The revised draft of the Senate's healthcare bill left much of the original version intact, including deep cuts to Medicaid, changes to individual market subsidies and the repeal of several Affordable Care Act taxes.
However, there are some key differences worth examining more closely—especially given how they might affect both health insurers and healthcare providers. Read on for a summary.
It tweaks DSH payment rules—with a catch
The Affordable Care Act placed limits on so-called disproportionate share hospital (DSH) payments for Medicaid expansion states, under the reasoning that due to coverage expansions, they would need less federal funding to help care for the uninsured. Unsurprisingly, the hospital industry was not a fan, and some institutions even sued the federal government over it.
The original Senate bill erased those cuts for hospitals in states that did not expand Medicaid. The revised Senate bill, meanwhile, gives hospitals in Medicaid expansion states an opportunity to access that extra funding—but they won’t see that money unless their states roll back Medicaid expansion by 2020.
That dynamic creates a “Sophie’s choice” for states—keep Medicaid expansion or boost hospital finances, Kenneth Raske, CEO of the Greater New York Hospital Association, told The Wall Street Journal.
To Julius Hobson, a healthcare lobbyist and attorney with the law firm Polsinelli, the revised bill's DSH provision will likely make it difficult for senators from Medicaid expansion states to support it. "If they vote for this, hospitals in their state lose a lot of money," he told FierceHealthcare.
It creates a single risk pool for both ACA-compliant and non-compliant individual market plans
The revised Senate bill includes a version of an amendment suggested by Texas Senator Ted Cruz (R), which would let insurers sell non-ACA-compliant plans as long as they sell at least one plan in that state’s individual market that does comply with the law’s rules. When first introduced, some predicted that the Cruz amendment would essentially turn the ACA exchanges into a high-risk pool, with sicker enrollees staying in more robust plans and healthier ones choosing skimpier coverage.
Yet Cruz told Republicans Thursday that his amendment would keep all individual enrollees in one unified risk pool, according to Politico. The problem? Insurers and industry experts are very confused about how that would work, since it would be extremely challenging for regulators to treat plans conforming to different rules as one market.
“It seems hard to understand and doesn’t make a lot of sense,” Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts, told the publication.
Curiously, the bill also states that there will be no risk adjustment program for non-ACA-compliant plans, suggesting that one of the key tenets of creating a single risk pool—sharing financial risk—won't happen under the revised bill.
It adds more money to the state stability funds—but likely not enough
Like the original bill, the revised bill allocates $50 billion from 2018 to 2021 for the state stability and innovation program, which is meant to create “arrangements with health insurers to assist in the purchase of health benefits coverage by addressing coverage and access disruption and responding to urgent healthcare needs within states.”
For the long-term state stability and innovation program, which furthers many of the same goals, the revised bill allocates $132 billion from 2016 to 2019—$70 billion more than in the original bill. That funding boost could all go directly toward mitigating the effects of the Cruz amendment, however, as the revised draft states that from 2020 to 2026, $70 billion will go toward payments to ACA-compliant plans to help bring down costs.
To Andy Slavitt, former administrator of the Centers for Medicare & Medicaid Services, that is just one of many indications that the $70 billion boost in funding doesn’t go very far:
This is important. The $70 billion is spent 3 times over in this bill. And it does not need to be directed at low income at all. https://t.co/6j81TmN69B— Andy Slavitt (@ASlavitt) July 14, 2017
The revised draft also throws a bone to Alaska, as it says states where the individual market premiums are at least 75% higher than the national average will be entitled to at least 1% of the total allotment of long-term state stability funding annually.