Virginia Hospital & Healthcare Association Statement on the American Health Care Act
Virginia Hospital Community has Concerns about Legislative Provisions Regarding Medicaid Equity, Safety Net Funding for Non-Expansion States, Proposed Tax Credits, and the Potential of More People Becoming Uninsured
RICHMOND, VA – Throughout the vigorous debate regarding federal health care policy in recent years, Virginia’s community hospitals and health systems have consistently made the case for policies that enhance patient access to essential health services, and that promote health care quality, safety, and value.
In evaluating the recently released American Health Care Act (AHCA) proposal, Virginia’s hospital community is appreciative that U.S. House of Representatives’ Speaker Paul Ryan and his colleagues have put forth legislation that seeks to simultaneously repeal and replace the Affordable Care Act (ACA) rather than forging ahead on repeal proceedings and delaying replacement efforts. Also appreciated is the decision to forgo conversion of Medicaid funding to a block grant program, and the proposed elimination of Medicaid disproportionate share (DSH) funding cuts.
While those developments are welcome, several other provisions of AHCA concern the Virginia hospital community, including:
• A per capita-based cap on medical assistance payments. AHCA proposes to convert Medicaid program funding to a per capita allotment. While the hospital community continues to evaluate the financial implications of this proposed change, serious concern exists about the legislation’s failure to address inherent inequities in the Medicaid program pertaining to states’ use of supplemental payments to increase their Medicaid budgets, and its lack of incentives encouraging states to pursue enhanced health care quality and value.
• Safety net funding for non-Medicaid expansion states severely shortchanges Virginia and the 18 other states that opted against growing their Medicaid programs under ACA. The 31 expansion states this year are slated to receive $72 billion in federal funding, and that enhanced funding is expected to endure. Meanwhile, non-expansion states would share a $2 billion annual funding pool over five years under AHCA. That formula would provide Virginia roughly $87 million per year, based on an analysis of 2015 American Community Survey data. That amount falls far short of the billions Virginia would have received as an expansion state. Additionally, the legislation lacks a requirement that safety net funds are equitably distributed among safety net providers. These provisions result in the legislation failing to achieve Medicaid equity, while punishing states like Virginia that have conservatively managed their Medicaid programs.
• While the refundable tax credits for health insurance proposed in AHCA are adjusted for age and phased out beyond certain income thresholds, they are not means tested. That configuration, initial analysis suggests, could result in the tax credits disproportionately benefitting younger, healthier, and wealthier people in contrast to ACA tax credits. For instance, one estimate suggests the value of the tax credit for a 60-year-old Virginian earning $20,000 would decrease by more than 50 percent. This approach could make it more difficult for low-income and elderly Virginians to purchase health insurance in the individual marketplace.
• Also concerning is the fact that AHCA-imposed time limitations on funding for high-risk insurance pools and other mechanisms to reduce insurance costs create the potential for a coverage and fiscal cliff for members of the high-risk population, and for states, when that funding expires.
• Although the legislation was released without a Congressional Budget Office score, early estimates indicate AHCA would lead to a significant decrease in the number of Americans covered by health insurance. Yet despite the potential for more people to become uninsured, AHCA does not restore ACA-enacted Medicare cuts.
Prior to the release of AHCA, Virginia hospital leaders in meetings with members of Congress expressed specific concerns about equity treatment under any repeal and replace proposal brought forward. Having now reviewed the AHCA, Virginia’s hospital community remains concerned that those issues aren’t adequately addressed in the introduced package and will make those concerns known to the congressional delegation in the days ahead.
About VHHA: The Virginia Hospital & Healthcare Association is an alliance of 107 hospitals and 30 health delivery systems that develops and advocates for sound health care policy in the Commonwealth. Its vision is to achieve excellence in both health care and health. Its vision is through the power of collaboration to be recognized as a driving force behind making Virginia the healthiest state in the nation. Connect with VHHA through Facebook, Twitter, YouTube, and ISupportVirginiaHospitals.com.