The ABCs of the AHCA: A is for abortion, B is for backward, C is for costly
Rory Kraft

EDITOR’S NOTE: This piece’s posting was delayed by technical errors. However, the analysis of the American Health Care Act (AHCA) is still pressing and relevant. While the bill was pulled from a planned House vote in the US Congress on Friday 3/24/17 because Republicans (the GOP) did not have enough votes to pass it, House Republican leader Paul Ryan has vowed to try again after revisions to the AHCA. We do not know what they will be. Insofar as the elements critiqued by Rory Kraft remain in future versions, we still very much need this analysis. Indeed, Kraft analyzes some aspects of the proposal that did not receive a close viewing in news media, including the impact on access to abortion. At the end of Rory Kraft’s analysis, you will find a helpful list of other IJFAB Blog articles on health care and benefits reform in the US and other nations.

AUTHOR’S PREFACE:

This argument was originally written for another venue, and thus is quirky in that it assumes a certain level of informality and is not written to be either persuasive or educational in the manners that op-eds often are.  It is also at the same time a bit defensive (“please don’t troll me!”) and expressive.  Quite simply, this is my attempt to capture for others my own reactions to the bills being called collectively the American Health Care Act.  I’ve cleaned it up a bit, but essentially here are my reactions as to how the relevant bills stood as of late Thursday 3/9/17.

Since the House leadership plan to repeal and replace the Affordable Care Act (ACA) was released late Monday March 6, I’ve had several people ask me what I think of the new plan.  This is my attempt to provide some insights.

First, like almost anyone who has looked at the ACA I have some problems with it.  The ACA is gargantuan in scope and has many side provisions which impact the functionality of it.  I can only assume that many of these were attempts to placate particular senators and/or congressmen who were wavering in their support of the bill.  The specifics of the bill are a mess while at the same time leaving big swaths to administrative regulatory language.   I say all this because I am concerned that some will take the following criticisms of the Budget Reconciliation act as a total endorsement of the ACA.

What do I think of these bills (the reconciliation language is split into two bills, perhaps in part to speed it through committees)?   Quite simply: they are horrible.

A is for Abortion, so I start with issues tied to that:

They repeatedly aim to amend the law to ensure that no federal funding goes to any entity which provides abortions – even though federal funding of abortions is already settled.  As proponents of Planned Parenthood are quick to point out, the health care that PP provides is in many communities the only access to health care available.  And it is generally at a low cost to both the patient and any billing to Medicare is below the cost of services.  What the bills would do is shut down access to health care for anyone who depends on PP for routine care.  Several articles have cast this as a veiled blackmail; “if you want to provide care to women, get out of the abortion business.”  If we want to have this conversation as a country, I would welcome it.  But that conversation should not be muddied up with a conversation about access to insurance more broadly.

Second on the abortion front, the legislation routinely and purposefully omits the “or health of the mother” exception which has been repeatedly found to be required by the Supreme Court.  Omitting this clause, knowing that doing so will cause these components of the bills to be found unenforceable, is merely to throw meat to the base.  This is disingenuous and bad governance.   If you want to ban abortion, get rid of the health exception, etc., introduce legislation to do that and have it tested in the courts.  Do not muddy the waters here by mingling health care reform with abortion politics.

Third, assuming that a woman has complications from an abortion that occurred outside the Trumpcare plan, the bill states that “the treatment of any infection, injury, disease, or disorder that has been caused by or exacerbated by the performance of an abortion” shall not be funded.    One of the most effective techniques that abortion-rights advocates have is to point to the problem of pre-Roe “back alley abortions”.  This bill flat out says if you get an abortion and have a problem that the government will not pay for any medical care.  Cue the “dying from back alley abortions” rhetoric.   Seriously, how do you miss this?

Finally on abortion, there is an interesting slip in paragraph.  If one goes on COBRA coverage for health insurance (i.e. switches jobs, loses jobs, spouse who was primary insured passes away, etc.), you would be entitled to tax credits for your premium.  But… this is not allowable for any plan which includes abortion coverage.   This effectively means that for portability reasons employer-provided health insurance (which is most of the health insurance in the country) would most likely drop coverage for abortions. Including of course abortions which are necessary to remove a miscarriage, where the life or health of the mother is in danger, etc.

B is for Backward.

A key problem with operating health care payments through an insurance scheme is that in order to do so you need those who are less likely to use care to pay in advance of their own needing it.  Otherwise people just wait until they are sick to sign up for insurance.  In lieu of the individual mandate of the ACA, the bill would call for those who lacked insurance to pay 30% more for a plan if they did not have continuous coverage.

Imagine that Joe has started his own construction company and is trying hard to make ends meet.  Health insurance just seems too expensive right now. So he goes without it, gambling that he will not become ill or injured.  He does this because he doesn’t have the money right now to pay for it.  After he is more fully established, he goes to get insurance and discovers that his plan is now 30% higher than what was unaffordable before.  This will not encourage folks to return to coverage; it will only firm up a group of middle and lower-income folks who skip insurance permanently.

Much has been made of the fact that those in the so-called expansion states already getting subsidies through Medicaid will continue to get them.  But what has been lost in most reports I have seen here is that over time the burden for paying those subsidies moves to the states.  Essentially the continuation of the funding becomes a mandate on the states from the federal government.  This is not something I would expect from a conservative movement which decries unfunded mandates.

The subsidized payments that folk could get under ACA to reduce premiums for individual plans would be replaced with tax credits.  So folks who are getting insurance via individual plans (the most expensive plans!) would have to pay it all up front, then get a credit on their taxes when they file them the next year.   This is an odd sort of way of making something more affordable – paying people back long after they purchased the plan.  I guess it is sort of like a rebate for buying motor oil.  You just hope you do the paperwork right and never know if it is going to work.

This plan moves us not just to the pre-ACA days, but actually moves us backward to a place where insurance is even more unaffordable and out of reach.

C is for Costly

About 11 million people signed up for coverage under the ACA.  This has brought us down to 9.1% of the U.S. population without insurance.  The replacement plan’s version of how to cover those 11 million people (and the 28.9 million who remain uninsured – largely in the south and west) is to encourage people to move away from pooled insurance plans (HMOs, PPOs, etc.) and instead to purchase high deductible plans with Health Savings Accounts (editor’s note: see the Congressional Budget Office March 13 report on the AHCA, published after this article was originally written for a summary of costs).

The theory here is that if I could have put $5,000 in a HSA in a year when I didn’t really use health care, I would have that money for a year in which I do need it.  This way my money remains mine, not spent on someone else’s health care.  This maneuver though seems to be costly and not well thought through.

First, this breaks health insurance entirely.  The scheme of health insurance is that we get enough healthy and low-risk people to pay in to cover those who need care.  Eventually we will all need care, so we pay now.   HSAs change that up: save for your own future care.

Also implicit here is that if that money is “mine” I will shop around for less expensive care.  But… when my leg was broken I didn’t call to find out which ambulance company was cheaper.  I just wanted to get to the hospital.  And I don’t think I want to trust a practice which operates on the “coupon model” of medicine where we price some items as loss-leaders in order to get customers in the door.  What if, instead, we all worked together to negotiate on behalf of myself and 600 friends with a medical practice to set a standard where we would prefer going to that practice over another, and in exchange you charge us a lower rate because of volume pricing.   Sounds good!    But that is just what insurance companies have done by negotiating rates for service.  HSAs falsely assume that individual patients will make decisions based upon lowest prices and that the prices they receive from practices will be cheaper than those that insurance companies can routinely negotiate.

Further, HSAs and high deductible plans end up costing everyone money and make those in the plans even less likely to seek service because they want to preserve “their” money for a real emergency.  Even if the emergency is now.  The holder of a HSA plan with a headache has to determine on her own if the headache she is suffering is severe enough to warrant going to the emergency room and potentially costing money from her savings account.  This is cost benefits analysis when the risks are potential death from a brain bleed.

I won’t even get into the problems of the age preference on tax credits, etc.   All of this is just costly tinkering with a plan that at its heart is trying to incentivize not receiving routine health care.  This despite that we know that preventive care is much more effective and cost effective than emergency care.  At its heart the plan is flawed; the incentives for different populations to utilize the core mechanism is just attempts to dress it up.  (Though much can be said, and has been said by others, about the discriminatory and illogical use of preferences in setting up those credits.)

Conclusion

From my perspective the new plan doesn’t make fiscal sense, doesn’t improve on where we are, and includes far too much extraneous aspects to believe that this is a real attempt to “fix” health care.

So there you have it.

For more IJFAB Blog articles on health care and benefits reform in the US and other nations, see

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