Senate Passes ACA Repeal Bill


This week’s Health Policy Roundup curated by Jane M. Orient, M.D.

The Democrats’ worst nightmare is happening, writes Michael Cannon. The Senate passed a bill that would repeal most, but not all, of the Affordable Care Act (ACA). “The individual mandate, employer mandate, Medicaid expansion, Exchange subsidies, much of the corporate welfare, and some of the worst taxes, would fall. The Original Sin of Obamacare—its community-rating price controls—and other health-insurance regulations would remain.” Also, the bill would not repeal the Medicaid expansion and Exchange subsidies for two years, but it is still superior to the House partial repeal bill. Obama is expected to veto the bill, but even Democrats are getting nervous, as ACA continues to implode on its own.

Insurers were supposed to benefit, but UnitedHealth has lost about half a billion dollars on the Exchanges in two years, and may pull out completely in 2016.

Blue Cross Blue Shield’s Texas unit lost $400 million in 2014, about $360 per member, twice the national average. Results were so bad that it dropped its PPO for the individual market. Then it raised rates almost 19 percent for its exchange HMOs in 2016, and adjusted the prescription formulary and co-pays. The anticipated increase in costs due to “pent-up demand” has not leveled off. Many are apparently “gaming the system.”

The Obama Administration is seeking a taxpayer-funded bailout of insurers. Despite huge benefits from ACA, including $26 billion in direct subsidies, insurers probably lost $4 billion selling ACA plans in 2014. Despite the lack of a congressional appropriation, the administration delivered an additional $3 billion to insurers through a cost-sharing reduction program. The House of Representatives has sued the administration over these payments and the case is advancing through the federal court system, writes Brian Blase.

The cost curve is not bending down. U.S. health-care spending jumped 5.3 percent last year, the biggest increase since Obama took office in 2007.

This is despite the fact that the number of U.S. uninsured has fallen by only 2.7 percentage points, far short of expectations, writes Avik Roy.

Benefits are being cut substantially. The Preferred Provider Organizations offer far less coverage than PPO plans in 2015. They are greatly reducing out-of-network coverage. Consumers are “paying a deductible and then some kind of co-insurance ad infinitum,” said Robert Wood Johnson Foundation researcher Katherine Hempstead. Consumers may be caught unaware because information about out-of-network costs is often harder to find on insurance websites, generally requiring consumers to click through to a lengthy “summary of benefits,” she explains.

Michael Cannon wonders whether ObamaCare is actually encouraging people to hasten its demise.

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