In my early 20s, I moved to New York to try to make it as a writer. This was before the Affordable Care Act. I did not have insurance and did not go to the doctor for years. I don’t remember being particularly concerned about this. It seemed very much a fact of life, just a risk you took, like how people in Florida still legally ride motorcycles without helmets. (I was, and still am, incredibly privileged to enjoy good health.) I recall vaguely, childishly hoping that something terrible wouldn’t happen to me that would inevitably bankrupt me or my family. I’m obviously lucky that I made it out of that period of my life safe and sound.
We don’t live in that world anymore. The nationwide fervor around health care has reached a fevered pitch this month thanks to the American Health Care Act, a piece of legislation that would radically remake that Affordable Care Act (aka Obamacare). Over the past few weeks, I’ve read a lot of think pieces about the AHCA, which the House of Representatives passed on May 4th. I even clicked on a photo of a list of pre-existing conditions on Twitter, scanning its tiny type with my old-ass eyes to see if I fit any of the categories. Who knows who assembled this list, or if it even came from a reputable news source? It felt like everyone around me was panicking.
I needed more information, so I decided to speak with someone in the know to find out to what degree I should or should not be freaking out. Someone with a comprehensive viewpoint, who could break down what was really at stake.
Dr. Andrew S. Kelly is a political scientist whose research and teaching focuses on US health care policy and politics. He has held positions at University of California, Berkeley and Johns Hopkins University, and, in the fall, will be an assistant professor in Health Sciences at California State University, East Bay. We spoke for over an hour; our conversation below has been edited for length and clarity.
Leslie: There’s so many things about this health care situation that seem scary. There are also so many headlines. People are freaking out. Is it time to panic? All of these headlines make it seem like it’s time to panic.
Andrew: Regarding how much you should be freaking out: Yes, [the bill] has passed through the house, but the process in the Senate will be much harder. There’s still a big hurdle.
What’s surprising is that the headlines haven’t really been focusing on what I think is the scariest part, and that’s the large cuts and restructuring of Medicaid. A lot of articles have focused on pre-existing conditions. I understand the concern — it’s a serious issue. A recent survey from the Kaiser Family Foundation (a great source for easy-to-access data) states that 27% of the population has a pre-existing condition. Those are people that, before the ACA, likely would have been rendered unable to get health insurance coverage. Either they’d be denied outright, or they just wouldn’t have been able to afford it.
But this bill, the American Health Care Act, also completely restructures the Medicaid program (a means-based health care program). It would eventually get rid of the Medicaid expansion under Obamacare, but it would also take the entire Medicaid program — which covers almost 75 million adults and children, it’s huge — and turn it into either a block grant, or what’s called a per capita cap. It would change how [the government] gives money to states. The AHCA cuts Medicaid funding by an estimated 880 billion dollars.
When the Congressional Budget Office came out with its estimates a couple of weeks ago, after the initial introduction of the AHCA, they estimated that 14 million people would lose coverage by 2018 and 24 million people would lose coverage by 2026. Most of that was the result of changes to Medicaid.
Leslie: How does Medicaid get funded?
Andrew: For every X amount of dollars a state spends [on Medicaid], the federal government will chip in money based on a certain matching ratio, which is tied to a state’s per capita income. Take a state like California: For every dollar California spends on Medicaid, it gets a dollar from the federal government. It’s open-ended; there’s no cap — California can spend as much as it desires “on eligible populations and covered services,” and the government matches that.
The AHCA changes this. It’s predicted to create a lot of cuts within states. A portion of the reductions will come from the termination of the ACA Medicaid expansion and its generous 90% matching rate. The other reductions will come from the restructuring of Medicaid’s financing system. If a state spends over its yearly cap, the amount they spend over the cap will be solely the responsibility of the state — there will be no shared financial responsibility with the federal government for that portion of Medicaid spending.
Medicaid is a 52-year-old program. It’s a cornerstone of the American social safety net. It has long been seen as covering lower-income people, but it’s really grown over the last few decades to reach the middle class. The statistics are incredible. For instance, almost half of all births in the United States are covered by Medicaid. It’s the largest single provider of coverage for people with HIV. 24% of women between the ages of 19 and 64 in California get their health coverage through Medicaid. So it’s a women’s issue, it’s a children’s issue. That’s one of the reasons it will be really hard to pass in the Senate.
Leslie: Can you talk a little bit about how people get on Medicaid?
Andrew: It’s a means-tested program, which means eligibility is based on income. The federal government sets the minimum requirement, and states have to follow it in order to participate in the program. There are certain populations that states can cover optionally. Medicaid, in many ways, is 50 different programs because it’s that different state-to-state.
For a very long time, it was means-tested and also categorical — so, say, if you were at a certain poverty level, you also had to fall into particular categories to be eligible, such as single-headed households and children, pregnant women or people with certain disabilities.
Leslie: Why do you think people are focusing on the pre-existing conditions conversation?
Andrew: That’s a really good question and one that I’m puzzling over myself. Historically, Medicaid has been seen as a program for the poor. Programs that serve people of low socioeconomic status are less politically protected for a host of reasons: poorer people have a lower rate of voting, making it potentially less electorally dangerous to target programs for them; there’s no strong interest group to represent them, as compared to the AARP for senior citizens. And because of the nature of Medicaid’s funding and eligibility, it is easier to portray Medicaid recipients as “undeserving.” Look no further than recent comments by Mick Mulvaney, director of the Office of Management and Budget. Also, the system is incredibly fragmented and convoluted. It is divided among the federal government and state governments, between private insurance companies and private providers.
This vote [in the House] was taken without any sense of how much the AHCA would cost or what its impact would be, which is pretty wild. You’re voting to restructure about a sixth of the US economy.
A lot of senators, [on the other hand,] have voiced their opposition to this version of the bill because of its threat to Medicaid programs. It’s quite possible that the Senate will just start from scratch and write its own bill, because it will be that difficult to pass it in the Senate.
Leslie: In speaking about pre-existing conditions, my first question is how are they decided? There are these lists being passed around on Facebook and Twitter and everybody’s like, “I have three of these.” How or who decides upon pre-existing conditions?
Andrew: This article does a good job of explaining it. Sometimes, they are defined by states; it’s not going to be the same from one state to the next. [The list] also changes depending on the insurance company. It also differs in terms of, are you denied coverage outright for that preexisting condition, or are you just charged way more and effectively denied coverage because you can’t afford it?
Before Obamacare, 20 states didn’t even have a definition of pre-existing conditions, and insurers had a lot of leeway in determining what counted. After Obamacare, you could get health insurance regardless of your health status. Insurers were limited on how much they could charge one person versus another, the criteria pretty much boiled down to age, geographic location and if you smoked.
As you saw with the Jimmy Kimmel monologue, the pre-existing conditions conversation is really powerful. If 27% of people have one, then you or someone in your family has one. It touches a lot of people. Going back to a pre-ACA world where you’re allowed to charge people more based on their health risk is a big concern and people are rightly worried about that.
Under the AHCA, if you have a gap in your insurance coverage for more than 63 days, you can be charged more based on pre-existing conditions (this was not allowed under the ACA). This is particularly hard when you’re establishing yourself and moving between jobs or working in a freelance economy.
One of the amendments that helped the AHCA get across the finish line is that eight billion dollars over five years would to go to high-risk pools, where people with pre-existing conditions or high costs can go.
Leslie: What happens if you fall into a high-risk pool in that scenario?
Andrew: If a state applies for and is granted a waiver for the ACA’s community rating requirement (where a large community of people with varying degrees of health needs are charged the same rate), then that state would have to set up a high-risk pool to become eligible for that eight billion. We don’t know how many states would actually decide to waive certain aspects of the ACA. The general thinking, though, is that eight billion is way too little. It sounds like a lot of money, but in the health care world, unfortunately, that’s not a lot. Conservative estimates of the cost of [this high-risk pool plan] are around 15 to 20 billion dollars a year.
Leslie: Is there some sort of goal to strangle the system to death?
Andrew: The Affordable Care Act is a fairly conservative health care legislation, highly modeled after health care reform passed by Mitt Romney in Massachusetts. Yes, it expands Medicaid and taxes wealthy people to pay for insurance for lower-income people — probably not ideal for your average Republican — but it’s still a very centrist policy. Do conservatives want to cause a death spiral? I don’t think so. Are some of the politics and maneuvering creating problems in the marketplaces? Yes, but the rhetoric that Obamacare is failing is just observably incorrect. It’s faced difficulties, there are higher premiums and costs than some expected, but it is improving in terms of how well some insurers are able to function in the marketplace.
It’s been way harder than conservatives thought it was going to be though, and that demonstrates the political influence that the ACA has picked up over the last seven years, that we’re having conversations about pre-existing conditions and essential health benefits, that we are seeing Republican governors opposing the reduction of the Medicaid expansion. Once people start benefiting from a program, they’re going to push back against that being taken away from them.
Conservatives are not building this new policy on a blank slate, they’re responding to the ACA and the politics it’s created. The ACA constrains what options are available to Republican policy-makers. They have a very narrow path to walk to try to repeal and replace the ACA. It’s narrow, and it’s politically hazardous, but it’s not impossible.
There is a lot to be concerned about in this bill in terms of people losing coverage, coverage becoming less secure, coverage becoming more expensive. These are all valid and important concerns coming out of this piece of legislation.
Collage by Emily Zirimis.