The Healthcare Policy Debate: Part II--Inside The House Bill

This is the second part in a series analyzing the political and policy aspects of the current healthcare debate. Part I examined the first House bill from a political perspective. Part II assesses the second House bill, and Part III the Senate bill. The same discussion outline--categorizing elements of the bill by their Effects on Individuals, Employers, Industry and States--will be utilized in all parts of the series.

THE U.S. HOUSE OF REPRESENTATIVES BILL:

H.R.1628 was passed (with amendments) on May 4, 2017. The vote on an earlier version was cancelled by Speaker Ryan

because GOP defections made passage impossible. [See The Healthcare Bill Vote: Why Canceling It Mattered on THE PoP BLOG! for more on this.] Here are the details on 1628.

Effects on Individuals

The House bill maintains the mandate to be insured but removes the tax penalty for not doing so. Moreover, subsidies for individual policy purchasers (the amount of which depends on the purchasers' income and the price of their premiums) would be supplanted by age-dependent tax credits that must be utilized for premium payments.

These tax credits can not be applied to any policy that covers abortion. 

Further, taxes on high earners, designated to help defray the costs of the Patient Protection and Affordable Care Act (also known as the A.C.A. and Obamacare), would be eliminated. But, Medicare premiums increase for them.

Lastly, premium subsidies can be applied to policies not purchased on the exchanges.

Effects on Employers

The requirement for employers--with over 50 full time employees--to offer health insurance would be dropped in the House bill.

The tax on high-end, employer-sponsored health plans is also repealed.

Tax deductions for employers who receive subsidies to provide Medicare Part D are reinstated.

Effects on Industry

Taxes imposed by the A.C.A. on insurers, pharmaceutical companies, medical device companies, and tanning salons, would be repealed by the 1628.

Insurers are obliged to surcharge policy purchasers (by 30 percent) who were uninsured for more than 63 days before requesting coverage.

Insurers must also continue covering dependents until they are 26 years of age, and refrain from using gender in premium calculations.

The requirement to include abortion coverage is removed in H.R.1628.

Effect on States

Most of the language in H.R.1628 impacts the states. The whopper is the cessation of federal payments for the A.C.A.'s Medicaid expansion. Further, the disbursement methodology is fundamentally altered. Specifically, the Medicaid program would no longer use a fee-for-service model, substituting an annual block grant approach.

States would also receive subsidies to help the newly insured afford coverage, splitting $13 billion a year for ten years. Additionally, $8 billion over five years is allocated to support state funded high-risk pools. Finally, $15 billion is allotted for certain types of specialty care, and another $15 billion for reinsurance costs. Total cost, $153 billion.

One group of provisions in the House bill allows states to request waivers of certain federal insurance regulations. Specifically, states would be permitted to apply for waivers of regulations that:

• require insurers to offer a defined minimum benefit package with no annual dollar or lifetime limits
• limit the amount that insurance companies can charge older policy holders, relative to younger ones, to a ration of 3:1. [Without a waiver request, this defaults to 5:1.]
  
• prohibit insurers from charging higher premiums for policies issued to people with preexisting conditions. [Additionally, to qualify for the waiver, the state must have a high-risk pool or equivalent, and only allow this benefit to be applied to individuals who have not have been continuously insured.]

States may require able bodied Medicaid recipients to work in order to maintain their eligibility.

Health insurance marketplaces are maintained, and the use of health savings accounts is incentivized primarily by increasing contribution limits, in the House bill.

The Prevention and Public Health Fund, and Planned Parenthood clinics, are defunded.

Stay tuned for Part II of this series, which will take up the Senate's healthcare bill... as soon as it passes.

Special thanks to the Kaiser Family Foundation

A BRIEF HISTORY OF MENTAL HEALTH PARITY POLICY

The following is an excerpt from: The History of U.S. Federal Mental Health Policy, also posted on this blog.

The 1980's saw employers’ mental health insurance costs rise an average of 60 percent per year (England and Vaccaro, 1991; Washington Business Group on Health, 1996). The resulting typical benefit design--matching the minimums set fourth in the federal HMO Act and its amendments--was patently discriminatory. 

Compared to benefits for physical health therapies, benefits for behavioral health therapies typically had higher deductible, copayment and coinsurance requirements; lower limits on the number of outpatient visits and hospital days covered in a given year; and more austere care management guidelines. This remained the case even though it has never been clear whether managed behavioral health care produces more savings than is created by the initial expense reduction from imposing managed care on a system or population anew. (See Goldman et al. 1998, for example.)

The Mental Health Parity Act of 1996 (P.L. 104-204), which was signed by President Bill Clinton, began to correct these inequities by prohibiting disparate annual or lifetime limits on coverage for mental health and general health care. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, which was signed by President George W. Bush and included in the Emergency Economic Stabilization Act of 2008 (PL 110-343), took this even farther. Primarily, it prohibits the discriminatory practices noted above. Moreover, in contrast to most state parity regimes, the Act extends parity requirements to all conditions in the latest issue of the Diagnostic and Statistical Manual of Mental Disorders (currently in its 5th edition), including addiction. Additionally, out of network parity is made compulsory.

Importantly, the Mental Health Parity and Addiction Equity Act (or MHPAEA) does not mandate mental health coverage. Instead it sets benefit parameters which are only in force IF mental health coverage is offered. Also worthy of note are two categories of exemptions. The first is of businesses with fewer than 50 employees. The second exemption applies to business that can show an actuarially certified 2 percent increase in healthcare costs in the first year, or a 1 percent annual increase thereafter (P.L. 110-343).

The Healthcare Policy Debate: Part 1--Why Canceling The Vote Mattered

After the cancellation of the vote on the American Healthcare Act, it seemed that almost all of the reactions in the political sphere were overblown. I even tweeted about how absurd I thought they were.

I was wrong. Only some of them were absurd.

Atop the Still Absurd List sit the Democrat Party's elite, whose virtue-signaling responses were (generously speaking) poor form and vacant. According to TheHill.com, House Minority Leader Nancy Pelosi (D) opined that Republicans were "so eager ... to be mean-spirited" on the anniversary of ObamaCare's passage. This, of course, implies: We would have done the kind and virtuous thing by celebrating it. Chuck Schumer, the Senate's top Democrat simultaneously announced that 24 million people were saved from being "thrown off" of their insurance policies (an oft used, albeit grossly exaggerated DNC talking point). Again, the implication is: We would have done the kind and virtuous thing, in the first place, by leaving it intact.

Then, as if seeking to ensure their spots on the Still Absurd List, a seemingly endless parade was started by hyperbolic, giddy, left-leaning politicians and pundits who declared this to be both a victory and the beginning of the end of the Trump era.

Republican reactions ranged from the Freedom Caucus' condescending condemnation of Trump to the Tuesday Groups' apprehensive analysis of his political position. In time, many thought provoking arguments rose through the din to the surface, prompting me to rethink the issue (and turn this into the Used To Be Absurd List).

So why was the pre-vote bill pull truly a big deal? There are three answers. The first is because of the forfeiture itself. The second is because of the way in which it happened. The third is because of its political consequences; and they are yuge, if you will.

Before each of these are treated in more, albeit overlapping, detail, here are the facts. The GOP currently controls the executive and the entire legislative branch. However the Party enjoys only a thin margin in the Senate. What seems like a 6 vote margin (52-46) is 

actually a 4 vote margin (52-48). This is because the Senate's 2 Independents usually caucus with the Democrats. In the House, the GOP has 237 seats versus the Democrats' 193. (There are also 5 vacancies. Most recently, these seats were held by 4 Republicans and 1 Democrat).

The current drama-surprisingly-played out in the House, where conventional wisdom was that a 44 vote margin would virtually ensure that the GOP would reach the 216 needed for wins across the legislative agenda. However, as has been shown so many times in the nascent life of the Trump Political Era, conventional wisdom is no longer in force.

Unpredicted was the opposition of both 31 of the 32 members of the Conservative Caucus, as well as a dozen or so moderate Republican ship jumpers like House Appropriations Committee Chair Rodney Frelinghuysenso of New Jersey. In other words, there existed NO certainty that the GOP would reach 216 votes. As this 

became clear, a cranky POTUS demanded that the issue be put to rest one way or another. So, the only reasonable option available to House Speaker Paul Ryan was to cancel the vote.

For any other president, the cancellation would be news for a day, and fodder for the pundit class until the Sunday talking heads had their say. Then it would be forgotten. But we're talking about President Donald J. Trump.

The first reason why the vote cancellation was a big deal for Mr. Trump is because it was a forfeiture. In other words, he failed at his first legislative effort. This flies squarely and, frankly, overwhelmingly in the face of the political brand that he methodically built over the past few years. The most notable, and painful, examples of this were found on the stump, where candidate Trump took every conceivable opportunity to show himself to be successful. 

As for being successful as President Trump? Not so much. 

The second reason why taking the vote off of the schedule was an important moment for POTUS is because of how it happened. By most counts, there were 44 Republicans who declared either their opposition to the bill, or that they were very likely to oppose it. Despite the public nature of this challenge to Mr. Trump, which was  politically  suicidal  in  the  GOP   primary,   he    was   proven

beatable. The standing narrative of Trump as always winning was obliterated at that moment. 

The third reason that pulling the bill was important is because of its political consequences. As I mentioned above, conventional wisdom was that a 44 vote cushion would guarantee GOP legislative victories. The new reality is that Trump failed and is beatable, making this path anything but certain. So, the strategies that were developed based on the old narratives have to be discarded. Leaders on both sides of the isle must now draw up new plans. 

A more visible political consequence of the forfeiture is an endless source of anti-GOP rhetoric being given to the Democrats. Just consider what they can now say has been proven.

• Trump's characterization of himself as always a winner is untrue
• Trump's characterization of himself as always successful is untrue
• Trump has shown himself to be absent the requisite skill for the job of President
• There are serious fractures in the GOP
• And, so on...

There hasn't been much of this sort of talk from the DNC... as of yet. I'm listening for it, and dying to find out what will trigger it!