After weeks of negotiation between the Freedom Caucus led by Rep. Mark Meadows and Republican moderates led by Representative Tom MacArthur, the Meadows-MacArthur amendment to the American Health Care Act (AHCA) is being proposed as the bridge between the AHCA and the strong conservative bloc that would like to see a market-based insurance industry approach to address the weaknesses of the Affordable Care Act.
The Freedom Caucus objected to the initial iteration of the AHCA because it preserved many of the insurance reforms instituted by the ACA such as the elimination of preexisting condition requirements. Moderate Republicans, on the other hand, objected once the Congressional Budget Office (CBO) predicted that the AHCA would cause approximately 24 million Americans to lose their insurance coverage by 2026 and that Medicaid would be cut by $839 billion over the next 10 years.
While sustaining the original concerns of the AHCA, which include potential coverage losses, significant premium increases (particularly for the elderly) and a near $1 trillion cut in Medicaid, the Meadows-MacArthur amendment adds potential state waivers that would give each state the right to eliminate protections for individuals with preexisting conditions if they do not maintain continuous coverage (all but 63 days of the prior 12 months).
In addition, states would be permitted to restore lifetime caps on key benefits (e.g. mental health coverage) and permit insurance companies to increase premiums significantly for those in high-risk pools. Technically, states would be required to ensure that overall premiums would be lowered and that the changes would “stabilize” both the insurance market and coverage for those with preexisting conditions before their waivers are approved. However, there is no provision in this amendment for the federal government to oversee or enforce such initiatives.
States would further be given the right to waive the ACA’s “community rating” (or medical underwriting) prohibitions, which would give insurance companies the right to charge significantly higher premiums for those with more complex health conditions. The issue here is that the upper 1% of beneficiaries in any risk pool spend upward of $100,000 annually to treat life-threatening conditions (such as metastatic cancer), and there would be no premium limit for those individuals under such a waiver.
Healthcare is the most common cause of personal bankruptcy among working Americans, and cancer is the No. 1 cause of personal and family insolvency due to the high out-of-pocket costs associated with its treatment.
What would exacerbate this issue is the fact that the “low risk” pool of healthy individuals would most likely no longer continue their coverage without the coverage mandates, which would drive up the premium costs even more for everyone. That, in turn, would cause many other individuals to give up their coverage due to their inability to pay for higher premiums. The CBO predicted that total out-of-pocket expenses would rise by approximately $3,600 for current public exchange beneficiaries and even more for older individuals, particularly in higher-cost states.
In addition, those with low risk may choose to voluntarily undergo community rating/medical underwriting to lower the cost of their premiums, which would leave those needing insurance the most (those in the high-risk pools) with even higher and more unaffordable premiums.
Finally, states would have the right to waive the ACA’s essential health benefits as of 2020, which would eliminate required coverage for outpatient care, prescription drugs, mental health services, opioid dependency treatment and maternity care. This would cause many insurers to abandon coverage for these benefits altogether in order to drive down the cost of underwriting.
There is no question that the ACA needs to be rectified so that it works for the insurance industry, patients, healthcare organizations and federal/state budgets. Viable solutions need to balance these interests while optimizing the access, affordability and quality of care in an economically sustainable way.
One-sided solutions that benefit one stakeholder over another do not make sense, are divisive and undermine the process of further negotiation toward a sustainable approach. The proposed Meadows-MacArthur amendment to the AHCA is a sop to the Freedom Caucus to gain its support while moving the AHCA even further from moderate Republican and Democrat support.
Jonathan H. Burroughs, M.D., MBA, FACHE, FAAPL is a certified physician executive and a fellow of the American College of Healthcare Executives and the American Association for Physician Leadership. He is president and CEO of The Burroughs Healthcare Consulting Network and works with some of the nation's top healthcare consulting organizations to provide "best practice" solutions and training to healthcare organizations.