One of the Obama administration’s big selling points in enacting the Affordable Care Act in 2010 was that by expanding Medicaid insurance for many of the nation’s poor, the law would begin to relieve community hospitals of the mounting cost of providing routine treatment to indigent patients in their emergency rooms.
Uncompensated health care had become a massive drain on hospital budgets, greatly adding to the nation’s overall medical costs, which were passed along to other patients or local government in the form of higher hospital fees and charges.
As House Republicans savor their major victory Thursday in narrowly passing their highly controversial and little-understood plan to repeal and replace the Affordable Care Act, it’s instructive to consider some of the highly positive fiscal achievements of Obamacare that likely will be washed away if House and Senate GOP leaders and the White House ultimately settle on a compromise approach.
House Speaker Paul Ryan (R-WI) and President Trump frequently denounce Obamacare as a “failed” national health insurance program that is trapped in a “death spiral” of soaring premiums, broken promises and rapidly shrinking competition in many markets as more and more insurers bail out.
Despite all that, the non-partisan Congressional Budget Office (CBO) said in March that the current system is in pretty good shape and should continue to flourish. "The nongroup market would probably be stable in most areas under either current law or the [Republican] legislation," the CBO wrote.
That is, of course, unless the Trump administration and congressional Republicans continue to systematically throttle the program with adverse policy and executive actions and the withholding of vitally important subsidies to insurers and their low-income customers in the private market.
Obamacare’s success in relieving community hospitals in metropolitan, suburban and rural areas of billions of dollars in uncompensated medical treatment in recent years is just one of a spate of fiscal success stories that have received little attention during an epic partisan struggle on Capitol Hill over the future of the nationally subsidized insurance program.
The August 2012 Supreme Court ruling that for the first time upheld the constitutionality of Obamacare granted the states the choice to take advantage of the expanded Medicaid program or remain out of it. That decision ultimately prompted 31 states and the District of Columbia to take advantage of billions of dollars in fresh healthcare funding for the poor paid for by federal taxpayers.
A new report this week by the Commonwealth Fund, a healthcare research group, found that uncompensated care burdens fell sharply in Medicaid expansion states between 2013 and 2015, from 3.9 percent of total operating costs to just 2.3 percent. Estimated savings across all hospitals in Medicaid expansion states totaled $6.2 billion, with the largest reductions in uncompensated care recorded in hospitals that care for the highest proportion of low-income and uninsured patients.
Obamacare, in this case, was critical in helping the nation’s hospitals and healthcare facilities bend the cost curve, yet it came at a steep price. By 2035, Obamacare would cost business and especially consumers $4 trillion, according to the Republican Joint Economic Committee. Since the top 20 percent pays 84 percent all federal income taxes, there could be a significant effect on economic growth.
The House GOP plan, if ever enacted, would cut an estimated $800 billion from Medicaid over the coming decade by rolling back the Medicaid expansion beginning in 2019 that provides coverage to 11 million poor, able-bodied single people. The bill could also force states to cut back health care for low-income elderly, and others by altering the funding formula for the federal contribution – changing it from an open-ended entitlement to a block grant based on per capita costs.
“Legislation that scales back or eliminates Medicaid expansion is likely to expose these safety-net hospitals to large cost increases,” according to the Commonwealth Fund report. “Conversely, if the 19 states that chose not to expand Medicaid were to adopt expansion, their uncompensated care costs also would decrease by an estimated $6.2 billion.”
Robert Greenstein, president of the liberal-leaning Center on Budget and Policy Priorities, says the damage that the House-passed American Health Care Act could ultimately do to the Medicaid program covering more than 50 million people is breathtaking. The bill’s Medicaid cuts would reach 24 percent by 2026, according to CBO estimates, putting tens of millions of poor and near-poor families and individuals at risk of losing coverage.
“I have been in Washington, D.C. for 45 years,” he said in a statement following House passage of the bill. “But I have never seen members of Congress vote to so deeply hurt so many of their own constituents.”
The Committee for a Responsible Federal Budget, a more conservative anti-deficit watchdog, meanwhile took umbrage with the Republicans for what it views as the height of fiscal irresponsibility – members voting on a bill affecting one-fifth of the nation’s economy without any idea of how much it will cost, how many millions of people would lose their coverage and the impact it would have on the long-term debt.
The CBO produced analyses of two earlier iterations of the bill, finding that as many as 24 million Americans could lose health insurance coverage (14 million by choice) in the coming decade under the GOP approach.
Several amendments were added after CBO conducted those analyses. The most important one – which helped close the deal with many conservative members – would allow the states to opt out of two key Obamacare mandates. One requiring insurers to provide costly and extensive “essential services” to policyholders, and another that bars insurers from charging a higher price to people with pre-existing medical problems.
But little if anything is known about the likely impact of that amendment, sponsored by moderate Republican Tom MacArthur of New Jersey and arch-conservative Freedom Caucus leader Mark Meadows of North Carolina. Many assume that the amendment if enacted, would likely increase the number of people with some type of insurance, but would also raise premiums for older and less healthy individuals.
That reality has left the Committee for a Responsible Federal Budget flummoxed.
“Based on our previous analysis, we believe changes to the bill could save as much as $5 billion or cost as much as $265 billion – likely reducing and perhaps even reversing the $150 billion in savings from the previous version of the bill,” the organization noted in frustration in an analysis this week.