5 things for-profit hospitals want from ACA repeal-and-replace

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 - Chip Kahn FAH
Chip Kahn, President and CEO of the Federation of American Hospitals

The Federation of American Hospitals (FAH) has largely remained silent on ongoing Republican-led efforts to repeal and replace the Affordable Care Act (ACA), including the recently passed American Health Care Act (AHCA). The group has now weighed in on the legislative battle, offering its “core principles” to Senate Finance Committee Chairman Orrin Hatch, R-Utah.

Nowhere in the letter did FAH President and CEO Chip Kahn take a firm stance on the AHCA, which has been opposed by the American Hospital Association (AHA), America’s Essential Hospitals and many other medical associations. However, he did ask that the gains in insurance coverage under the ACA be protected.

“We hope you will focus your attention on sustaining the protections people have today, including coverage gains in the individual market and Medicaid, while you explore opportunities to expand coverage to those Americans who continue to lack it,” Kahn wrote.

Here are five items Kahn asked the Senate to consider while crafting its own version of the AHCA:

1. No rolling back Medicaid expansion

The AHCA would reduce Medicaid spending by $839 billion by 2026, end the enhanced federal funding in 2020 for states which expanded Medicaid eligibility and not allow any other states to take advantage of the ACA’s expansion. This would be in addition to $610 billion in cuts over the next decade proposed in the fiscal year 2018 budget by the Trump administration.

Much of the change would come from turning Medicaid funding into a block grant or per-capita allotments to states. Kahn singled out these ideas as something the FAH doesn’t support, calling them “vehicles for arbitrary reductions in coverage and care for those most in need.”

2. Restore ACA cuts to Medicare hospital payments

Similar to a December report the FAH issued along with the AHA, Kahn said the ACA’s cuts to Medicare hospital payments should be rolled back along with the ACA’s taxes. The letter said these “productivity adjustments” will total $300 billion over the next decade and could cause up to half of all hospitals to experience negative margins by 2025.

“It is also a contributing cause to MedPAC’s recent projection that Medicare hospital payments will fall ten percent below the cost of care in 2017,” Kahn wrote.

3. Retain ACA tax credits and subsidies on insurance

The AHCA does offer subsidies to help individuals buy health insurance like the ACA, but they’re mostly based on age, rather than geography and income. This would result in reduced financial assistance to lower-income enrollees or people who live in high-premium states, like Arizona or Alaska.

“Proposals that base credits on age alone fall short of the mark,” Kahn wrote, “and are likely to result in financial assistance that is insufficient to help individuals and families make premium payments.”

Kahn also asked for supporting the cost-sharing reduction payments given to insurers for limiting deductibles and copays for lower-income enrollees on the ACA exchanges. President Donald Trump has reportedly favored ending those payments to drive Democrats to negotiate on repealing the law.

4. Keep pre-existing condition protections, essential benefits

Amendments to the AHCA before it passed out of the House on May 4 would allow states to waive the community rating provision in the ACA, opening the door for insurers to charge customers more based on their individual medical history. Kahn said the FAH opposes making the cost of insurance “prohibitive” with those kind of policies.

Additionally, the letter warned against the skimpier coverage the AHCA would allow, with states able to waive essential benefits like hospitalization and emergency care. Kahn said these are services “which anyone with insurance should reasonably expect” to have covered.

5. Expanding insurance coverage should be the goal

Overall, the message of Kahn’s letter is senators should be discussing ways to expand, not contract, insurance coverage. The Congressional Budget Office estimated an earlier version of the AHCA would result in 24 million more uninsured by 2026, including 7 million losing employer-based coverage.

“Employer-sponsored insurance should not be weakened and must remain a cornerstone of coverage for working Americans,” Kahn wrote.