What GOP Plan For Health Care Reform May Mean For You?

The House GOP Health Care Reform Plan provides a blueprint for eliminating important elements of the ACA and replacing them with a more market-oriented approach.

On Wednesday key Capitol Hill committees started debate on the controversial new Health Care legislation

Both President Trump and the House GOP plan contemplate using tax credits to subsidize the purchase of health insurance.

Hearings on the “American Health Care Act” (AHCA) stretched overnight at the House Ways and Means Committee and Energy and Commerce Committee. Ways and Means approved its portion of the AHCA at around 4 a.m. on Thursday, while discussion continued at Energy and Commerce

While partial details on the AHCA’s costs are available, the Congressional Budget Office hasn’t yet estimated how the AHCA would affect the uninsured rate or how much it would cost overall. CBO would not have a “score” — a report on the effects of the bill — before next week, when the measure could go to the Budget Committee.

The Plan has not yet been analyzed by the Congressional Budget Office, so it is unknown how much the plan will cost and what its impact will be on the number of people who are insured. Additionally, despite the Republican majority in the Senate, it is unclear whether all the Republican senators will support the bill.

It is far from clear, however, whether the Medicaid provisions of the House GOP plan have sufficient support to pass the Senate. Four GOP senators recently warned that they would not support any plan that does not protect the Medicaid expansion population. Moreover, in his speech last week, President Trump argued that Congress should give governors the “resources and flexibility with Medicaid to make sure no one is left out.” It is not clear what Trump meant by this statement and whether he supports the House GOP plan’s Medicaid changes could very well cause some people to lose coverage.

One way of shedding light on what a final law may look like is to look at its putative winners and losers. Although it is hard to assess the ultimate impact of health care reform until more details emerge, what’s now known suggests that particular subsectors of the industry could be winners or losers:

1. Hospitals:

To the extent health care reform results in significantly more uninsured patients, hospitals will likely bear increased costs. Because hospitals often treat patients regardless of ability to pay, more uninsured patients means increased charity care and bad debt write-offs. This burden would fall heavily on disproportionate share hospitals (DSH) — hospitals that treat a large percentage of the indigent population. The ACA had reduced government funding to DSH hospitals under the theory that they would offer less uncompensated care as the number of uninsured people drops. The House GOP plan would benefit DSH hospitals by repealing the ACA’s funding cuts.

2. Pharmaceutical Industry:

The plans contemplated by the Trump administration and House GOP will have a mixed impact on the pharmaceutical industry.

The ACA reflected a complex bargain between the Obama administration and the pharmaceutical industry. The pharmaceutical industry benefited from more insured people who could afford to purchase more drugs. It also benefited from the closing of the “doughnut hole,” the coverage gap between an initial threshold of drug costs that would be covered by Medicare Part D and a much higher catastrophic maximum after which Part D coverage would resume. In return, the branded pharmaceutical industry agreed to an annual tax of about $3 billion (allocated among branded pharmaceutical companies based on their share of the branded pharmaceutical market) and cutbacks on Medicaid reimbursements for prescription drugs.

The House GOP plan partially unwinds this bargain. The plan benefits the pharmaceutical industry by repealing the $3 billion annual tax and maintaining the closure of the doughnut hole. Additionally, repealing the “medicine cabinet tax” may boost the sale of over the counter drugs. But the pharmaceutical industry will lose to the extent that people reduce purchases of prescription drugs because they lose their health insurance or are covered by plans that provide only limited coverage for expensive drugs, even while the ACA’s cutbacks on Medicaid rebates are left intact.

3. Medical Device Manufacturers:

Health care reform will likely be a major boon to device manufacturers because there is strong GOP support for lifting the excise tax on devices. Device manufacturers may also benefit from greater flexibility in patients’ ability to use HSA money on devices that would not typically be covered by insurance. That being said, device manufacturers may suffer lost sales to the extent people lose insurance coverage or purchase only thin coverage that leads them unable to afford certain devices.

While the House GOP plan reflects the bill that the House GOP leadership would like to pass, it is likely to be just the start of a heated health care reform debate. Different health care industry subsectors may yet have a significant role in shaping whatever bill, if any, ultimately passes in Congress and is signed by the President.

Republican leaders have emphasized that the objective of the law is to lower the cost of coverage and reduce government mandates, not necessarily to increase or even maintain the number of people covered.

One thing remains clear: the changes contemplated by the Trump administration and congressional Republicans are likely to have significant implications for just about every sector of the health care industry.

Republicans hope to send the AHCA to the full House within the next month.

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Bipartisan House Vote Passes Permanent Medicare ‘Doc Fix’

The U.S. House of Representatives on Thursday passed a bill intended to put in place a permanent “doc fix” to replace Medicare’s unpopular physician reimbursement system, commonly overridden by lawmakers each year.

H.R. 2, the Medicare Access and CHIP Reauthorization Act, passed in a 392-37 vote, with many Democratic lawmakers joining the bulk of House Republicans in supporting the bill after several lawmakers from each party spoke in favor of the legislation on the House floor Thursday.

Under the bill, Medicare’s current sustainable growth rate formula, or SGR, would be permanently repealed. Instead, Medicare doctor pay would rise by 0.5 percent each year between 2015 and 2019, beginning in July.

Payments will then be held at the 2019 rate through 2025, but physicians and other health professionals will be eligible for merit-based bonus payments based on factors such as meaningful usage of electronic health record systems and their use of care models that emphasize quality over volume.

From 2026 onward, medical professionals who use certain alternative payment systems will receive a 1 percent annual increase in their Medicare payment rates, with others seeing 0.5 percent annual increases.

The SGR is a measure meant to tie increases in Medicare reimbursements to inflation, designed to avoid runaway cost increases. But the formula has been routinely overridden for almost two decades, through enactment of an annual “doc fix” — usually at the last minute — with lawmakers generally arguing that keeping to the SGR rates would cause many doctors to refuse Medicare patients, threatening access to care for seniors.

Over time, the gap between the specified rate under the SGR and the actual Medicare payment rate has grown amid this long pattern of temporary fixes. If a doc fix is not signed into law this year, doctors would see their Medicare reimbursement rate drop by 21 percent.

In addition to the doc fix section of the bill, the legislation also includes a collection of measures to both relax and strengthen various aspects of anti-fraud oversight under Medicare and would extend both the Children’s Health Insurance Program, or CHIP, and certain funding for community health centers for an additional two years.

To help offset the expected cost of the bill, pegged at more than $210 billion, House Democratic lawmakers agreed to a number of other Medicare changes, including tweaks to make supplemental Medigap plans less generous starting in 2020, and requiring certain high-income seniors to pay higher premiums for doctor and outpatient care and prescription drug coverage.

Their Democratic counterparts in the Senate have offered the bill qualified support, indicating they may push for a longer extension on CHIP funding and look to tweak some aspects of the legislation, such as the inclusion of the so-called Hyde Amendment  — used to bar federal funds from being used to fund abortion — for community health center funding, the same clause that has seen an otherwise uncontroversial anti-sex trafficking bill stall.

The White House has indicated it will support the bill in its current form, backing up President Barack Obama’s measured support with a policy statement Wednesday saying it believed the reforms in the bill were “sensible.”