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Failure to pass Obamacare replacement gives Ducey room to breathe


Gov. Doug Ducey

Like most Republican politicians, Gov. Doug Ducey is publicly pining for the repeal of Obamacare.

In reality, the end of the Affordable Care Act would have heralded the beginning of a festering political and fiscal headache for Arizona’s governor.

And while he wouldn’t publicly admit it, the failure of U.S. House Speaker Paul Ryan’s Congress to pass the American Health Care Act has given Ducey room to breathe.

Had it been approved, the proposed Obamacare replacement would have crippled Arizona’s health care program, according to an analysis from the Arizona Health Care Cost Containment System, which runs Medicaid in the state.

Under the worst-case scenario, Arizona’s Medicaid rolls would drop by 383,000 through attrition, with state spending in the health care economy dipping by $2.5 billion by fiscal year 2023.

That’s largely because Arizona expanded its Medicaid program under Obamacare, and the American Health Care Act would have forced its contraction.

That’s also because unlike most states, Arizona voters mandated the state to provide health coverage to any resident earning up to 100 percent of the federal poverty level.

Under Obamacare, enhanced federal matching funds for the expansion population is paying for the publicly mandated health coverage of low-income Arizonans.

Regardless of Obamacare’s fate, Arizona’s government is still under the people’s dictum to insure its poorest citizens, although the courts have allowed cuts to this coverage in the past, ruling that whether funds are available to pay for the program is a question left to politicians to decide.

The American Health Care Act would have upended this intricate system, plunging the state government into a fiscal crisis and cornering its politicians in a quandary.

Indeed, had the Obamacare replacement passed, Ducey – presuming he wins re-election in 2018 – would have to make what likely would be the most difficult decision of his governorship at the start of his second term: Cut off health care for hundreds of thousands of Arizonans or put the state on the hook for nearly a half billion dollars to keep their coverage.

Leaving people without health insurance would have been politically unpalatable. But only a tax could realistically solve a half a billion dollar headache, since current state savings aren’t enough to pay for that amount beyond one year and there aren’t enough places to cut in government to sustain that much more in spending.

“Governor Ducey has long said Obamacare is a monumental failure and rolling disaster, and he would like to see it repealed,” Daniel Scarpinato, the governor’s spokesman, said in an email after Republicans pulled the American Health Care Act when it became clear it didn’t have the votes to pass.

“As efforts move forward, he will continue to advocate for Arizona having a seat at the table and for a replacement that puts patients first, increases competition and expands access to quality, affordable health care,” Scarpinato added.

In fact, many governors of expansion states urged caution as Congress forged ahead with its replace-and-repeal plan.

They sought flexibility and wanted Congress to ensure that Americans who are now getting care through the Affordable Care Act wouldn’t suddenly find themselves unable to afford it.

“I don’t want to see any Arizonans have the rug pulled out from under them,” Ducey told U.S. House Majority Leader Kevin McCarthy in January.

Ducey’s top advisers, in a letter sent to Congress, pleaded with Republican leaders to keep in place federal subsidies during the transition between Obamacare and its replacement, arguing that “failing to follow through on these federal promises would cause people to lose their plans, prices to increase, and more insurance companies leaving the fragile individual market.”

They cautioned against a block grant system, saying it would result in the “single largest transfer of risk ever from the federal government to the states.”

And yet the plan put forth by Ryan would have undercut the states’ ability to care for its most vulnerable populations.

The Congressional Budget Office had scored the American Health Care Act as amended, and concluded that it would result in savings over 10 years ($150 billion as opposed to the original version’s $337 billion), while still causing 24 million Americans to lose health care by 2026.

By that year, 52 million Americans would be uninsured, compared to 28 million under Obamacare.

“Essentially, (there’s) no real substantive change except the amendments have cut the net budget savings in half,” said Dave Wells of the Grand Canyon Institute, a centrist research group.

CBO also said the American Health Care Act will cut the Medicaid population by 17 percent. Applying that reduction number to Arizona would mean roughly 326,000 fewer uninsured Arizonans by 2026.

Given the way Arizona’s Medicaid expansion law is structured, that’s probably a conservative number.

AHCCCS’s analysis prompted Greg Vigdor, president of the Arizona Hospital and Healthcare Association, to say the congressional plan would have plunged Arizona into a crisis.

“We’re seeing nothing but bad news in how this would roll out,” he said.

One comment


        I wish to propose a set of health care reforms, which I
    believe will accomplish the following without requiring substantial government expenditure:

    1.) Substantially reduce health care costs by direct price competition between all health care providers, with immediate and easy public access to all health care prices.

    2.) Allow everyone to use any health care provider regardless of what type of insurance they have, or whether or not they’re insured, eliminating limited health care networks.

    3. ) Allows all health care providers to charge whatever price they desire.

    4.) Allows insurance companies to charge whatever premium they desire, and insure whomever and whatever they desire, without having to negotiate prices continuously with health care providers.

    The proposals are as follows:

    1. All health care providers within a given geographic region would be
    required to publicly post prices, on a central internet website, for
    any and all services and products which they wish to provide.  For
    complex services, such as surgery,  all of the providers involved
    would be required to collaborate and provide a package price.  For
    unanticipated services other than those inherently associated with an
    emergency (ambulance services. emergency room general fees, etc.)
    providers would be required to charge no more than the average
    regionally posted price for any service rendered.  The listed prices
    would be valid for anyone not covered by Medicare or Medicaid,
    regardless of age or whether or not they are insured.

    2.  All insurance companies would be required to pay out, for
    policyholders for which a specific service or product is covered, the
    average posted regional price minus a standard co-payment set
    approximately equal to half the range of prices (perhaps within a
    standard deviation of the average) posted for that specific procedure.
      The amount paid by a policyholder for any service or product would
    then be the price charged minus the average regional price plus the
    standard co-payment.  The  health care consumer could therefore
    control his bill by comparison shopping.  As an example, suppose a
    specific procedure has an average posted price of $1,000, with most
    providers posting a price between $900 and $1100.  If the standard
    co-payment is then set at $100,  the health-care consumer has the
    ability by comparison shopping to vary his or her out of pocket
    expense from nothing to $200.

    3.   Insurance companies would be required to offer the option of
    catastrophic insurance only, with an arbitrary annual deductible
    chosen by the policy holder, to anyone currently insured through their
    employer or who can pass a physical exam to the satisfaction of an
    insurance company. Anyone insured through their employer would receive
    a premium discount appropriate to the annual deductible chosen.
    Policyholders would  be credited with the average regional price for
    any service received before the annual deductible is satisfied.

    4.   Health care consumers could receive a discount from providers by
    optionally signing an agreement with the provider, before any service
    is rendered,  guaranteeing not to sue for malpractice, or possibly
    just not to sue for punitive damages, under any circumstances.
    Discounts would be regulated to be proportional to any reduction in
    malpractice premiums paid by the provider.

               The above proposals will greatly aid the uninsured in two
    ways.  First,  health care providers currently bill uninsured or
    out-of-network consumers at a rate far in excess of what is charged to
    anyone who is insured or covered by Medicare or Medicaid.  This
    practice may have resulted due to the “discounts” demanded by
    insurance companies and the government, and/or the desire of health
    care providers to sell off unpaid bills to collection agencies, but
    it  is nonetheless despicable and morally indefensible.  Second, the
    availability of catastrophic insurance, with an annual deductible
    chosen by the policyholder, will place health insurance within the
    financial reach of a large number of the uninsured.
                 Cost containment for both the insured and uninsured is
    achieved primarily by financially motivating the health care consumer
    to comparison shop. As the insurance benefit and copayment would be
    independent of which insurance or provider is used, health care consumers
    would be able to use any insurance and/or provider for any medical needs
    covered and have instant access online to what their out-of-pocket expenses would be.
                   Finally,  if Medicare was converted from  its current
    form, paying 70- 80% of all  medical costs, to one providing 100% of
    catastrophic care,  with an annual deductible determined by income,
    Medicare recipients would then also be motivated to comparison shop.
    If Medicare was completely separated from the rest of the federal
    budget.  the annual deductible could be adjusted periodically to
    guarantee long term solvency of the program.

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