By Roy Grant, MA
The US Congress recently took its first steps toward repealing the Affordable Care Act (ACA). The Congressional Budget Office projected that repeal would increase the number of uninsured by 18 million people initially, and by 27 million after funding for Medicaid expansion and subsidies are eliminated. Repealing the ACA also threatens the safety net critical to health care access for economically vulnerable individuals and families.
Although there is no consensus about how to replace the ACA, some actions are shared by the plans put forth by House Speaker Paul Ryan (R, Wisconsin) and Secretary of the Department of Health and Human Services Tom Price, MD, former Republican US Representative from Georgia. These include maintaining provisions such as ensuring access to coverage for people with preexisting conditions and allowing young adults to remain on their parents’ plan. The greatest risk of repeal would be for economically vulnerable individuals.
Most partisan criticism of the ACA focuses on the individual marketplace; however, only 7% of the population purchase individual insurance. Of the more than 20 million people who gained insurance through the ACA, 9.2 million became covered through the exchanges and 11 million through Medicaid expansion.
The Individual Economics of Replacement
For an individual who currently receives coverage because of the Medicaid expansion (whose income must not exceed $16 400 per year), the average subsidy is $236 per month. This covers 84% of the premium cost and represents approximately 17% of annual income. For a family of 3 with 1 full-time worker who earns $15/hour (annual income $31 200/year) and has no insurance benefits, the average monthly subsidy is $632 ($7584/year), which offsets 85% of the premium and is equivalent to 24% of that family’s income.
Republican replacement plans propose facilitating individual purchases in 2 ways: by expanding health savings accounts and tax credits, and by seeking to reduce premium cost through increased competition from allowing companies to sell insurance across state lines. These are not adequate substitutes for subsidies.
Health savings accounts allow individuals to set aside money for health care with later tax benefits, but the greatest economic benefit is for households with incomes of $100 000 or more. Also, sales across state lines are currently permitted but not often done. The ACA requires insurers to provide a basic level of coverage, but with repeal, insurance companies might be permitted to locate in the state with the weakest regulations, driving up cost and reducing benefits.
For context, the median monthly cost for renters in the United States is $922 ($11 064 per year) and is considerably higher in large cities where the preponderance of Medicaid expansion beneficiaries live. It is generally accepted that to maintain residential stability, rent should not exceed 30% of monthly income. Families earning less than $36 000 a year are already struggling to afford necessities. In 2015, nearly 13% of households (15.8 million US households, with 42.2 million people) experienced food insecurity, the risk of not having enough money for food. This includes nearly about 3 million families with children. Even without an additional burden to pay for health insurance, low-income households still often choose between paying for health care or food.
Medicaid Block Grants
The Republican ACA replacement plans propose eliminating the Medicaid expansion and converting Medicaid to a block grant, giving each state a fixed amount and increased flexibility to modify its Medicaid program. But experience with block granting shows that over time, funding will decline. It is estimated that block grants for Medicaid might reduce funding nationally by $1 trillion (one-third of current funding) over the next 10 years.
States already have flexibility in use of Medicaid funding, especially for the expansion population. Governors must make waiver applications to the Centers for Medicare & Medicaid Services (CMS). The most draconian Medicaid waiver proposals have come from the Indiana and Kentucky governors, who proposed policies known to reduce Medicaid participation: work requirements (even though three-fourths of adults receiving Medicaid already live in a household with at least 1 worker), monthly premiums, and discontinuing or terminating coverage for missed payments. During the Obama administration, work requirements and other policies inconsistent with the goals of the Medicaid program were not approved. However, the CMS director appointed by Trump designed the proposed Indiana Medicaid waiver, so approval of the model seems likely.
Block granting would greatly increase costs to the states. The result could be budget-driven decisions to render some current beneficiaries ineligible or reduce reimbursement to providers, limiting their willingness to accept Medicaid patients. States could choose, consistent with the Indiana and Kentucky waivers, to eliminate covered services such as hearing, vision, and dental care. With block granting, Medicaid would insure fewer people with less comprehensive coverage.
Damage to the Health Care Safety Net
Community health centers serve more than 24 million patients annually and are essential to the primary care safety net for low-income people. In 2015, nearly half of those receiving care from these health centers were covered by Medicaid and 28% were uninsured. Health centers in states that expanded Medicaid had an up to 40% decrease in uncompensated care for uninsured individuals and a corresponding increase in revenue. The ACA also included funding for health center expansion, creating new primary care access points. Reducing Medicaid reimbursement and withdrawing this funding would reduce capacity and access to care, making routine and preventive services, management of chronic conditions, and mental health treatment less available.
Hospitals also play an important role in the safety net. Rural safety-net hospitals, with their lower patient volume, are especially vulnerable to changes in their patients’ insurance status. In states that did not expand Medicaid, the increased cost of uncompensated care jeopardized the financial viability of such hospitals and contributed to hospital closures. Curtailing Medicaid expansion would compromise health care throughout our rural counties.
Impact of Repeal and Replace
A stated goal of Republicans’ ACA replacement plans is increasing access to insurance, giving people freedom to choose not to purchase insurance they don’t need or can’t afford. But this obfuscates the likelihood that insurance will be unaffordable for many who gained coverage through the ACA. Repeal and replacement would likely disrupt health care for millions, damage our safety net for the economically vulnerable, reverse our progress in reducing health disparities, and drive up health care expenditures with preventable hospitalizations and emergency department use.
About the author: Roy Grant, MA, is a public health research and policy consultant in New York City. Following 3 years on the editorial board of the American Journal of Public Health, he is now an associate editor for the journal. Previously, he was Research Director at Children’s Health Fund and Associate Director for community pediatric programs at Mount Sinai Medical Center in New York City. He has published more than 4 dozen book chapters and journal articles on diverse topics, including access to care and service needs of vulnerable populations, mental health, child development, and the interface between research and public policy.
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