Senator Lamar Alexander released a statement about the Better Care Reconciliation Act (BCRA), the Senate version of the American Health Care Act (AHCA) on June 22, 2017 and another statement about the subsequent CBO score of the BCRA on June 26, 2017.
We found many problems with Sen. Alexander’s analysis of the bill. Here’s the breakdown:
Sen. Alexander: To begin with, the draft Senate healthcare bill makes no change in the law protecting people with pre-existing conditions
REALITY: The BCRA will allow states to waive essential health benefits. Under the ACA, essential health benefits include hospitalization, rehabilitative and habilitative services and devices, and preventive and wellness services and chronic disease management (among other services), which are critical services for people with pre-existing conditions. The ACA’s ban on annual and lifetime limits only applies with respect to care that is considered essential health benefits, according to the Brookings Institute. Additionally, the consumer protection provision of the ACA that requires plans to cap annual out-of-pocket spending only applies to care that is considered essential health benefits, as well. If state waives requirements for essential health benefits, it undermines these consumer protections that are vital for people with pre-existing conditions. Nominally prohibiting plans from denying coverage to people with pre-existing conditions will be an empty protection, as most people with pre-existing conditions will not be able to afford the care that they need.
Sen. Alexander: no change in Medicare benefits
REALITY: Just like the AHCA, the BCRA repeals the Medicare payroll tax on high-income earners which would deplete the Medicare Part A trust fund in 2025, 3 years earlier than under current law. The Medicare Part A trust fund pays for hospitals, skilled nursing facilities, and home health and hospice benefits.
Additionally, one in five Medicare beneficiaries relies on Medicaid to cover their Medicare premiums. The BCRA’s estimated $772 billion cuts to Medicaid will severely affect these vulnerable older adults.
Americans aged 50-64 will be particularly hard hit by the BCRA due to the provision that allows insurance companies to charge older adults five times more than younger people, simply due to their age. This will cause many to lose coverage. When they age into Medicare, they will need more and more expensive health services, driving up all costs for the Medicare program, leading to higher premiums for everyone.
Sen. Alexander: increases Medicaid funding— that’s TennCare—at the rate of inflation
REALITY: While this is technically true, it is misleading. The “rate of inflation” for the overall economy is significantly lower than the rate at which medical prices inflate. For example, the out-of-pocket costs of prescription drugs grew two times faster than other goods. The Congressional Budget Office has pointed out that the effect will be to shift to states, and state taxpayers, the burden of additional inflation, which will grow to billions of dollars with each passing year.
Right now, Medicaid is a federal-state partnership whose funding adjusts proportionately to market forces like medical inflation, epidemics, medical innovation, and economic recessions. Per capita cap or block grant systems are completely inadequate and inappropriate to deal with the variances in the coverage needed by many Americans.
That leaves the state with having to continually decide where to cut? Nursing home care for the frail elderly, hospitalization for cancer patients, prenatal care for high risk pregnancies, treatment for opioid addiction. All are at risk.
The following graph shows how much TN would have lost if similar inflation limits on federal spending had been in place in the past.
Sen. Alexander: Let me repeat: it makes no change in the law protecting people with pre-existing conditions
REALITY: As explained above, the nominal consumer protection that does not allow insurers to deny or charge more for people with pre-existing conditions is still there, but because of the ability of states to waive essential health benefits, insurers will still be able to price people with pre-existing conditions out of the market.
It’s actually easier for states to waive these benefits in the BCRA than in the House-passed version of the AHCA by allowing states to bypass proving they are still protecting patients and allowing governors to make this decision without input from their state legislatures.
Sen. Alexander: increases funding for Medicaid—that’s TennCare—at the rate of inflation.
REALITY: This statement is misleading, for it masks the great harm the BCRA does to Medicaid and the children, families and frail elderly whom the program serves. The bill does not keep up with actual health care costs, which is why the Congressional Budget Office estimates that 15 million people will lose Medicaid coverage, and millions more will face reductions in care. An estimated 395,000 Tennesseans will lose Medicaid coverage. The cuts in Medicaid payments to providers will lead to the closing of many hospitals, clinics, pharmacies and nursing homes across rural Tennessee.
Sen. Alexander: Here are some other benefits for Tennesseans I see in this draft: Offers health care coverage to 162,000 Tennesseans who make less than $12,000 a year, and under the current law, receive zero help buying insurance.
REALITY: As a reminder, the reason this accommodation is needed is because Tennessee’s legislature rejected Gov. Bill Haslam’s “Insure Tennessee” plan to use federal Medicaid funds to cover low-wage workers, leaving 280,000 people without access to coverage under the law. Unfortunately, this bill does not offer effective health coverage: instead, it offers meager assistance through premium tax credits for the poorest adults in our state to buy catastrophic, high deductible plans.
According to the Congressional Budget Office’s assessment of the bill, “Some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan.”
Sen. Alexander: Means the 350,000 Tennesseans who buy their insurance in the individual market – these are Tennesseans who don’t get their insurance on the job or who don’t get it from the government – are more likely to be able to buy insurance next year instead of being in the collapsing Obamacare exchanges where there may be only one option – or even zero options – to buy insurance.
REALITY: Instability in the insurance market is real, but Sen. Alexander’s diagnosis is wrong, and so is his cure. Politicians’ vows to repeal the law, and uncertainty whether they will even allow the federal government to honor commitments to pay insurers for costs they have already incurred, have made participation in the market risky and uncertain. No wonder insurers are pulling out.
The right solution is to honor the government’s financial commitments to insurance companies and those who have bought insurance on the federal Marketplace. Politicians, including Sen. Alexander, should quit vowing to destroy the current law and should instead work to fix its problems. Only then will stability return to insurance markets.
Unfortunately, that is not the approach Sen. Alexander advocates. He would lure insurers by subsidizing the sale of shoddy coverage that will make money for the insurance companies without providing real protection for their customers. Sen. Alexander would allow companies to sell skimpy plans that don’t include critical services like emergency services, prescription drugs, and pregnancy, maternity, and newborn care. Only the most desperate will pay for the illusion of coverage. With fewer people overall (and mostly sick people) buying plans, insurance companies will seek to spread their costs across a smaller group of people, so co-pays and deductibles (patient’s responsibility) would likely rise. Coverage will continue to deteriorate.
Sen. Alexander: Gives the state more flexibility and continues federal cost-sharing, which our state insurance commissioner said will help bring down the cost of premiums.
REALITY: Of course premiums would go down if you cut off access to insurance for 22 million people, people who will typically be older, poorer and have pre-existing conditions.
The BCRA allows the state to cut services like the 10 Essential Health Benefits required by the ACA, which include, ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, pediatric services, including oral and vision care.
More flexibility can have bad results if states are not required to ensure that plans provide essential health benefits. Trading vital services for cheaper premiums is a bad deal. An overwhelming majority of Tennesseans support Gov. Haslam’s Insure Tennessee plan, but the state legislature has refused for three years to even bring it to a vote. Entrusting the future of Tennesseans’ health and financial security to state legislators is not a good idea.
Sen. Alexander: Slows down sky-rocketing premiums, which in Tennessee have gone up 176 percent over four years.
REALITY: The Affordable Care Act actually staunched the rise of premiums. Premiums have risen at a slower rate since the implementation of Affordable Care Act than the 5-year period before the ACA, and it has protected moderate income people from those increases by providing tax credits that defray the cost. There are still problems with affordability, but Congress is only making those problems worse, rather than fixing them.
Sen. Alexander: Repeals the medical device tax on one of our state’s largest exports.
REALITY: This is a corporate tax break that has nothing to do with the goal of “patient-centered care.” It isn’t even a tax break that gives much help to Tennessee businesses. The Senate health bill will close rural hospitals, clinics, pharmacies and nursing homes across Tennessee, and it will cost the state 28,000 jobs.
Sen. Alexander: Repeals the employer mandate penalty, which should mean that employers should be able to offer employees more choices of insurance at a lower-cost—and about 60 percent of us get our insurance on the job.
REALITY: This approach could leave people with watered down coverage that doesn’t really protect them.
Sen. Alexander: Ends the tax on individuals who choose not to buy insurance.
REALITY: Elimination of the individual mandate will destroy insurance markets unless there is some other requirement that does not allow people to avoid buying insurance until they get sick. The Senate bill replaces the tax with a much harsher, unfair penalty requiring uninsured people to go without coverage for six months – a death sentence in some instances – without taking into account their inability to afford coverage.
Sen. Alexander: Provides more money for hospitals that serve low-income Tennesseans who don’t have insurance.
REALITY: The bill gives with one hand but takes away more – much more – with the other. Tennessee already has the dubious distinction of having the highest rate of rural hospital closure of all states, and there are 32 more that are at risk for closing, including Blount Memorial Hospital on Lamar Alexander Parkway in Maryville, Tennessee. This bill further threatens the financial viability of many hospitals that are already barely surviving in Tennessee. The American and Tennessee Hospital Associations, Children’s Hospitals of America and the National Rural Health Association all oppose the Medicaid cuts, because it will damage or close many hospitals.
Sen. Alexander: Provides new funding for opioid abuse, and opioid abuse is a rampant epidemic in our state.
REALITY: The amount of this new funding is only a tiny fraction of the $772 billion the BCRA will take from Medicaid, which is the main source of funding for treatment for people with addiction. The Senate bill will devastate the effort to curb the opioid epidemic. That is why the Tennessee Coalition for Mental Health and Substance Abuse Services has asked Sen. Alexander to vote against Medicaid cuts such as those in the BCRA.
This amount isn’t nearly enough to address every state’s needs.
Sen. Alexander: Provides new Medicaid funding for mental health to double the number of days of in-patient treatment.
REALITY: The amount of this new funding is only a tiny fraction of the $772 billion the BCRA will take from Medicaid, which is the principal source of coverage for the prevention and treatment of illness. Fewer people will receive mental health treatment under the BCRA. That is why mental health organizations like the National Alliance on Mental Illness vigorously oppose these cuts.
Sen. Alexander: I’m going to continue to review this draft. I’m going to see what it costs when the Congressional Budget Office gives its report. Then, I’m going to stay focused on it next week as the bill goes to the Senate floor – where it will be subject to virtually unlimited amendments – and my focus will be on how it affects Tennesseans. We are going to wait for the CBO score and hope to goodness there are public hearings with experts to make you see what a stinker this bill is for Tennessee and America.
Update: On June 26, 2017, Senator Alexander released a statement on the CBO score that said: The Congressional Budget Office report is helpful information for every senator to consider as we review the draft Senate bill and look at how it will affect our states. I’m encouraged that CBO says premiums would begin to fall under this bill starting in 2020, especially in states that take advantage of the new flexibility available under the bill. It’s important to remember that the alternative to this bill is current law that leaves 162,000 Tennesseans who make less than $12,000 a year without aid to buy insurance, and as many as 350,000 Tennesseans in the individual market facing the real possibility of having zero insurance options next year.”
REALITY: Sen. Alexander has apparently not given thought to the 22 million people (including 634,600 Tennesseans) who will lose coverage and the $772 billion that will be cut from Medicaid.
In response to Senator Alexander’s statement, Michele Johnson, Executive Director of the Tennessee Justice Center, said, “We are perplexed – as many Tennesseans are – about Senator Alexander’s statements about the Senate version of the American Health Care Act. Many organizations and experts are contradicting Senator Alexander’s claims about the bill. The Senator himself said ‘it’s important to get every voice heard in this discussion’ a few weeks ago. This process has been so rushed and secretive. We are calling for full disclosure and respectful vetting. Let’s get to the bottom of the questions this raises and include the public and all of these expert organizations. The American Cancer Society knows how it affects cancer patients, AARP knows how it affects seniors, Rural Health Association of Tennessee knows how it affects rural communities – let’s hear them out.”
It seems like Senator Alexander has a fundamental misunderstanding of the bill that he helped draft. Will he come back home to Tennessee next week for Independence Day recess, where we will be celebrating the decades of progress our great nation has made, and defend a bill that would reverse this progress and threaten the lives of millions of Tennesseans? Is he willing to hold public forums to explain to Tennesseans the statements that he has made? Will he stand behind the so-called “benefits” of the bill when faced with the reality of his constituents and the dire circumstances our rural hospitals and communities face?
For a one page response to Senator Alexander’s statement, please click here.