On May 4 the House of Representatives passed a new version of the American Health Care Act (AHC) that made deep cuts to both Medicaid funding and marketplace subsidies. It now moves to the Senate, where experts predict it will undergo substantial changes.
Hospital groups opposed the newer version of the bill primarily because of the reduction in the number expected to have insurance in 2026 (24 million according to an earlier Congressional Budget Office estimate). Most of those coverage cuts would result from an estimated $800 billion reduction in the growth of Medicaid over the next 10 years.
The American Hospital Association’s president and CEO issued a written statement expressing concern: “As the backbone of our nation’s health safety net, America’s hospitals and health systems—which include more than 270,000 affiliated physicians and 2 million nurses and other caregivers—believe it’s vital that Medicaid be protected.” (To read statement, click here.)
The issue with marketplace subsidies stems from provisions that would reduce the amount currently available for older enrollees—who generally use more hospital services—while increasing subsidies for younger enrollees. The change could help stabilize the Affordable Care Act (ACA) marketplaces but leave older, pre-Medicare-eligible enrollees with unaffordable healthcare costs. That situation could increase hospitals’ charity-care and bad-debt costs.
The Senate has appointed a 13-member working group to craft the Senate bill. The group includes members from both ends of the spectrum: complete repeal of the ACA to approval of its Medicaid expansion.
Pending a CBO score for the House bill (expected the week of May 22), the Healthcare Financial Management Association (HFMA) has noted some key points:
- Hospitals will still be required to provide free care for medical emergencies to the newly uninsured.
- Hospitals can expect a $165.8 billion decrease in revenue through 2026.
- If ACA’s Medicare and Medicaid disproportionate share hospital payment reductions are retained, it would produce another $102.9 billion in hospital cuts.
- The AHCA leaves in place an expected $289.5 billion in reductions to the Medicare inflation update over the coming decade.
- The bill’s Medicaid cuts will likely force some states to either reduce Medicaid eligibility levels or cut provider payments to offset the growing burden on state budgets.
- Hospitals would likely be the prime target of any state Medicaid-rate reduction because other types of providers would either opt out of the program or face unsustainable losses from any cuts.
- Major Medicaid changes—including a reduction in the federal matching rate for the newly eligible population—are likely.
- The House-passed AHCA would reduce the federal match in Medicaid for early expansion states to 80 percent starting this year, while the 19 non-expansion states could receive the enhanced match if they adopt the expansion by the end of this year.
- The House bill would replace the ACA’s insurance subsidy structure with one that provides age-based subsidies ranging from $2,000 for ages 29 and below to $4,000 for ages 60 to 64. Those subsidies would not be adjusted to account for regional premium differences. The bill would eliminate cost-sharing subsidies for marketplace enrollees earning less than 250 percent of the federal poverty level.
Source: “Hospitals Watching Medicaid, Subsidies in Senate AHCA Bill,” HFMA Weekly, May 12, 2017
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