Health Reform Repeal Would Cut Benefits for Nearly 400,000 in RI
Friday, March 30, 2012
Hundreds of thousands of Rhode Islanders would lose a range of benefits if the health care reform law is struck down in its entirety by the U.S. Supreme Court this summer, according to state-specific figures obtained by GoLocalProv.
Justices this week hinted that if they scrap the individual health mandate—widely viewed as the most vulnerable part of the law—the rest of the law may fall with it. Conservatives in Rhode Island and across the country are hoping that is exactly what happens, calling for an end to so-called Obamacare before it is fully implemented in 2014. Problem is, hundreds of thousands of Rhode Islanders would lose benefits they are already receiving under the new law.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“There are really significant impacts on the people of … Rhode Island if this law is repealed,” said Lt. Gov. Elizabeth Roberts, whose office is spearheading reform implementation in the state. “We’re not talking about what happens in the state budget. We’re talking about what happens directly to people.”
Benefits that will be lost or eliminated include tax credits for small businesses to buy health insurance, prescription drug benefits for some seniors, insurance coverage for young adults 26 and under, and the return of lifetime caps on health insurance benefits, which would affect patients with cancer and other high-cost health needs, Roberts said.
In Rhode Island, those benefits break down as follows, according to data from the U.S. Department of Health and Human Services.
■ Free preventive care: An estimated 323,218 Rhode Islanders received free preventive health care in 2011 under the law. Nearly 200,000 of those residents received those services through their private health insurance. The rest were getting preventive care through Medicare.
■ Lifetime limits on benefits banned: The health care law bars insurance companies from setting lifetime limits on benefits, a change which affected 374,000 residents, including 89,000 children. The provision benefits patients with cancer and chronic diseases, who may run up high health care bills.
■ Prescription drugs for seniors: Nearly 15,000 seniors have saved $8.2 million on the cost of prescription drugs, thanks to the law. Those seniors had previously been stuck in the so-called doughnut hole, which is the gap between the minimum coverage provided by Medicare Part D and Medicare’s catastrophic coverage limits.
■ Coverage for young adults 26 and under: Under the law, young adults 26 years old and under can be covered under their parents’ health insurance. As of June 2011, more than 7,000 young adults in Rhode Island had taken advantage of this provision.
■ Small business tax credit: The law also extended a tax credit to small businesses equal to 35 percent of the cost on their health insurance premiums for their employees, according to Roberts. No estimates are available yet on how many businesses have claimed the credit in Rhode Island.
All these benefits would cease—at least temporarily—with the repeal of the health care law.
‘Hard part is the money’
One of the biggest consequences down the road: Rhode Island will have a harder time covering an estimated 140,000 residents who are currently insured. And it’s a problem that affects those who do have insurance too, because the uninsured end up receiving care at emergency rooms, which leads to higher premiums for everyone, according to Roberts. She said that the cost of care for the uninsured adds $1,000 a year to the premiums for families.
The state budget also would take a substantial hit in terms of lost federal funds for health care it was due to receive when the law was fully implemented. “It will be hundreds of millions of dollars that will come in the Medicaid expansion, the subsidies, and the Medicare enhancement,” Roberts said.
The state would also be left holding the bag on health care exchanges—online sites where it is expected to be easier for the uninsured to obtain coverage. The exchanges were one of the centerpieces of the law and Rhode Island has already received $64.7 million to plan for the creation of its own state-level exchange. The state was counting on an influx of federal money to fund it once it goes live.
“The hard part is the money. That’s what it really comes down to,” said Chris Koller, the state health insurance commissioner. “Where do we find the way to pay for this medical care?”
Even if the court cuts out the individual mandate, but leaves the rest of the law, the state would have to rethink the exchanges. “Clearly the exchange would have to change somehow, but we’re not sure how much it would have to change,” Koller said.
If the entire law is scrapped, some of its provisions can be restored at the state level, such as the individual mandate andprovide coverage for pre-existing conditions, according to Chris Koller, the state health insurance commissioner. But there are other things the state could not do by itself because it does not have jurisdiction over self-insurers like Brown University and Lifespan. It could not, for example, mandate coverage of preventive care, nor could it require that insurers allow 26-year-olds stay on their parents’ plans, according to Koller.
Even if there is a complete repeal, Roberts said the issues the law was meant to address, namely the rising costs and the sustainability of the health care system, would persist. She promised that health care reform would march forward in Rhode Island, with or without the help of the federal government. “These problems don’t go away in the repeal of the law,” Roberts said. “If anything they get worse.”
Law Has ‘Disastrous Consequences’ Too
While advocates of the health care reform law point to the many benefits it has already had on the average American, fiscal conservatives say there’s a hidden cost to the bill that far outweigh those benefits.
“The attractive benefits in the bill were frontloaded to get it passed,” said Stephen Moses, president of the libertarian-leaning Center for Long-Term Care Reform in Seattle. Meanwhile, he said the “disastrous consequences” of the new law will not become apparent until it is fully implemented in 2014.
Benefits like the free preventive care might sound all well and good, but they come at a price, added Mike Stenhouse, CEO of the Rhode Island Center for Freedom and Prosperity. “Nothing is for free,” Stenhouse said. “If people are receiving free stuff, whether it’s in a health care law or an emergency room … Somewhere, somehow, someone’s paying for it.”
Some businesses are already facing higher costs, said U.S. Senate candidate Barry Hinckley, the likely GOP nominee in the race this fall. During his statewide “Ride for Jobs” Hinckley said he met with the owner of Servpro in North Kingstown, who said his employees faced an 18 percent increase in their premiums, coupled with a higher deductible. When he asked his insurer, Blue Cross, what caused the increase, he was told it was because of the health care reform law, Hinckley recalled. (Click here to view the interview.)
“The exact opposite of what the government proposed would happen, happened,” Hinckley said.
But what about the health insurance provisions already in place for young adults? Or the gap in prescription drug coverage? “You don’t need a 2,000-page law to fix some of the things you mentioned,” Hinckley said. “There’s some good things in there we can accomplish without ‘Obamacare.’”
‘Brick wall of fiscal reality’
The main problem with health care in the United States, Moses said, is that third parties are picking up virtually all the costs. Put another way: “The fundamental problem is we have taken the consumer out of the marketplace. The amount paid by consumers is approaching zero,” Moses said. “[People will] have no concern for what the cost is and that’s a recipe for disaster.”
Moses, who has authored a study of Medicaid in Rhode Island, said the health care reform law perpetuates and expands that problem. Like Hinckley, he supports the repeal of the law.
To the surprise of everyone, particularly to the surprise and consternation of health reform advocates, it now seems as if the Supreme Court is going to act “constitutionally and rationally” and move to prevent the worst effects of the law from happening, Moses said. But that won’t fundamentally change the trajectory of health care in the United States, he added. “The court can’t repeal economic gravity and more than physicists can repeal gravity,” Moses said.
That economic gravity he’s referring to? It’s the weight of the unfunded liabilities in Medicare and Social Security, which total $89 trillion and $17 trillion, respectively, according to Moses. Both programs are supposed to have trust funds, but apart from IOUs in the form of U.S. Treasury bonds, there’s no real money in them, Moses said.
“Medicaid … doesn’t even have a phony trust fund to rely upon,” Moses added.
The health care reform law would nonetheless have added 16 million Americans to Medicaid and cost a total of $2 trillion over a decades, more than double the original estimated cost, according to new figures released this month by the Congressional Budget Office.
“We’re headed towards a brick wall of fiscal reality,” Moses concluded.
Editor’s Note: GoLocalProv requested comment from Senator Sheldon Whitehouse’s Congressional office staff, who said they would be unable to respond in time for publication. Instead they forwarded a speech Whitehouse delivered on the Senator floor last week, in which he touted the benefits of health care reform in Rhode Island. Yesterday, Whitehouse’s office also sent out a news release on a report it has produced on progress in a specific piece of the law—“delivery service reforms” in health care. That report can be viewed here.
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