As passed by the U.S. House of Representatives, the American Health Care Act (AHCA) would include sweeping reforms to current healthcare payment systems and insurance markets. While these reforms are estimated to reduce the deficit by $119 billion dollars, if AHCA is enacted into law unchanged, federal funded healthcare programs would suffer sweeping reductions. Medicaid cuts alone would amount to $834 billion. According to the report issued by the Congressional Budget Office (CBO) on May 24, 2017, approximately 51 million Americans would be uninsured by 2026 if AHCA becomes law.
The impact of these funding cuts would be uniquely felt by hospitals. Hospitals are subject to a variety of healthcare laws and regulations that require them to treat individuals regardless of their ability to pay (e.g., EMTALA). Hospitals are also subject to strict limitations on the recovery and collection of unpaid medical bills (“bad debt”).
Hospitals may find it difficult to understand what the impact from AHCA would be for their hospital and community. Below is a high-level comparison of the current health care landscape under the Affordable Care Act and the American Health Care Act and the anticipated effects on Georgia hospitals if AHCA were enacted as passed by the House. In many ways, it appears that AHCA would mean a return to pre-Obama era, where medical bankruptcies were common and hospitals relied on DSH monies to offset the cost of the uninsured.
Current Landscape
(Affordable Care Act) |
American Health Care Act |
Anticipated Georgia Effects |
|
Medicaid Funding based on Federal Matching |
Per-Capita allotment or Block Grants (starts FY 2020) |
Georgia likely forced to reduce payments to hospitals and other safety net providers, eliminate services, and/or cut populations from Medicaid |
|
Enhanced Federal Matching to encourage Medicaid Expansion |
Non-expansion states eligible for a “safety net” fund ($2 billion per year for 5 years). Funds available based on number of low income residents of the state |
Georgia would receive approx. $177 million (3rd largest amount). Falls short of what Georgia would have received if it expanded Medicaid. |
|
Presumptive Medicaid eligibility determinations |
Eliminated |
Increased indigent/charity care |
|
Eliminates Disproportionate Share (DSH) payments |
Reinstates DSH payments |
In 2017, Georgia’s DSH allotment was $295 million (but GA hospitals incurred $1.9 billion in uncompensated care) |
|
Medicaid income eligibility up to 133% FPL |
Up to 100% FPL |
Reduces Medicaid eligible population/increases uninsured |
|
Medicaid work requirements not permitted |
Medicaid work requirements permitted with 5% bump in match rate |
|
|
Insurance Mandate |
Penalty reduced to $0.00; but allows 30% premium surcharge for those that fail to maintain coverage |
Healthier/younger populations may not seek coverage; increased cost sharing increases likelihood of Hospitals incurring bad debt/charitable care |
|
Cost-sharing and premium subsidies to encourage the purchase of insurance on exchanges |
Repealed in 2020, replaced with age-based tax-credits ($2k – 4k) for annual incomes under $75k (150k joint filers) |
Hospitals bad debt may increase without cost-sharing subsidies to help offset deductibles and copayments |
|
Insurance plans on the exchange required to offer “minimum essential health benefits” |
Patient and State Stability Fund created to cover cost of high-risk and chronically ill through high risk pools |
The fund will require substantial funding from Georgia in the long term |
|
Age-rating rules cap at 3:1 ratio |
Ratio raised to 5:1 (so insurer can charge older population 5x what it charges younger) |
|
|
Section 1332 waivers and 1115 waivers available for state innovations |
State waivers:
-
States may waive community age rating rules
-
Can waive 30% premium surcharge for those that do not maintain coverage
-
Can waive essential health benefit requirements and establish their own
|
Waivers may not provide enough protections to ensure individuals with pre-existing conditions have access to insurance coverage—could lead to more uninsured seeking care in hospital emergency rooms. |
|
Medical device tax, OTC tax, Medicare surtax on wealthy; tanning tax |
Taxes repealed |
Repeal of taxes would benefit Georgia’s Medicaid program because it would not have to pay higher capitation payments to MCOs to cover the tax |
Currently, AHCA must undergo U.S. Senate review and approval before its passage. The Senate has formed a 13-member working group dedicated to this task. Many anticipate that the bill would be ready for vote in late July or August of 2017. AGG will continue to monitor changes at the federal level, and any proposals in the Georgia legislature.
