The health bill introduced this week by Congressional Republicans would repeal major parts of the Affordable Care Act, rescinding the mandate that you buy health insurance and threatening to roll back Medicaid coverage for thousands of Minnesotans.
But there’s a reason why critics are calling it “Obamacare Lite:” Some of the most popular consumer protections would remain in place, and people who buy health insurance in the individual market would still have strong incentives to obtain coverage.
The state’s nursing homes and hospitals, however, are bracing for change simply because Minnesota gets hundreds of millions of dollars from the Medicaid program, and it pays a large share of their bills.
Across Minnesota on Tuesday, people close to the health care system reacted cautiously, noting that there’s a good chance this plan will never pass Congress, at least in its current form.
“I would expect to see more changes before we really know how it affects Minnesotans,” said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers. “I’m certainly worried that these changes are going to lead to fewer Minnesotans having insurance.”
The bill unveiled by GOP leaders is their effort to repeal the federal Affordable Care Act (ACA), the sweeping legislation signed by President Barack Obama in 2010. The law hugely increased health coverage, adding 20 million Americans to the ranks of the insured, through a variety of measures, including a requirement that most Americans obtain coverage or pay a tax penalty. But it also left many consumers, this year at least, with higher premiums and fewer choices in the insurance marketplace.
The new American Health Care Act from House Republicans would eliminate the “individual mandate” and alter the ACA tax credits for premium costs, said Cynthia Cox, a researcher with the Kaiser Family Foundation.
Instead, it would offer fixed-dollar tax credits that vary, to some degree, by age and income, Cox said. That could result in smaller subsidies for many consumers in states like Minnesota, where premiums are higher than the nation average. But there also would be winners in the state, including higher-income residents who did not qualify for premium subsidies under the ACA but might now receive tax credits.
Instead of an individual mandate, under the Republican bill, people who don’t maintain health insurance coverage would face a financial penalty should they opt into the market at a later point, Cox said. It’s unclear, she said, whether that would do a better job driving healthy people into the market, which has been a key problem with the ACA.
The Republican legislation would maintain reforms that let adult children stay on their parents’ insurance until age 26 — one of the most popular provisions in the ACA. It also would continue to prevent health insurers from denying coverage to people with preexisting health conditions.
“It’s fair to say the Republicans are going to repeal Obamacare and replace it with Obamacare,” said Roger Feldman, a professor at the University of Minnesota. “The one respect where it’s different — and it’s really a big policy difference — is Medicaid. And in that sense, it’s a definite rollback.”
Medical Assistance, as Medicaid is known here, covers nearly 1.1 million Minnesotans, generating a significant source of revenue for hospitals, nursing homes, clinics and other health care providers.
A recent analysis by the state Department of Human Services estimated that Minnesota would lose up to $5 billion a year once the funding changes to Medicaid take effect, forcing extremely difficult choices over who is covered and what benefits they receive.
One concern voiced Tuesday is that people will continue to get sick and, without insurance, seek charity care at the state’s hospitals, which are required to treat anyone who comes to the emergency room in a crisis, such as a heart attack. Charity care costs for Minnesota hospitals have dropped from $227 million in 2011 to $172 million in 2015 as Medical Assistance coverage expanded.
“Our priority is to preserve the coverage for the low income Minnesotans that have received coverage,” said Wendy Burt, a vice president with the Minnesota Hospital Association.
Expanded Medicaid coverage also encouraged patients to obtain preventive care that reduces the needs for expensive hospital care, she added. “It encouraged care in the clinic and preventive care and regular screenings, and so we believe that did reduce overuse of the emergency room.”
The largest single demographic group covered by Medical Assistance is children, with about 500,000 now covered in Minnesota.
“In Minnesota particularly, we had a state that has understood the importance of investing early in children, whether it is education or health care and that is critical,” said Bharti Wahi, executive director of the Children’s Defense Fund-Minnesota. “The cuts that are proposed would rip away those clear supports and investments.”
Medical Assistance also accounts for 60 percent of payments to the state’s nursing homes, paying for the long-term care costs of about 50,000 low-income seniors.
“We are very concerned,” said Kari Thurlow, a senior vice president with LeadingAge Minnesota, a nursing home trade group. “When you talk about capping payments at current levels, it doesn’t allow for the growth that will be coming as our population continues to age.”
Advocates are concerned because, while the elderly and disabled make up about 20 percent of Medical Assistance enrollment, they account for 60 percent of the outlays.
But others said the proposed caps on Medicaid spending would introduce useful budget discipline to Minnesota.
It’s unfair to call the House bill “Obamacare Lite,” because it delivers key reforms to Medicaid that Republicans have long sought, said Peter Nelson, a vice president at the Center of the America Experiment, a conservative think tank based in Golden Valley. In addition, he said, it promotes use of health savings accounts that Republicans have long pushed, on the theory that they would encourage smart shopping for health care.
The bill could also stabilize the individual insurance market starting in 2019, in part by lowering taxes on insurers, said Bob Stein, president of the Minnesota Association of Health Underwriters, a trade group for insurance agents. Even so, Stein said there are details he’s waiting to see, such as how Republicans would tackle benefit mandates in the health law.
“I am optimistic, because it looks like they’re going in the right direction,” he said. “I just want to see the next piece.”