1. Changes to Medicaid from prior version are minor, would still negatively affect providers
Those worried by the CBO's previous estimate that the BCRA would cut federal Medicaid spending relative to current law by $772 billion across the next 10 years, and even more across the following decade, may see little to like in the updated bill.
The revised version does make minor tweaks with provisions that would give states additional Medicaid funding in the event of a public health emergency and grant them the flexibility to cover the Medicaid expansion population under a block grant in lieu of a per capita limit. It would not, however, increase the proposed growth rate of the Medicaid spending caps, nor would it preserve the enhanced federal match for the expansion population across the long term—and those provisions were the source of the vast majority of the bill's spending cuts. Further, the public health emergency funding would last only five years and would max out at $5 billion in additional payments across all states.
These minor changes are unlikely to garner a more favorable Medicaid CBO score and may not mitigate the concerns of moderates worried about pushback from constituents. McConnell has reportedly been trying to assuage these concerns by selling senators on the idea that, much like the delayed “Cadillac” tax, the longer-term Medicaid cuts are unlikely to come to fruition. Whether this argument is effective, however, is questionable given that Congress would have to identify other spending cuts to offset the cost of reinstated funding later on.
Regardless, if the Senate's Medicaid changes did go into effect, states would be likely to significantly modify some combination of Medicaid eligibility, benefits, and payment rates, all of which would negatively impact provider margins. States might also respond to funding cuts by using federal waivers to experiment with consumer-driven insurance design or to implement delivery system reforms in Medicaid.
2. Changes to pre-existing condition protections remain a big source of contention and could lead to more people being underinsured
The politically divisive specter of health status underwriting—the practice of insurers charging more for coverage to those with pre-existing conditions—once again looms over the individual market.
A proposal floated earlier by Senators Ted Cruz (TX) and Mike Lee (UT) would allow insurers that meet certain conditions to offer off-exchange plans that do not adhere to a variety of ACA market regulations, including providing protections for pre-existing conditions. Cruz and Lee argue this proposal is necessary to maximize consumer choice. Market experts, however, have expressed concerns that these plans would not meaningfully improve affordability, particularly for those with pre-existing conditions, and could increase the number of people subject to the BCRA's "lockout" from ACA-compliant coverage, as these more bare-bones plans would not count for the purpose of determining whether individuals have been continuously enrolled in coverage. T
he non-compliant plan concept is included in the revised BCRA, but marked off by brackets meaning it is not yet officially approved and is subject to change.
This provision would likely lead to more individuals being uninsured and underinsured, which could increase hospital bad debt and uncompensated care.
3. The revised bill doubles down on increasing flexibility in the individual market—and would pave the way for greater consumer cost-sharing
The updated BCRA would, for the first time, allow premium tax credits to be used to purchase catastrophic health plans. The BCRA would also eliminate the current ACA restriction that permits catastrophic plans only for individuals under age 30 who qualify for a hardship or affordability exception given concerns about the low actuarial value of this plan design.
Additionally, under the updated BCRA, individuals could use money from their health savings accounts (HSAs) to pay the premiums for high-deductible plans in the private market. This approach could potentially make individual market coverage more affordable—although Democrats argue that HSAs primarily benefit those with higher incomes, who can afford to contribute to the accounts in the first place.
4. Overall, the revised bill still proposes a challenging future for providers
The revised bill would provides $70 billion in additional funding to support the individual insurance market and $43 billion in new funding to combat substance abuse and addiction—targeting the opioid crisis. It would also increase DSH payments in 2020 to hospitals in non-expansion states.
Ultimately, though, the revised bill does not offer a meaningfully rosier picture for provider organizations. It would still cut federal spending on health care, increase the uninsurance rate, and decrease the actuarial value of coverage among those with insurance—in some instances perhaps even more dramatically than previous iterations of the bill.
Although this proposal will almost certainly evolve over the coming weeks, it's clear that the GOP remains set upon decreasing federal funding for Medicaid and reducing individual market regulations.
As I've previously noted, these changes would require hospitals and health systems to:
- Be much more proactive in developing an effective safety net strategy by collaborating with state Medicaid agencies, doubling down on population health efforts, and investing in care coordination and insurance navigation resources;
- Redouble efforts to reduce costs by improving revenue cycle performance and focusing on both near-term savings and long-term cost restructuring;
- Develop a consumer strategy that delivers on what patients value by improving access, offering more affordable pricing, and driving patient loyalty over time; and
- Create an intentional Medicare risk strategy to continue adapting to the intractably changing payment and delivery system landscape.
These are no-regrets strategies you need to be working on right now, regardless of political uncertainty, but they become even more critical when confronting the funding cuts proposed in the BCRA.