ANALYSIS:

The recent House of Representatives approval of legislation to repeal and replace the Affordable Care Act (ACA or “Obamacare”) had very little to do with health care policy – it was all about politics. But the House American Health Care bill (AHCA)– if it ever becomes law – has serious ramifications to seniors and near-seniors.

The House's action resulted in part from:

• Republicans’ desire to follow through on campaign promises to dismantle President Obama's health care law so lawmakers don't have to face voters in 2018 without having done what they have pledged to do for seven years.
• Laying the groundwork for a huge tax cut by freeing up tax dollars already distributed in the Obamacare law.
• House Speaker Paul Ryan's (R-Wis.) agenda to revamp entitlement spending of Medicare, Medicaid and Social Security despite Trump's repeated campaign pledge to not touch the entitlement programs.

What Does It Mean to Seniors?

While most of the attention has been on the issues over pre-existing conditions, perhaps the more important story may be the bill's sweeping cuts to Medicaid, which have the potential to severely hurt the elderly, the poor and the disabled, and eliminating health care for millions. Here are the key provisions of the AHCA as approved by the House that could most impact seniors:

• Rolls back the huge expansion of Medicaid in 30 states that came under President Obama's Affordable Care Act. The House Republicans’ legislation goes even further, enacting broad cuts to Medicaid's spending that increase over time, offsetting a huge package of tax cuts for the wealthy and medical industries.
• Raises the bar for Medicaid eligibility among lower-income Americans and caps federal payments to states for the program through block grants. The changes would reduce federal spending on Medicaid by $880 billion over the next decade, pushing more of that financial burden on to the states.
• Eliminates the penalty for people who don't buy insurance, commonly known as the individual mandate.
• Gets rid of Obamacare's system of subsidies for people who don't get insurance through work or government programs and replaces it with a less generous system of fixed tax credits.

For those in the individual market, older patients would see significant spikes in their premiums while lower-income families would face higher deductibles and out of pocket costs. The Congressional Budget Office, in an assessment of the initial AHCA bill in March, which has since faced minor changes, noted that a 64-year-old making $26,500 a year would have seen their annual premiums skyrocket from $1,700 to $14,600 – a 758 percent increase.

While larger numbers of Medicaid patients would lose their coverage, younger and healthier patients with higher incomes who buy insurance on the individual market could see their premiums go down and they might get some federal aid they have not qualified for under Obamacare.

Essential Benefits on the Cutting Block

A major concern for many is to allow states to determine what "essential health benefits" will be provided. This could cause havoc in the insurance market, whether or not you are covered by the new law.

In the next few years, Medicaid plans will not have to cover these benefits and states will determine what they will cover. Among the essential benefits currently covered are maternal care, prescription coverage, hospitalizations and mental health care. But if even a few states let insurers offer inexpensive plans that cover only bare-bones benefits, it will allow nationwide employers to follow their lead and set up similar coverage. While those plans would lower premiums for many workers, it could also leave people with huge gaps in their coverage.

Perhaps even more important, other ACA protections like the cap on how much patients spend out of pocket each year are directly tied to essential benefits. So is the ban on lifetime limits on coverage, which is crucial for people with chronic conditions. If states allow insurers to scale back those benefits, the protections could become meaningless. People on a plan that doesn't cover hospitalization, for example, will have no cap at all on their out-of-pocket costs for hospital bills.

Per Capita Cap Fight

Where seniors face the biggest potential problem from the House legislation, if any version of it is ever enacted, is over the per capita cap. All Medicaid recipients could face trouble, even more than just those folks who gained coverage under the Obamacare Medicaid expansion.

Currently, the federal government matches state spending on Medicaid, offering about $1 to $2.79 for every dollar states spend on it. Poorer states get a bigger match. But the House bill would change all that. Beginning in 2020, the ACHA would give each state a set amount of money per person, instead of matching state Medicaid spending. The amount would grow each year based on the medical component of the Consumer Price Index (CPI), to account for inflation.

The CPI medical component is growing slower than Medicaid costs, budget experts predict. So changing to a per capita cap is, in effect, a federal cut to Medicaid amounting to billions over 10 years. This cap is still better than a block grant, in which states get a set amount of money. Under the per capita cap, states get a set amount of money for every person who is eligible. But it could lead to cuts in some other ways as well.

Florida, a state that's aging fast, is a good example of what many other states could find themselves facing, according to an analysis by Vox. The AHCA bill includes separate caps for different groups of beneficiaries – the elderly, disabled, and non-elderly adults, among others, so states can't get more money by dumping lots of seniors in favor of 24 year olds.

There are some federal requirements on whom states must cover, but they only go so far and most states now provide additional coverage that they can roll back. As Alker told Vox, that means people on Supplemental Security Income (SSI) – a program for disabled, elderly and blind people with low incomes – would be covered "but a lot of folks in nursing homes (are) optional coverage."

The Nursing Home Issue

Another big potential problem is what the Medicaid cuts would do to nursing home funding. Many people don't realize that the huge cost of nursing home care is not covered by Medicare. Those costs are covered by Medicaid for those who cannot pay for it themselves, though they usually must spend down all their savings before Medicaid will kick in. Medicaid also plays a large role in covering long-term care, including assisted living facilities and in-home aides.

According to 2012 numbers, the latest available, 1.3 million Americans live in nursing homes, with 70 percent relying entirely on Medicaid to pay bills that average $83,000 a year. Roughly 90 percent of nursing home residents are age 65 or older, and 45 percent are 85 or older.

Some Medicaid recipients cannot care for themselves and many would be homeless without Medicaid.

As the population gets older, nursing care continues to rise and is one of the reasons Medicaid recipients over 85 years old cost the program 2.5 times more than those who are between the ages of 65 and 74.

Lifetime Limit Caps

For anyone who has faced a whopping hospital medical bill, or someone who lives with costly chronic conditions often requiring hospitalization, there's another provision in the House-approved bill that could be devastating if it survives and becomes law.

The House legislation allows states to impose work requirements on Medicaid, a policy that could further reduce access to care for poor families. But the potential minefield for seniors is another provision that eliminates the "lifetime limits" which let insurers cap how much they're willing to spend on a patient over the course of a lifetime.

Caps have traditionally been in the range of $1-2 million and that provision has kept a large number of chronically sick folks from bankruptcy. When Obamacare went into effect in 2010, 91 million Americans had employer-sponsored plans that imposed those so-called lifetime limits. At that time, PricewaterhouseCoopers estimated there were 20,000 to 25,000 Americans who had blown past their allotted medical benefits. These are typically people with chronic conditions that required expensive drugs or people who suffered through traumatic medical events.

Most Americans who had lifetime limits have no idea about that policy because their medical bills never get high enough to learn they need it. But under the House-passed bill, a state's ability to waive out of essential health benefits could allow them to choose to eliminate lifetime limits protection altogether. Republicans claim this would only apply to the individual market, but Matt Fiedler at the Brookings Institute, a liberal think tank, argues that it applies to employer-based plans also. He told Vox the law could eliminate Obamacare's guarantee of protection against catastrophic costs for people with coverage through large employer plans in every state.

Two other areas of the House-approved legislation could also cost seniors disproportionately. Everyone knows that it costs more for insurance companies to cover older people than it does younger healthier folks. Under Obamacare, insurance companies can charge older Americans up to three times the cost of the prices charged to younger Americans.

Under the GOP plan, insurers would be allowed to charge older Americans more based on their age  – raising the ratio limit to five times instead of three. States would also be allowed to set their own ratio. Inevitably, older Americans not yet eligible for Medicare would be at risk for more expensive premiums.

In addition to that cap, the Obamacare provided financial help with premiums and out-of-pocket expenses that keep healthcare costs down for older Americans. Americans earning less than four times the poverty level ($97,200 for a family of four in 2017) receive premium subsidies, and people with income up to 2.5 times the poverty level qualify for help with their deductibles and co-pays. Last year, premium subsidies helped reduce the average individual's premium to about $100 per month.

If the House version of the American Health Care Act passes, those cost-savings measures disappear. In addition, the 3-1 ratio increases to 5-1 in the House bill. This "age-tax," as AARP calls it, could significantly drive up the cost of premiums for seniors. A 55-year-old earning $25,000 a year could end up paying $3,600 more in premiums under the House Republican's plan, while a 64 year old earning $25,000 could pay $7,000 more.

Pre-existing Conditions

Finally, there's the pre-existing conditions issue. If pre-existing protections were to be repealed, then 52 million people under age 65 would have difficulty getting private coverage, a Kaiser Family Foundation analysis concluded. There are no good numbers on how many people over age 65 have pre-existing conditions but statistics from the Centers for Medicare and Medicaid Services show that 48 to 86 percent of those between the age of 55 and 64 have some type of pre-existing condition. The numbers inevitably must be significantly higher for those over 65.

Technically, people with pre-existing conditions may not be barred from obtaining insurance coverage under the Republican's bill. But their coverage options could be seriously affected by this bill which allows states to seek a waiver from those rules on a case-by-case basis. People with continuous coverage and pre-existing conditions will not be affected. But those in states that receive a waiver and experience a lapse in coverage for two months could face higher premiums.

The waivers could exempt insurance companies from a community rating provision which sets premiums and is designed to ensure risk is spread evenly across a larger pool of people who are charged the same rate regardless of factors like health status. Under Obamacare, insurance companies charge different rates for individual plans only on the basis of age, geographic location, the number of people covered and tobacco use. The bill’s provisions could allow much higher premium charges.

Waiver states will be required to implement high risk insurance pools to help those that need coverage. To lock in some moderate's votes that were at risk, lawmakers added a provision allocating $8 billion over five years to help underwrite those programs.

But few think that's enough money. Karen Pollitz of the Kaiser Family Foundation said that money would be enough to cover a couple hundred thousand people, nowhere near the 5-10 million people who have pre-existing conditions and currently get insurance through the individual markets. Without giving folks full coverage, Pollitz told ABC "it's like giving someone half a bulletproof vest."

[Also contributing to this column were Vox, Stat, the Washington Post, Kaiser Health News, NBC News and ABC News.]

Alan Schlein runs DeadlineOnline.com, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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