The “Better Care Reconciliation Act”

The Senate Republican Leaders released a health overhaul on Thursday, June 22, 2017. BEFORE WE BEGIN-You can hear this English expression in a meeting. If there are announcements to make, people to introduce, or other things to talk about before the main topic of the meeting, someone will say “Before we begin…” let us look at an overview.

THE BCRA CHANGES

  • Coverage for People with Preexisting Conditions
  • Mandates to Buy Insurance
  • Other Insurance Market Reforms (Benefits)
  • Medicaid Expansion
  • Subsidies for Marketplace Plans
  • Taxes Funding the Affordable Care Act (ACA)

POTENTIAL IMPACT

  • Shifts away from explicit Republican promise that Insurers would not be allowed to charge patients more for preexisting conditions
  • Essentially eliminates the penalty for people who don’t buy insurance
  • Keeps but lowers the tax credit subsidies
  • Changes would leave “vulnerable constituents” without important protections
  • Large numbers of Medicaid patients would lose their coverage
  • Wealthy earners would also get a tax cut as would segments of the medical and drug manufacturing industry

We will talk about two of these, Mandates to Buy Insurance and Other Insurance Market Reforms (Benefits)

Summary of Benefit Coverage

To understand the scope of the potential impact, let us start with a summary of the ‘benefit coverage circle’ (my term) as described under the ACA.[1]

  • You have the right to an easy-to-understand summary about a health plan’s benefits and coverage.
  • Insurance companies and job-based health plans must provide you with:
    • A short, plain-language Summary of Benefits and Coverage (SBC)
    • A Uniform Glossary of terms used in health coverage and medical care
    • Your SBC should be your guidebook.

healthcare coverage circle diagrahm

 

Parts of the ‘benefit coverage circle’

  1. Premium:  a monthly fixed payment to the insurance company.
  1. Deductible:  fixed amount that you pay out of pocket before your health insurance begins to pay for your health services
  1. In-Network (Participating) Providers:  charging you lower deductibles, copayments and coinsurance amounts
  1. Benefit Coverage:  what is actually covered and not covered
  1. Medical Necessity:  supported by evidence based data
  1. Coinsurance:
    1. your share of the costs of a covered service
    2. percent of the allowed amount for the service.
    3. out-of-network provider charges more than the allowed amount, you may have to pay the difference (This is called balance billing.)
  2. Copayments:  fixed dollar amounts you pay for covered health care, usually when you receive the service.

 

The BCRA-How the Senate version might impact you

PROVISION

Subsidies for Marketplace Plans[2]

  • ACA’s state-based healthcare marketplaces
    • subsidies (tax credits) to buy insurance are available to people who have household incomes of up to 400% of the federal poverty level
  • Two kinds of subsidies
    • premiums
    • healthcare expenses
  • If they’re reduced or removed
  • Many of the estimated 12 million people who buy insurance would not be able to do so, or they might not adhere to prescriptions and other recommendations from doctors.
  • Republicans argue
    • these people could afford to pay for coverage if insurers didn’t have to follow all of the ACA’s strict coverage requirements, including:
      • not turning away people with preexisting conditions
      • providing essential benefits
      • complying with age bands.
    • But without these protections, people would have much scantier policies.
    • Removal of subsidies might also spell the end of healthcare marketplaces, which depend heavily on subsidies
    • Many people will get reduced tax credits
    • Tax credits would be larger for people with low income, those who live in areas of high medical cost, and older Americans

 

  • Impact on Premiums & Out of Pocket Costs (healthcare expenses)

PREMIUMS

  • Under the ACA
    • These data are for the Individual Market Place where 12.7 million Americans currently have coverage. Nearly 83%, or 10.5 million members, received subsidies.[3]
    • Changes in the Second-Lowest Silver Premium[4]
      • The second-lowest silver plan is one of the most popular plan choices on the marketplace and is also the benchmark that is used to determine the amount of financial assistance individuals and families receive.
      • Across these major cities in 2016, the second-lowest silver premium for a 40-year-old non-smoker ranged from $186 per month in Albuquerque, NM to $719 in Anchorage, AK, before accounting for the tax credit that most enrollees in this market receive. In 2017, the second-lowest silver premium for a 40-year-old non-smoker living in these cities will range from $229 in Louisville, KY and Cleveland, OH to $904 in Anchorage, AK, before accounting for the tax credit.
      • Of these major cities, the places with the largest increases in the unsubsidized second-lowest silver plan were Phoenix, AZ (up 145% from $207 to $507 per month for a 40-year-old non-smoker), Birmingham, AL (up 71% from $288 to $492) and Oklahoma City, OK (up 67% from $295 to $493). Meanwhile, unsubsidized premiums for the second-lowest silver premiums will decrease in Indianapolis, IN (down -4% from $298 to $286 for a 40-year-old non-smoker), Cleveland, OH (down -2% from $234 to $229), Boston, MA (down -1% from $250 to $247), and Providence, RI (down -1% from $263 to $261) and increase just 1% in Little Rock, AR (from $310 to $314).
      • Most enrollees in the marketplaces receive a tax credit to lower their premium. In most parts of the country in 2016, a 40-year-old adult making $30,000 per year would pay about $208 per month for the second-lowest-silver plan. If this person is willing to switch to whatever the new second lowest-cost silver plan is in 2017, they will pay a similar amount (the after-tax credit payment for a similar person in 2017 is $207 per month or a change of 0%). In some parts of the country (for example, in Albuquerque, NM), premiums for a 40-year-old are so low in 2016 that an enrollee making $30,000 may not have qualified for a subsidy. In these places, an increase in the benchmark silver premium may make them newly-eligible for financial assistance.

 

  • Bronze Plans-the entry-level plans within the Affordable Care Act and typically have the lowest premiums and the highest out-of-pocket costs for healthcare use. These entry-level plans are more popular with the unsubsidized consumer as compared to the subsidized consumer.[5]
Average Monthly Premiums in 2016 BRONZE
Individual Age Profile 2016 Average Bronze Plan Premium 2015 Average Bronze Plan Premium Difference
30 year-old $257.68 $231.78 11%
40 year-old $289.88 $260.74 11%
50 year-old $405.28 $364.55 11%
60 year-old $615.15 $553.33 11%

 

  • Silver Plans-Silver Plans are the most popular purchased health plan type on exchanges. The government has promoted widely that “7 in 10 returning Marketplace consumers will be able to buy a plan for $75 or less in monthly premiums after tax credits in 2016.” Additionally, the government promoted that the second lowest cost silver plans offered on Healthcare.gov, upon which subsidies are based, will increase in unsubsidized premiums at a 7.5% average rate.
Average Monthly Premiums in 2016 SILVER
Individual Age Profile 2016 Average Silver Plan Premium 2015 Average Silver Plan Premium Difference
30 year-old $312.00 $283.16 10%
40 year-old $351.02 $318.48 10%
50 year-old $490.75 $445.33 10%
60 year-old $744.99 $675.76 10%

 

  • Gold Plans-Gold plans, along with platinum plans, are often considered ‘higher-end’ plans within the Affordable Care Act market due to their costlier average premiums and more generous out-of-pocket cost protections.
Average Monthly Premiums in 2016 GOLD
Individual Age Profile 2016 Average Gold Plan Premium 2015 Average Gold Plan Premium Difference
30 year-old $380.98 $334.56 14%
40 year-old $428.51 $376.28 14%
50 year-old $599.16 $526.15 14%
60 year-old $909.22 $798.37 14%

 

  • Platinum Plans-Platinum plans provide the greatest cost coverage of medical expenses by the health plan for its enrollees. As such, their out-of-pocket costs are typically the lowest and their premiums are typically the highest as compared to the other Affordable Care Act metal tiers.
Average Monthly Premiums in 2016 PLATINUM
Individual Age Profile 2016 Average Platinum Plan Premium 2015 Average Platinum Plan Premium Difference
30 year-old $482.87 $415.16 16%
40 year-old $543.68 $467.45 16%
50 year-old $759.81 $653.27 16%
60 year-old $1,154.51 $992.69 16%

 

  • Under the BCRA[6]
    • The Senate bill provides smaller subsidies for less generous health insurance plans with higher deductibles.
    • Instead of 400% of federal poverty line ($47,550 individual/ $97,200/family), lowered to 350% ($41,580/$85,050)
    • Tax credits which will buy less healthcare insurance
    • CBO estimates a 64-year-old making $26,500 would see increased insurance premiums up to $12,900 a year with less coverage.
      • For a patient with Bronze ACA coverage, that could be a $5,519 increase from $7,382 per year under the BCRA. That would be a 74% increase. Compare that to the 11% increase from 2015 to 2016.
      • For a patient with Silver ACA coverage, that could be a $3,960 increase from $8,9340 per year under the BCRA. That would be a 44% increase. Compare that to the 10% increase from 2015 to 2016.
    • The impact may be lessened somewhat by the plan for Tax Credits to be larger for people with low income, those who live in areas of high medical cost, and older Americans.

 

OUT OF POCKET COSTS

Out of pocket costs include all of the rest of the items described in the ‘the coverage circle’ (Deductible, In-Network Providers, Medical Necessity, Coinsurance, Copayments) except for benefit coverage which will be discussed separately.

  • Under the ACA- ACA-counts affordable as 9.7% of an individual’s income

 

Average 2016 Out-of-Pocket Costs[7]

Out-of-Pocket Cost Category 2016 Avg. for Individuals 2016 Avg. for Families
Deductible-Bronze $5,731 (11% increase) $11,601 (10% increase)
Maximum Out-of-Pocket Costs $6,639 $13,292

 

Deductible-Silver $3,117(6% increase) $6,480(8% increase)
Maximum Out-of-Pocket Costs $6,110 $12,270

 

Deductible-Gold $1,165(decreased) $2,535(decreased)
Maximum Out-of-Pocket Costs $4,708 $9,634

 

Deductible-Platinum $233(4% decrease) $468(4% decrease)
Maximum Out-of-Pocket Costs $2,403 $4,806

 

  • Under the BCRA-BCRA counts affordable as 16.2% of an individual’s income[8]
    • The Senate bill would raise the amount individuals are expected to pay into their health plans for people who are low or middle income.
    • A 60 year-old who earns $35,649 (300% of poverty line) would be expected to spend 16.2% of their income ($5,773) before they get any help from the government. Under the ACA it was $3,442.
    • The Senate bill on average covers 58% of an enrollees’ cost. Most likely there will be higher copays and deductibles.

 

  • At the end of the day the BCRA will increase the ranks of the UNISURED and UNDERINSURED[9] [10]

 

unisured and underinsured chart

  • Uninsured had stabilized by 2010.
  • Underinsured were increasing prior to 2010
  • The ACA implemented in 2010
    • Data would appear to indicate that the number of uninsured was impacted positively
    • The number of underinsured did not increase but appeared to remain stable
  • UNDERINSURED Defined
    • out-of-pocket costs, excluding premiums, over the prior 12 months are equal to 10 percent or more of household income; or
    • out-of-pocket costs, excluding premiums, are equal to 5 percent or more of household income if income is under 200 percent of the federal poverty level ($22,980 for an individual and $47,100 for a family of four); or
    • deductible is 5 percent or more of household income
  • What Does That Mean?
    • 23 percent of 19-to-64-year-old adults
    • 31 million people in 2014
    • Half (51%) of underinsured adults reported problems with medical bills or debt of $4,000 or more
  • More than two of five (44%) reported not getting needed care because of cost. In essence, the ranks of the UNDERINSURED will increase from the present 31 million, and many more people will not be able to afford health care at all.
  • The ranks of the UNINSURED will increase.
    • Going without health care insurance can be a life and death situation.
      • 307,000 veterans may have died awaiting Veteran’s Affairs health care[11]
      • In States which expanded Medicaid, a 6.1% decrease in mortality was observed.[12]
      • The estimated number of lives saved per year through Medicaid expansion could be significant as the figure below demonstrates.[13]

 

chart of estimated number of lives saved with medicaid expansion

 

chart for unisured rate under AHCA

 

PROVISION

Other Insurance Market Reforms (Benefits)

Under the ACA

  • Insurers must cover 10 categories of essential benefits

outpatient care
Hospitalization
prescription drugs
preventive services
Rehabilitation
lab services
maternity care
pediatrics

Keep in mind the COST OF HEALTHCARE

THE COST OF HEALTHCARE[14]

 cost of healthcare chart

 Insurers prohibited from putting lifetime or annual payment limits on these benefits.

  • The ACA limits age bands-there’s a limit to how much insurers can charge older people compared with younger people.
  • If it’s removed
    • Premiums could be lower, but coverage would be scantier.
    • Annual or lifetime payments could be limited.
    • Patients would be less likely to get these key services
  • Cost-Free Preventive Services for Patients
  • Insurers must cover certain preventive services without any cost-share to the patient.
    • Colonoscopies-screening for colon cancer
    • Mammography-screening for breast cancer
    • Vaccines
    • diabetes screening
    • wellness visits
    • among many others.
  • It would be hard for Congress to repeal this measure because it does not involve federal spending, it would require a 60-vote supermajority in the Senate to remove it.
  • If it’s removed
    • Removing this provision would remove free testing for tens of millions of people. If people are less likely to get these tests, they may seek medical treatment only when they are more seriously ill, and use hospital or emergency services when their underlying condition is more advanced.

Under the BCRA

  • The Senate Bill seems to allow states to opt out of essential health benefits.
  • Any State can get waivers as long as they don’t increase the deficit.
  • The Bill defunds Planned Parenthood for one year. Access to contraceptives would decline.

For both sets of benefits, the ‘area under the curve’ or healthcare costs would increase as patients can’t get care, put off care, or don’t follow through with the advice given by their healthcare providers.

increasing cost of healthcare

 

  • The ‘area under the curve’ basically signifies the magnitude of the quantity that is obtained by the product of the quantities signified by the x and the y axes.
  • Why is that important?
    • Because it is a way to measure how significant any particular intervention might be along the Health Care Continuum (or any curve for that matter).
    • To be specific, if we are looking at healthcare cost (and we are), the AREA UNDER THE CURVE on our example above would represent the cost of health care for that particular segment. In this case, the representation of the cost of care for WORRIED WELL (Preventive Healthcare Services), SEEKING CARE, COMMON CHRONIC DISEASES, and SERIOUSLY ILL (all involved with Categories of Essential Benefits).
    • In actuality, the cost of COMMON CHRONIC DISEASES represents the bulk of the cost of care.
    • By fostering absence of access to health care or limited access to health care, the impact of the BCRA can only result in increasing health care costs.

is cost a viable concept for informaed consumer of healthcare?cost of healthcare

cost of healthcare

At the end of the day, any stress placed on health care costs such as the stress applied by the BCRA will only result is increased cost of care. As the Federal and State Governments are deeply involved in paying for the cost of healthcare, it would behoove the decision makers to consider the reality of the issues at stake here. Not only for the individual American, but for the country as well.

 

Brian H. Casull MD, MPA
COL (R) United States Army Medical Corps
June 24, 2017

 

 

[1] https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/summary-of-benefits

[2] Medscape-What’s At Risk in Repealing the ACA? How Will It Affect You? Leigh Page, February 23, 2017

[3] https://www.hhs.gov/about/

[4] http://www.kff.org/health-reform/issue-brief/2017-premium-changes-and-insurer-participation-in-the-affordable-care-acts-health-insurance-marketplaces/

[5] https://www.healthpocket.com/healthcare-research/infostat/2017-obamacare-premiums-deductibles#.WU2iwWjytPY

[6] https://www.vox.com/policy-and-politics/2017/6/22/15846728/senate-plan-better-care-reconciliation-act

[7] ibid https://www.healthpocket.com/healthcare-research/infostat/2017-obamacare-premiums-deductibles#.WU2iwWjytPY

[8] ibid https://www.vox.com/policy-and-politics/2017/6/22/15846728/senate-plan-better-care-reconciliation-act

[9] How Many Are Underinsured? Trends Among U.S. Adults, 2003 And 2007 by ‘Cathy Schoen, Sara R. Collins, Jennifer L. Kriss and Michelle M. Doty)

[10] http://www.commonwealthfund.org/publications/issue-briefs/2015/may/problem-of-underinsurance

[11] http://www.cnn.com/2015/09/02/politics/va-inspector-general-report/

[12] N Engl J Med 2012; 367:1025-1034September 13, 2012DOI: 10.1056/NEJMsa1202099

[13] http://www.americanprogress.org/issues/healthcare/news/2013/04/01/57839/access-to-medicaid-reduces-mortality-rates/

[14] https://blog.visitorscoverage.com/infographics-average-cost-of-medical-services-in-the-usa/

By | 2017-06-26T18:33:20+00:00 June 26th, 2017|Categories: Uncategorized|0 Comments

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