More half a million New Jersey residents could lose their health insurance, another 1.3 million Medicaid members could face more limited benefits, and hundreds of thousands of working-poor patients could find themselves paying more for coverage — or priced out of the market entirely — according to policy analysts who have reviewed the Republican healthcare plan that advanced Thursday.
Six weeks after an initial failed attempt, Republicans in the U.S. House of Representatives amassed enough votes — with help from two of New Jersey’s five GOP members — to advance a highly controversial plan that would eliminate aspects of the Affordable Care Act and overhaul health insurance coverage for more than 20 million low- and middle-income Americans.
But a wide range of healthcare providers, industry leaders and patient advocates joined Democrats to forcefully oppose the measure, the American Health Care Act, which they said traded tax breaks for wealthy Americans for funding cuts and regulatory changes that would reduce or eliminate care for millions of Americans. Republicans insist it will give states and insurance companies new tools to reduce premium costs, but the measure faces significant challenges in the U.S. Senate.
“The AHCA hurts women, seniors, and the poor the most, but is of concern to anyone with a pre-existing medical condition,” said Linda Schwimmer, president and CEO of the New Jersey Health Care Quality Institute. “It also is a budget buster for states — there is no doubt about that.”
The Republican plan passed by a single vote Thursday with backing from U.S. Rep. Tom MacArthur (R-3), the author of a key amendment, and U.S. Rep. Rodney Frelinghuysen (R-11), the chair of the House Appropriations committee, who had pledged to vote against a previous version of the plan. Congressmen Frank LoBiondo (R-2), Christopher Smith (R-4), and Leonard Lance (R-7) joined their seven Democratic colleagues in opposing the bill.
Lance said the bill failed to address key issues and had yet to be analyzed by congressional budget experts who could provide cost estimates. He said the Senate is likely to make changes to the legislation and the final product will require the two legislative chambers to reach some compromise. “I remain committed to repealing and replacing Obamacare and will work with my colleagues across the Capitol to pass a better bill, one that lowers costs, improves access, and increases quality of life for hard-working New Jersey families,” Lance said.
The vote followed months of protests led by New Jersey Citizen Action and other patient-advocacy groups, who targeted the GOP congressmen with weekly vigils; reports from AARP, Planned Parenthood — which is targeted by name for defunding — and policy organizations detailing the potential impact; and statements from physicians groups, hospital trade organizations, and other industry leaders lamenting the problems the bill would cause.
“This is a very sad day for those of us committed to the health of the American people,” Betsy Ryan, president and CEO of the New Jersey Hospital Association, said after the vote. “Our hope is that the U.S. Senate will stand firm and refuse to pass a bill that impacts senior citizens, children and families, the disabled, veterans and millions of others,” she added.
An epic battle
Republican leaders framed the vote as an epic battle to defeat the status quo. House Speaker Paul Ryan pointed to Iowa, where the only insurance company operating in some markets has declared it will pull out of all but a handful of counties. “What protection is Obamacare if there is no health plan to purchase in your state,” Ryan asked his colleagues.
But passage in the Senate is far from certain. New Jersey Sen. Robert Menendez and Sen. Cory Booker, both Democrats, have made clear their opposition to the AHCA, quickly labeled “Trumpcare” by party leaders. “I am ready to fight tooth and nail to defend the people whose lives depend on the Affordable Care Act and the hard-won gains it delivered to America’s families — all of whom deserve the ability to visit a doctor without fear of being sent into bankruptcy,” Menendez said.
Some Garden State healthcare leaders are also taking a proactive approach. Schwimmer said the Quality Institute has partnered with state Sen. Joe Vitale, the longtime health committee chairman, to pull together a diverse group of stakeholders who can help the state prepare for the challenges ahead. (The AHCA does not address self-insured plans generally offered by larger companies, and not subject to most state insurance law, but experts said its reforms could trigger industry changes that might eventually impact these policies, which make up about half the patient coverage in New Jersey.)
Detailed review needed
Vitale said a detailed review of the bill is needed to fully understand the cost and coverage implications, although it is likely to harm those with pre-existing conditions. “We know that it will hamper our efforts to fight addiction in New Jersey, our leading public health crisis, by chipping away at all our efforts to expand mental health care and substance-abuse treatment,” he added.
The GOP bill does not technically repeal the ACA, but it would eliminate the unpopular insurance mandate that drove more people into insurance plans and helped spread the risk and cost. It would also end requirements that employers provide insurance and, starting this year, would eliminate some $900 million in annual taxes levied on medical devices, the pharmaceutical industry, and wealthy Americans.
To offset the lost revenue, the AHCA would significantly restructure how the federal government funds Medicaid, shifting in 2020 from a system in which it pays 50 percent to 90 percent of the bills for each patient to one where states would receive fixed federal funding. State leaders can chose a flat fee per person, which would be calculated based on 2016 enrollment, or a block grant.
In addition, the measure would start phasing out in 2020, federal dollars for the Medicaid expansion population, those added under Obamacare — some 500,000 people in New Jersey who earned too much to qualify under the traditional rules — and create a more stringent enrollment period for those who are eligible in the future. The AHCA does call for $100 billion in federal funding over 10 years to help all states offset these additional costs.
Ray Castro, the healthcare policy analysis with New Jersey Policy Perspective who has tracked the law closely, said these structural changes could cut Medicaid funding for New Jersey by as much as 20 percent — the largest reduction in the nation. New Jersey now spends $15 billion in state and federal dollars annually on Medicaid but, as coverage has expanded, it has also saved some $400 million since 2015 on payments to hospitals to offset what they spend on caring for uninsured patients.
The Republican proposal also outlines significant changes for nongovernment insurance plans sold on the small and individual market, which cover nearly 300,000 New Jerseyans. The Trumpcare plan would replace the subsidies patients received under the ACA to help with premium costs with a system of tax credits for individuals making less than $75,000 a year, or families who earn up to $150,000; the funding would range from $2,000 a year for someone under 30, to $4,000 for a person over 60.
Critics note that while older patients would receive more than younger ones, these tax credits still don’t provide nearly the level of assistance they received under Obamacare. And under the AHCA, starting in 2018 insurance companies could charge more for plans that covered older, sicker patients, which could leave coverage unaffordable for some. Companies could also add a 30 percent surcharge to plans for patients who did not have continuous insurance coverage in the past year.
The MacArthur amendment
MacArthur’s amendment, crafted to draw support from conservative Republicans, would enable states to apply for a waiver permitting more insurance flexibility, if they promised the federal government their plans would further reduce costs, increase choices for patients, or expand access to care. States would also have to set up a government-backed funding pool to help cover this additional cost risk. The federal government would have several months to deny a waiver request.
While the waiver process expressly prohibits any ban on coverage for patients with pre-existing conditions, it would enable insurance companies to charge sick patients more and greatly limit the treatments they cover. Plans would no longer be required to pay for a set of essential health benefits that were made standard under Obamacare, things like hospitalization, maternity care, mental health services, and prescription drugs.
“By allowing states to waive critical consumer protections in the Affordable Care Act, Trumpcare gives insurance companies free reign to once again discriminate against people with pre-existing conditions, and charge exorbitant prices for plans that don’t actually cover the care that people need,” warned U.S. Rep. Frank Pallone (D-6) a leading opponent of the GOP plan.
Through MacArthur’s amendment and another addition, Republicans added another $37 billion in federal funding to be used over 10 years to help states create high-risk insurance pools and ensure coverage for opiate addiction and other key services. Another amendment ensured that changes implemented through a state waiver would also apply to Congress members from that state.