BEYOND THE NUMBERS
Latest House ACA Repeal Bill Hits Alaska — Already Hardest-Hit State — Even Harder
We explained that Alaskans had more to lose from the original House bill repealing the Affordable Care Act (ACA) than residents of any other state. The latest version of that bill doesn’t address any of the features that would end coverage and raise costs for tens of thousands of Alaskans. And the new MacArthur amendment to the bill could cause additional harm to the more than 300,000 Alaskans with pre-existing health conditions.
The latest bill, like the original version:
- Replaces the ACA’s premium tax credits with much smaller tax credits that don’t adjust for geographic variation in premiums. Combined with other parts of the bill, that would lead to a $12,599 increase in average out-of-pocket health care costs for Alaska marketplace consumers — far more than in any other state (see graph).
- Effectively ends the ACA’s Medicaid expansion, which covers more than 30,000 Alaskans and is a key reason why the uninsured rate among adults in Alaska dropped by nearly 40 percent from 2013 to 2016.
- Caps and cuts federal funding for the rest of Medicaid. The bill’s caps on annual per-enrollee federal Medicaid funding would pose a particular risk to Alaskans. Over the long run, Alaska’s share of seniors who are 85 and older — a group with much higher health costs than younger seniors — is projected to grow faster than other states’, and capped federal funding wouldn’t keep pace.
- Harms Alaska Natives. The House bill not only endangers Medicaid — which Alaska Natives are especially likely to rely on for coverage — but would also end ACA subsidies that cover out-of-pocket costs for Alaska Natives enrolled in the marketplace.
Nationwide, nearly 1 in 10 non-elderly people who would have health insurance under current law would lose it under the House bill, the Congressional Budget Office estimates. In Alaska, that ratio could be higher.
Now, with the new MacArthur amendment, the House bill would be even worse for Alaskans with pre-existing conditions. That’s because the amendment would let states waive ACA provisions preventing insurers from charging people higher premiums based on their medical history and requiring plans to cover basic services like mental health and substance use treatment and prescription drugs.
While all states would face pressure to waive these protections, the pressure on Alaska policymakers would be especially intense, since Alaska’s individual market would suffer perhaps the most severe shock of any state’s under the House bill. While the bill would cut premium tax credits by about 40 percent nationwide, it would cut them by nearly 80 percent in Alaska, leading to a nine-fold increase in the premiums for marketplace consumers, on average. Many consumers would see even larger increases.
Especially when coupled with the bill’s elimination of the ACA’s individual mandate (which requires that people have coverage or pay a penalty), these steep increases would lead healthy people to drop coverage, causing premiums to rise, which in turn would cause additional healthy people to drop coverage — potentially triggering a “death spiral” of ever-rising premiums and falling enrollment. Alaska policymakers would likely see waiving protections for people with pre-existing conditions as their only option to stabilize Alaska’s market, even though it would put coverage even further out of reach for Alaskans who have the most serious health needs, who could face premium surcharges of tens of thousands of dollars.
Alaska would also lose federal funds for its reinsurance program. Supporters of the latest House bill argue that states could use federal funding from its Patient and State Stability Fund and Federal Invisible Risk Sharing Program to cover people with pre-existing conditions through high-risk pools. But high-risk pools, which were common before the ACA, have a terrible track record in terms of cost, coverage, and service. They often came with enrollment caps, long waiting lists, unaffordable premiums and deductibles, exclusions for coverage of pre-existing conditions, and annual and lifetime limits on coverage, and they covered only a few hundred thousand people nationwide.
For Alaska, there’s an additional problem: the federal funding that the bill’s advocates argue that states could use to establish high-risk pools wouldn’t even make up for Alaska’s loss of federal matching funds for its reinsurance program.
Last year, recognizing the unique challenges facing their state’s individual market, Alaska policymakers created a reinsurance program to lower premiums by covering part of the cost of the highest-cost patients. Under the ACA, the program could qualify for federal matching funds through a so-called “1332 waiver.” That’s because, by lowering premiums, the program would cut the cost of federal premium tax credits. Those savings would offset the federal matching funds, fulfilling the requirement that 1332 waivers not increase the deficit.
Under the House bill, federal matching funds couldn’t continue after 2019. The bill delinks tax credits from premiums — in other words, consumers’ tax credits would be the same whether premiums were higher or lower — so lowering premiums would no longer lower federal costs. Thus, there would be no federal savings from Alaska’s reinsurance program, and no opportunity for a federal match.
Alaska is seeking about $55 million in federal matching funds for 2020 through its waiver. Based on Oliver Wyman’s estimates of how the House bill’s Patient and State Stability Fund would be allocated across states (and assuming the same allocation applies to the much smaller Invisible Risk Sharing Program), Alaska would receive only about $40 million from the bill’s grants for 2020. That’s not enough to offset the lost matching funds.
The House bill would cause severe harm nationwide. But in Alaska, it would create a perfect storm of detrimental effects that would gut the state’s Medicaid program, destabilize its individual health insurance market, and — due to the new MacArthur amendment — create further barriers to coverage for those who need it most.