American Health Care Act, Subtitle D: Patient & Health Insurance Market Stability

This subtitle of the American Health Care Act (AHCA) may possibly be the most important part that I have reviewed thus far. I can finally see where the drafters of this legislation can support their call for “Repeal and Replace.” That is exactly what this section does.

Section 1402 of the Affordable Care Act (Obamacare) will be repealed. This section covers the decrease of “cost-sharing” for insured Americans. Things like copays and deductibles are reduced but premiums and out of network services are not.

This is to be replaced with a new title section added to the Social Security Act which governs medical assistance programs and payments. This new section will be:

Title XXII – Patient and State Stability Fund

For the period of January 1, 2018 to December 31, 2026, funds will be given to each state for the following purposes:

  1. Financial assistance for “high-risk” people who don’t have health care coverage through their employer. The term “high-risk” was not defined anywhere in the subtitle and poses a concern because it can mean many things to different people.Do they mean high-risk financially or medically? And what would the criteria be to fall into that category. Implementation gets sketchy when details are left out.
  2. States can provide “incentives” to “appropriate entities” that enter into arrangements with the State to help level off the cost of premiums (the bill you get to pay to the insurance companies… ).
  3. The funds can be used to reduce the cost to insurance companies for people who are  expected to need a lot of medical care. Although it isn’t stated, I can see where this could be a good idea. Premiums go up when insurance companies think they will have to pay more for your care. There should probably be some oversight here to make sure the insurance companies follow through completely on this.
  4. States can use the money to promote participation in the health insurance market and to increase the number of options available in the individual/small group market.
  5. They can promote access to preventive services, dental and vision care, and services mental health or substance use disorders.
  6. Payments can be made directly or indirectly to health care providers
  7. Finally, and perhaps what families will notice the most, these funds from the federal government to the States can be used to reduce out of pocket costs to those who are insured to include copays, premiums, and deductibles.

State Eligibility and Approval; Default Safeguard

States will need to formally tell the federal government how these funds will be used before they can receive them. They will also need to certify that they will use their own State money to supplement the federal money in the percentage required by law (discussed a little later). If a State doesn’t have and approved application for funding for the year, the Administrator of the Centers for Medicare and Medicaid Services will work with the State Insurance Commissioner and spend the money for the State for the purposes stated above.

For insurance claims that exceed $50k, but less than $350k, part of the State funds will be used to pay 75% of those claims to the insurer. This will be done in hopes of stabilizing the price of insurance. $15 billion in total will be given to the States in 2018 and 2019 and 10 billion for every year after  that through 2026.Any funds that are not used each year can be applied to payment of insurance claims that exceed $1 million or they can be rolled over to the next year.

Beginning in 2020, States must also agree to use a portion of their own money for the same seven reasons listed above that the federal money is used for. It starts at 7% in 2020 and increases by 7% each year until it jumps by 8% in 2026 to make an even 50%. So for every $1 million that the federal government gives the States for this section in 2026, the States will have to use $500k of their own money for the same activities. If they do not agree to this, they will only receive a portion of the money they would otherwise get.

The penalty for not having health care doesn’t seem to be going away. Instead of a flat penalty for being uninsured that many Americans enjoy so much… the punishment will be 30% of the monthly premiums you would have paid if you remain uninsured for more than 63 days continuous days. My thoughts on this are best described in this quote from B.F. Skinner:

“A person who has been punished is not thereby simply less inclined to behave in a given way; at best, he learns how to avoid punishment.”

I would confidently say that the majority of people who are uninsured do not remain that way because they want to. It’s a matter of “Do I eat today” or “Do I pay my insurance bill” more than anything. No one likes to be surprised by hospital and doctor bills, just like we don’t like to be surprised by natural disasters and car wrecks. The difference is the cost. Car and home insurance can be had fairly cheaply as long as you are take precaution and follow the applicable laws. If this – or any – health care bill works to control the spiraling costs of health care, then – and only then – will you see people happy to have a law requiring them to buy health insurance.

Section 134 Increasing Coverage Options

This section takes away the mandate for basic “Health Benefit Packages” in order for health insurance to be part of an approved plan by the government. If you have read my previous posts, this may sound familiar to you… and it should. This section takes away the mandate within the Affordable Care Act. There was a similar removal from the Social Security Act under Subtitle B of this bill.

Finally, and probably a really terrible note to end on, age related premiums have gone from a ration of 3:1 to 5:1. Basically, if you are 22 year old woman and are charged $200 for a health insurance plan, it would be legal for an insurance company to charge a 64 year old woman $1000 for the exact same plan.

What a crappy note to end on. There better be some serious help for that 64 year old woman…

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