year.) Subsidies are higher for people buying insurance in higher-cost areas.

Under the AHCA, subsidies would be awarded based on age and income, with older people getting higher subsidies. The subsidies alsowould go away at higher income levels. The changes would cut the amount the federal government spends on subsidies by $312 billion over the changes’ first decade, according to the Congressional Budget Office.

The Kaiser Family Foundation has estimated that these changes would give comparatively more support to people at higher incomes than under current law. Comparatively they also would reduce the benefit of the subsidies in areas where health insurance is expensive.

The latter change could be especially significant in westernColorado, which has some of the highest health insurance rates in the country. For instance, a 40-year-old in Mesa County who makes $30,000 per year would see her premiums after the tax credits increase by about $1,500 per year under the AHCA, compared with the ACA, according to the Kaiser analysis. That same person living in Arapahoe County would see her annual premiums drop by about $1,000. At different ages and different income levels, the math changes, and people on theWestern Slope could see their premiums drop after the AHCA’s subsidies are applied. But the relative benefit of the subsidies would shift toward the Front Range, according to the Kaiser analysis.

The bill would keep requirementsthat insurersmust sell coverage to everybody.

The ACA changed insurance rules by requiring insurance companies to sell health plans to anybody, a provision known as “guaranteed issue.” TheAHCAkeeps this requirement in place but allows states the ability to set policies that change what insurers are required to cover or how much they are limited in charging.

The billwould allowstates to changewhich benefits insurers are required to provide to people who buy plans on their own.

The federal government currently dictates that insurers selling plans in the individual market must cover 10 types of medical care, known as the law’s “essential health benefits.” These categories are preventative care, emergency care, hospitalization, maternity and newborn care, mental health and substance abuse treatment, rehabilitative care, laboratory services, chronic disease management, dental and vision care for kids, and ambulatory care, which is outpatient care.

The AHCA would allow states to waive these requirements or set up their own list of essential health benefits that insurers must cover in the individual market.

About 8 percent of Coloradans are covered through the individual insurance market — and generally a higher percentage in areas along Interstate 70 on theWestern Slope. Although no Colorado officials have so far expressed interest in a waiver to rewrite essential health benefits, leftleaning health care advocates have warned that insurers could pressure the state into seeking such waivers or threaten to leave the market altogether.

The bill would allow insurers to charge older peoplemore than under current law.

TheACAlimited insurers to charging older customers three times as much as they charge younger customers in the individual insurance market. The AHCA expands that ratio to allow insurers to charge older customers five times as much as they charge younger customers. This could end up reducing premiums for younger customers, but it likely would increase the premiums of older customers, according to a report from The Commonwealth Fund.

The billwould allowstates to let insurers charge older people much, much more.

Under the AHCA, states could seek a waiver from the federal age ratios and set their own, which would more strictly limit or further expand how much insurers could charge older customers.

The billwould allowstates to end requirements that insurers cover pre-existing conditions.

Perhaps the most famous rule in the ACA is that insurers cannot deny customers based on pre-existing conditions. TheAHCAwould allow states a waiver from that rule for insurers in the individual market, provided the states meet certain conditions.

The bill could lead to states setting up special insurance programs for highcost patients.

Themain requirement for a waiver on pre-existing conditions is that states must set up some kind of programto cover the most costly customers. The two main ideas are “highrisk pools,” in which the highcost customers are all grouped together on one insurance plan that is boosted with government funding, and “reinsurance,” where highcost customers keep their normal insurance but the insurance companies are reimbursed by government funds for covering extraordinary expenses.

The AHCA allocates more than $100 billion that could be used to help states set up these pools— although states might also use much of that money for other purposes. Critics, though, say that funding is inadequate. In an analysis released Thursday, the health care consulting firm Alavere estimated that the money — even if it all went to high-risk pools — would be enough to cover 600,000 people. The firm estimated that there are approximately 2.2million people in the individual insurance market nationwide who have chronic pre-existing conditions.

Colorado, as many states do, has previous experience with high-risk pools. The state formerly had two: Cover Colorado, which launched in the early 1990s, and Getting Us Covered, whichwasmeant to be a short-term bridge before the ACA took effect. Cover Colorado charged enrollees higher premiums than the market average and imposed a $1million lifetime limit on benefits. It also imposed awaiting period before coverage for pre-existing conditions would kick in. At its peak, it served about 14,000 people.

Getting Us Covered, meanwhile, burned through money faster than expected and had to ask the federal government for more funds after little more than a year.

The bill could impact the benefits covered by employer-sponsored insurance, even if Colorado doesn’t seek a waiver.

None of the waivers in the law specifically apply to employer-sponsored coverage. This is significant because about 50 percent of people — in Colorado and nationwide — get their health insurance through their employers.

But the Brookings Institution has argued in an analysis that theAHCA’swaivers could interact with federal administrative regulations in a way that allows insurers to reduce benefits for people on employer-sponsored plans. The ACA prohibits insurers from imposing lifetime limits on coverage — for instance, refusing to cover medical expenses once a person’s total cost of care exceeds $1 million. But those limits apply only to coverage for things designated as “essential health benefits.”

By giving states the ability to change or opt out of essential health benefits regula- tions, the AHCA also changes what is protected from lifetime caps. The federal government, meanwhile, allows large employer plans to use any state’s definition of essential health benefits when determiningwhat is covered by the lifetime caps. They are not restricted to using the definition in the statewhere the covered person lives.

“Under current law, allowing large employer plans this type of flexibility has limited impact since all states’ essential health benefit definitions are required to meet basic federal standards,” Brookings fellowMatthewFiedler writes in the analysis. “But if each state could set its own definition of essential health benefits, as states would be allowed to do under the (AHCA), the consequences of allowing this flexibilitywould be significant.”

The ACA set up online health insurance marketplaces where people could go to buy coverage. People in Colorado use Connect for Health Colorado. Many in other states use Healthcare.gov. Those exchanges would remain in place.

The bill would allow kids to stay on their parents’ plans until they are 26.

A popular provision of the ACA allows parents to keep their children on their health insurance plan until the kids turn 26. TheAHCAkeeps that provision in place.

The billwould repeal multiple taxes that helped fund the Affordable Care Act.

The ACA created a number of newtaxes to raise money to pay for its provisions. These taxes included higher Medicare payroll taxes on people making over $200,000 a year or couples making $250,000; taxes on generous, high-cost employer-sponsored health plans; taxes on health insurers; taxes on pharmaceutical manufacturers; and taxes on the sale of medical devices. TheAHCAeliminates most of these taxes.

The Joint Committee on Taxation has estimated the repeal of the taxeswould reduce federal revenue by $575 billion in the AHCA’s first decade.

The bill would cut federal spending by hundreds of billions of dollars.

When the Congressional Budget Office first analyzed the bill in March — before several amendments that went into the bill ultimately passed by theHouse— it estimated that the AHCA would reduce federal deficits by $337 billion between 2017 and 2026.

John Ingold: 303-954-1068, jingold@denverpost.comor twitter.com/johningold