GOP's replacement for ACA should deeply worry hospitals

Oral arguments before the U.S. Supreme Court in the King v. Burwell case are less than a month away. That means members of the media have amped up the hand-wringing over how the ruling will go, publishing stories and opinion pieces with headlines such as "King v. Burwell will decide the fate of millions," "If Obamacare is eliminated, what is the next step?" and my personal favorite, "Justice Scalia could be the decisive vote on Obamacare," which appeared recently in the New Republic.

An aside: Scalia won't be the deciding vote. He's voting against subsidies. So is Clarence Thomas. All the other justices have shown a little more flexibility.

But what I really want to talk about is the spot in which King v. Burwell has placed the Republican party. If subsidies are revoked in a majority of states and GOP members of Congress can't agree on an easy fix, Republicans have to provide an alternative to the Affordable Care Act (ACA). After nearly five years of "Repeal and Replace," it finally got around to that pesky second part in just the past few weeks.

Party leaders have so quietly rolled out the replacement and stuck it in the proverbial corner of the office you'd swear they were worried they were going to be called on to officiate NFL games instead.

That's primarily because the GOP has begun to fret about the monster it may have created. Polls suggest that the American public doesn't want King v. Burwell to gut the ACA, according to the AARP. If the high court does, it's going to be a wee bit of a stretch pinning blame on the Democrats.

Hospitals also have a lot riding on this case as well. Millions of Americans who can't afford an unsubsidized policy are going to walk. Hospitals will be on the hook for their bills, a situation their operators want to avoid.

All dogma aside, the GOP is a relatively easy party to decipher. It's leaders may talk about personal freedom and economic expansion being the ultimate product of limited government, but it's really about making sure rich people and corporations don't pay too much in taxes. Too many programs equals too many taxes.

Any person or entity with a lot of money need not worry about being inconvenienced by this new plan, according to the Washington Post's clear-eyed reporting last week on the GOP alternative

Among the proposal's primary components:

  • No more individual mandate (meaning no more tax penalty for not getting coverage)

  • No more employer mandate (my, what a surprise)

  • The ban on medical underwriting is lifted if your coverage lapses for a couple of months (a boon for insurance companies looking to aggressively cherry-pick enrollees and a punishment for any household that suffers a cash crunch)

  • The Cadillac tax on richer health plans is, naturally, relaxed (it would begin at a $12,000 cost for an individual plan and $30,000 for family coverage, up from $10,200 and $27,500)

  • A refundable tax credit instead of real-time subsidies to purchase insurance, with the income cap lowered from 400 percent of the poverty level to 300 percent (again, punishing cash-challenged households)

  • Older enrollees can be charged up to five times what younger enrollees are charged, up from the current 3-to-1 ratio

The proposal actually keeps a couple of politically popular items, such as allowing children to stay on their parents' plan until the age of 26 (which won't make much difference if mom and dad don't have a subsidy anymore).

I'm really not sure what this plan does except to put things back to the status quo before the ACA. That means about 10 million fewer Americans with insurance, hospitals seeing their charity care cases rise after they fell into a sharp decline. That this proposal will never see the light of day as law is more certain than the Supreme Court invalidating subsidies, which is not likely to happen anyway.

The upside is that if the Supreme Court does invalidate subsidies, the uproar will likely be so loud that Congress will either pass a fix pronto, or most states will have their own insurance exchanges operating by the next enrollment period. The ACA has its own significant faults, but the flaws of this weakling clone are at least a thousand times worse. - Ron (@FierceHealth)

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