House Majority Leader `Highly Confident’ of Obamacare Repeal This Year

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By Sara Hansard

House Majority Leader Kevin McCarthy (R-Calif.) is “highly confident” a law repealing Obamacare will be signed this year.

McCarthy made that assessment at a discussion sponsored by news service Axios and NBC News April 5. He said Republicans are focusing on moving power over health care from the federal government to states and providing consumers with more health insurance choices that can lower their costs. Republicans’ first attempt to repeal the Affordable Care Act failed when the American Health Care Act (AHCA) was pulled from the House floor March 24.

House Republicans are working with President Donald Trump to put together another plan that would garner support from conservative Republicans who wouldn’t support the earlier version of repeal because it didn’t remove enough provisions of the ACA. McCarthy pointed to the fact that about one-third of the country now only has one health insurance option as evidence that the ACA is failing.

No Time Frame

“There’s not a time set on it, when it’s going to get there,” McCarthy said. “But I think it’s closer than it is further away.” Earlier in the week there were reports that Republicans may bring up another bill by April 7.

Eighteen of the ACA’s 23 original nonprofit cooperatives have failed, and 16 counties in Tennessee have no plans committed to sell on the ACA exchange in 2018, “but you have legislation that actually punishes people for not having health care,” McCarthy said, referring to the ACA’s individual mandate penalty. The ACA’s Medicaid expansion is projected to cost $1 trillion in the 10th year, equal to the federal government’s annual discretionary spending, he said.

“Every element of Obamacare is going to collapse on itself,” McCarthy said. “The framework of our bill is what’s going to have to happen,” providing more consumer choices and flexibility to states and insurers, he said.

Allowing insurers more flexibility to design products consumers are willing to buy will lower premiums; and providing middle-income consumers with refundable tax credits and allowing risk pooling by associations and others across state lines—provisions included in the AHCA—will increase choices and competition, “instead of government telling you what the plan is,” McCarthy said.

State High-Risk Fund

A $100 billion fund included in the AHCA would allow states to create “a very good high-risk pool,” McCarthy said. “We have more than enough money” to adequately fund the pools, he said.

Defining who has medical conditions that would qualify for being in a high-risk pool can be determined “as we go through this process,” McCarthy said. He also suggested that states could work with each other to create high-risk pools, or states could all be managed together.

Taking the sickest people out of the risk pool reduces costs for others in the individual health insurance markets, McCarthy said.

Sebelius: Insurers Facing Uncertainty

Kathleen Sebelius, who was secretary of the Department of Health and Human Services when the primary provisions of the ACA began in 2014, said more insurers are needed to sell products in the exchanges to lower costs.

But she said uncertainty about whether the ACA will be enforced and whether their customers will be able to pay their bills “is creating, I think, a flee from the marketplace, not stability.”

Offering “skinnier” benefit plans to lower premiums for young, healthy people is “a great way to back-door pre-existing conditions, because somebody who is chronically ill needs a full-benefit health plan,” Sebelius said. Women are more likely to want maternity coverage, she said. Benefits required by the ACA, which include maternity coverage and pediatric services, are designed to mirror the small group markets in each state, she said.

Some of the steps Republicans are taking will revert to pre-ACA practices of segmenting people by health condition in the individual markets, when “lots of people were locked out and priced out of a plan altogether,” Sebelius said.

Out-of-Pocket Costs Rising for All

Out-of-pocket costs have risen both for people in the ACA marketplaces and for “all the public,” as employers shift costs to employees, Sebelius said. “That could be addressed” by Republicans, she said.

“I’m sorry that the Republicans aren’t talking about drug plans and drug costs,” Sebelius said. “We tried to actually get that into the bill in 2010. There wasn’t even enough Democratic support at that point to actually have negotiating power and some sort of pricing theory, but I think that those days have changed, so that’s a failure of [the] original framework.”

Trump said during his campaign that he favored giving the government power to negotiate drug prices in the Medicare program.

The ACA succeeded in reducing health inflation for Medicare and private insurance, Sebelius said. “It’s not where it should be, but we are seeing actually a very slow pace of cost increases compared to where we’ve been.”

Consolidating Hospitals

Medical inflation has started going up again, Toby Cosgrove, president and chief executive officer of the Cleveland Clinic said.

“Every industry in the United States has consolidated,” he said. “We have a huge expense of running a health-care system” in the country.

The U.S. has a health system “that is a cottage industry,” Cosgrove said. “Every community has its own hospital. We have to realize that not all hospitals can be all things to all people. We have to have a system that allows people to move and drive the efficiency of the health-care delivery system.”

The Federal Trade Commission and the Department of Justice need to “ease off a little bit on us so that we can begin to consolidate hospitals, and begin to get the efficiency that bookstores have gotten, lawyers have gotten and accountants have gotten” by consolidating back-office support, Cosgrove said.

Health insurers and medical providers have issued dueling reports in recent years on the ill effects of consolidation in each others’ industries.

In 2016 America’s Health Insurance Plans pointed to a 2015 JAMA Internal Medicine study finding that “financial integration between physicians and hospitals may help health care provider organizations meet the challenges of new payment models but also may enhance the bargaining power of provider organizations, leading to higher prices and spending in commercial health care markets.”

But the American Medical Association’s 2016 edition of its 15-year annual study, “Competition in health insurance: A comprehensive study of U.S. markets,” found that 71 percent of the 388 metropolitan areas studied were highly concentrated, meaning consumers could be paying higher premiums, while payments to health-care providers are below competitive levels.

The Obama Department of Justice blocked proposed mergers between Anthem Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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