PBPC Analysis of Effects of House GOP Health Care Plan on Pennsylvania

HARRISBURG – Marc Stier, Director of the Pennsylvania Budget and Policy Center, released the following analysis of how recently-released House GOP proposal, the “American Health Care Act,” would affect Pennsylvanians:

The health care legislation introduced by the House Republicans late yesterday is a devastating and dishonest attack on not only the Affordable Care Act, but on the Medicaid program. When fully implemented, it will have horrible consequences not only for the health of low- and moderate- income Pennsylvanians, but on long-term care for all but our wealthiest senior citizens.

We will be providing a thorough analysis of the legislation soon. But our preliminary analysis suggests that when the program is fully implemented, around 1 million low- and moderate- income Pennsylvanians will lose health insurance; the state budget will lose at least $2.5 to $3 billion in funding; at least 60,000 Pennsylvanians will lose their jobs, and over 4,000 Pennsylvanians per year will die prematurely.

Some key points:

• The bill would end new enrollments in the Medicaid Expansion program in 2020. Because incomes rise and fall, by the end of five years, most of the almost 700,000 Pennsylvanians who received health insurance through the Medicaid expansion will lose it. Our preliminary estimate is that the reduction in federal spending in Pennsylvania on the Medicaid expansion will be roughly $4 billion per year.
• The bill would create per-capita caps on traditional Medicaid spending. Because those caps do not take into account changes in the age and health status of Medicaid beneficiaries or above average increases in health care costs due in part to the development of new and costly procedures and pharmaceuticals, federal support for Medicaid will decline by a huge amount. That will cost Pennsylvania another $10 billion to $15 billion over ten years or $1.1 billion to $1.5 billion per year.
• The bill would have a devastating impact on Pennsylvania’s state budget. To maintain traditional and expanded Medicaid would cost the state roughly $5 billion per year. Even if the state declines to support expanded Medicaid, Pennsylvania-specific health care programs already on the books are required to pick up some of the those who lose insurance. That cost to Pennsylvania will be $1.1 billion a year. Thus, even without continuing to pay for expanded Medicaid, the state will need $2.6 billion to $3.0 billion a year to maintain traditional Medicaid.
• The bill would force states, most likely including Pennsylvania, that are unable or unwilling to make up the difference in federal support for traditional Medicaid to reduce Medicaid benefits. Eligibility for the program will be restricted, and coverage of medical procedures will be limited. Waiting lists will be created. Work requirements, that have little or no impact on work effort, but create additional paperwork that make it hard for people to secure benefits, will be created.
• The bill would force states to reduce Medicaid support for long-term care, which benefits middle-income as well as low-income seniors.
• The bill would replace the tax credits in the Affordable Care Act—which are adjusted for income and for the cost of health insurance—with new fixed tax credits that vary only with age. This shift benefits those who are younger and have higher incomes while hurting those who are older or have lower-incomes. Very few of the 321,000 Pennsylvanians who use tax credits to purchase health insurance on the health care exchange marketplace will be able to afford insurance under the Republican proposal.
  • We estimate that in Philadelphia, for example, a 40 year-old who has an income of $20,000 will see their health insurance tax credit decline from $4,950 to $3,000. The tax credit for a 60 year-old at the same income level would drop from $11,600 to $4,000. But a 40 year-old with an income of $40,000 will see a tax-credit increase from $1,830 to $3,000 and a 40-year old with an income of $75,000 who does not receive a tax-credit now will get one of $3,000.
  • Similar results will be found in other parts of the state.
• Even if health insurance is cheaper, that insurance will have higher deductibles and more co-pays as ACA rules for health insurance are abandoned.
• The loss in federal funding in the bill would cost Pennsylvania at least 60,000 jobs, not only in the health care field but in other areas as well.
• We estimate that there will be at least 4,000 pre-mature deaths per year in Pennsylvania when the program is fully implemented in 2025.

The bill would lead to an increase in health insurance costs in the individual market as younger and healthier people delay getting health insurance until they become sick. The new tax credits for those with moderate incomes may not even offset the increase in health insurance costs.

Enactment of this proposed legislation would be a shameful episode in our history, as we turn our backs on providing health care and long-term care for millions of Americans and Pennsylvanians.