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March 09, 2017 03:10 AM MST

Three Ways the GOP Health Plan Will Erode Colorado Gains

  • by: TheBell

(Promoted by Colorado Pols)

We’re keeping a close eye on how the Congressional Republicans’ newly proposed American Health Care Act (AHCA), introduced on Monday, would impact Colorado. The measure would effectively repeal many aspects of the Affordable Care Act (ACA) through a budget process. The plan contains major threats to the health care status quo in Colorado.

The early signs point to higher costs for low- to moderate-income people, older people and sicker people. The AHCA would dramatically shift Medicaid costs to states, under the guise of “greater flexibility” and “modernization.”

If health insurance premiums soar, if people don’t get help with paying higher costs, or if they lose Medicaid coverage, hundreds of thousands of Coloradans will lose health coverage because they can’t afford it. That puts us right back to where we started before the ACA.

The non-partisan Congressional Budget Office (CBO) has not released its analysis of the AHCA. Even though we lack this crucial, unbiased information about what the plan will cost taxpayers and how many people stand to lose health coverage, the House is rapidly pushing this bill through the legislative process.

While we policy analysts wait, here are some educated guesses about the three ways the GOP plan will erode many of the health care gains that our state has made.

1. Threats to Medicaid

Colorado is one of 31 states that expanded Medicaid, now called Health First Colorado. The expansion through the ACA gave health care coverage to an additional 400,000 people, grew employment and our state GDP and increased annual household earnings. For a few years, the ACA covered 100 percent of the costs for people who qualified for Medicaid through the expansion. The federal share of that funding will lessen over time but will still cover 90 percent of costs in 2020 and beyond. Colorado is paying for its share through the hospital provider fee.

The Republican health plan repeals the expansion in 2020 and requires states to pay a much higher percentage of the cost. According to an analysis from the Colorado Health Institute (CHI), Colorado policymakers would have to find $780 million to pay for the expansion population if this occurred in the next fiscal year – roughly equivalent to our General Fund budget for the Colorado Department of Higher Education.

It’s not just our expansion that’s at risk. The plan changes the way the federal government finances its share of Medicaid costs. Currently, federal funding ebbs and flows based on how states spend to meet the health needs of enrollees. The AHCA would move away from this system to one that gives a fixed amount per enrollee in the form of a “per capita cap,” the growth of which is tied to the medical care piece of the Consumer Price Index. The Center for Budget and Policy Priorities estimates that states will need to find an extra $370 billion over the next ten years under per capita financing.

Check out the Colorado Center for Law and Policy’s analysis of what this would mean for the nearly one in four Coloradans who are insured by Health First Colorado, and for our state in general. The upshot: it results in dramatic losses to Colorado’s state budget and its economy. It will force our state into making very tough choices about who to cover and to what degree. And because of the Taxpayers Bill of Rights, Colorado lawmakers have very little flexibility in how we can find more funds to cover bigger expenses.

2. Threats to the Individual Market

AHCA repeals the monthly subsidies that help people buy health insurance and pay certain out-of-pocket costs. However, it replaces them with refundable tax credits. The big difference? Current law ties financial relief to income and price based on location, whereas the new Republican proposal ties it to age. The effect, as recently analyzed by the Kaiser Family Foundation, is that those who are “lower income, older, or live in high premium areas would be particularly disadvantaged” but people making over 400 percent FPL would get tax credits. Be sure to see the interactive, KFF map that shows what would happen at a county level.

Over 104,000 people in Colorado currently qualify for financial help purchasing insurance on the marketplace. Others don’t qualify and are feeling squeezed by rising health care costs, particularly in rural and western Colorado. Colorado policymakers, including the Lieutenant Governor, are proposing state solutions to help, which you can read more about here. Analysts at CHI surmise that the change under the AHCA would shift tax benefits from the high-cost rural areas to the Front Range, where insurance is not as expensive.

Another part of the proposed measure would allow insurance companies to charge older consumers up to five times the amount they charge younger customers – a shift from the current three to one ratio. AARP, in its letter of opposition to the bill, states that it would create “skyrocketing premiums” for adults age 50-64 without dramatically increasing the participation of younger people in the marketplace.

A recent analysis by health policy experts and economists from Harvard, the Center for American Progress, and California’s insurance exchange looked at the net financial impact of the bill for consumers. They crunched the numbers not only on premiums and tax credits, but also on the increased out-of-pocket costs that would hit consumers. They found that the AHCA would increase costs for the average enrollee by $1,542 in 2017. Three years from now, those costs rise by $2,409. By 2020, it could get even more expensive for families, whose costs would increase by just over $4,000 three years. Lower income families or those with older family members would be faced costs that rise by about $10,000. This research also makes the important point that when you decrease premium spending but increase out-of-pocket costs, you are in a riskier financial situation, which can lead to debt.

At a recent meeting of the National Governors Association, governors got a preview about what could happen in the marketplace under an earlier version of the bill. Colorado, as a Medicaid expansion state, may see at 30 percent decline in enrollment and a 65 percent decline in federal funding. The numbers are even worse for non-expansion states.

3. Tax Cuts Leave Questions

The AHCA repeals $600 billion in taxes on the healthcare industry and high-income earners – taxes that help pay for provisions of the Affordable Care Act. This includes Medicare taxes for high-income earners, taxes on investment income, and taxes on makers of pharmaceuticals and medical equipment. It also removes a cap that prevents health insurance companies from writing off more than $500,000 of what they pay in executive salaries and bonuses. The bill does not create a new funding mechanism.

It repeals the fee that people who don’t purchase insurance must pay to the government (the individual mandate). To try to compel people to remain insured, it requires insurers to penalize people who fail to retain health insurance coverage over time. People would pay that financial penalty to the insurers.

While we don’t have a CBO score for this bill, in early 2017 the office analyzed aspects of a similar Republican plan from 2015. It found that repealing the taxes and penalties in the law, but keeping its marketplace reforms in place, would result in 32 million people losing coverage and a doubling of premiums over 10 years. We can also look to the Brookings Institution, which wrote in December that paying for a replacement if the tax increases are repealed would be “near impossible.” Its report found that the tax cuts being proposed in the budget reconciliation process will make it “much more difficult to achieve a sustainable replacement plan that provides meaningful coverage without increasing deficits.” Both Brookings and the AARP point to the added problem that the payroll tax cut will “hasten the insolvency” of the Medicare Trust Fund.

As Congress rushes to approve a replacement bill, we will keep analyzing how working people in Colorado will be affected. CHI will be putting out a series of reports analyzing different aspects of the proposal as well – including high risk pools and health savings accounts. The Protect Our Care Coalition and the Colorado Health Policy Coalition (the Bell is a member of each) are also working to inform the conversation on protecting Colorado’s health gains.


27 thoughts on “Three Ways the GOP Health Plan Will Erode Colorado Gains

  1. The train has left the station. This bill is not enough. Full repeal and an unwinding of Obamacare's redistribution of wealth is required. Let private charity pick up the slack. Get government out of health care.

    1. Let's be very clear about what the Republican healthcare bill moving through the U.S. House will do and what your "private charity" theory would do if it was adopted. Both will result in the death of many of our fellow citizens because they won't have insurance to cover them when they become sick or injured or have a chronic preexisting condition. That is the bottom line.

      Gleefully throwing up the canard that "private charity will pick up the slack" is nothing more than a cruel and heartless way to relieve yourself of your obligation (and mine) to look after the less fortunate among us.

      Do you really think private charity will pick up the slack. In 2013 private charities in Colorado gave out a total of $803 million to various groups for many different purposes. Of that amount, one third was given to healthcare related groups – about $266 million. The bill moving through the House will put a $790 million hole in Colorado's medicaid budget. Private charity won't come close to filling that gap. How can you advocate for a system that will literally result in the death of many your fellow citizens for lack of insurance that it is within our ability to provide?

      Redistribution of wealth? All government appropriations redistribute wealth to various government programs, including defense. Taxes, of any kind, by definition take money from one person or group of people and uses that money to purchase goods and services for a public purpose. 

      Puristic theory is a poor substitute for affordable healthcare.

        1. I do not but I welcome Moderatus' comments. Each one gives us a wonderful opportunity to contrast facts and compassion with what the Republicans are saying.

          1. I'm all for that.  The thing is, I've learned that simplistic messages seem to resonate the quickest, unfortunately.  And as much as Moldy has a right to say whatever asinine thing that he says as a contrast, it seems like enough people go along with it despite how badly they will get hurt by doing so.  Look at Kentucky and West Virginia.  They went along with Trump and Republicans, who said that he would cut Medicaid.  An extremely high percentage of them are on Medicaid and are likely to lose it with GOP policies. 

            Some people (Trump voters) have angst over losing ACA benefits.  But they "didn't believe him" when he talked about repealing it when he was campaigning.  Seriously.  These people lament politicians not delivering on promises and vote for Trump because he's "different".  Then when it looks like he and Republicans are going to deliver on one of their promises and these same people realize they're going to get screwed by that, they worry.  But still twist themselves into a pretzel in either supporting them or defending their votes for him.

            Yeah.  Moldy and his ilk can speak their minds.  They can also go fuck themselves.

    2. Just curious, Moderatus. Why do you think that "private charity" would be able to pick up any substantial portion of "the slack." The most recent statistics I know of say that Colorado's TOTAL philanthropic giving (personal, inheritance, corporate, and foundations) was just over $4 billion – so replacing JUST the Medicaid aspect cited above would take nearly 19% of all existing giving.

  2. "get government out of health care………"  That also means doing away with Medicare, Medicaid, and health care for vets through the VA. Also means doing away with the free ride; meaning no income taxes paid; on health care provided by employers. Also means getting rid of tax breaks for health savings accounts and doing away with free medical care provided for active duty military.

    Moderatus has sunk to a new record low on the stupidity scale. 

        1. So we've had healthcare for centuries. Does that mean can I pay my MRI bill with a couple of chickens and a goat?  Are cancer treatments payable with a basket of hand-picked fruits and a couple loaves of bread?

          Have you or your family gone hungry just to pay your utility bill, much less an ER bill?



    1. What he means, CHB is "get government out of my pocket; unless it's putting money into it."

      As I said on another thread, earlier, I just can't understand the jealousy of people who have enough toward people who have nothing.

      And you're spot on about how jealously (see?) the Republicans will guard the programs that benefit them: military, VA, Medicare…)

      1. "I just can't understand the jealousy of people who have enough toward people who have nothing."

        It's because we work for what we have and don't feel we have to give what we've worked for to people who don't work. It's easy to understand if your a maker and not a taker.

        1. That's fine. The more you mouth off, the deeper you bury yourself. People may not be working for a wide variety of reasons; and I have no problem at all with getting able-bodied persons off welfare. But you don't know jack-squat about why someone might be a "taker."

          Examples might include the person who has rheumatoid arthritis and is wheelchair confined because their lower joints don't work any more and their hands may be so deformed that they can barely grip anything. Then there might be the person with MS or Parkinson's also wheelchair confined. Or maybe the individual with an IQ in the 40s who doesn't have the mental capacity to work and will need life-long care. It’s rather obvious that in the world of Moderatus, Paul Ryan, and Kevin Brady, we should just imitate pre-historic cultures and leave these “drags upon society” on mountain tops so they can quietly die. 

          1. Wow, CHB. I wouldn't have expected you to defend people who need SSI or Medicaid. Guess all those years as a caseworker rubbed off some compassion as well as cynicism.

        2. Wow.  I honestly hope you are a Christian, Moldy.  

          Because I want you to have to answer for that attitude when you die.  I'm sure it'll be a lively conversation.  

            1. There are those who believe living as a selfish, hateful old bigot is its own punishment.  Considering what he wishes upon other innocent people, I think he'd be getting off light.

      2. Moldy is an entitled ass who believes that anybody disabled or faces challenges is mooching off of him.   So he spouts stupid righ wing bullshit to put people down that he feels threatened by.

        1. Notice how often Moldy projects others as being "scared", when in fact it is he who lives in constant fear and threat from "others".  

          Really must suck to be him.

  3. Paul Ryan states that "healthy people shouldn't have to pay for sick people." Ummm … it's called 'insurance'. 

    Last I checked my house insurance premiums in Wray pay for a hail-damaged roof in Yuma. 

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