HELENA – This is the first of a two-part series examining the potential effects in Montana of repealing the 2010 Affordable Care Act – “Obamacare.”
In Montana, as many as 150,000 additional people have obtained health insurance in the past six years – and a good chunk of those did so with the help of the 2010 Affordable Care Act.
Now, Republicans in Congress plan to replace the ACA with their own health-care blueprint, saying Obamacare is in a “death spiral” and can’t be sustained.
Yet health-care industry officials, analysts and others both inside Montana and out say the current GOP bill before Congress could end up diminishing coverage or making it more expensive for many who’ve gained it.
“I don’t know that I’ve seen anything in those reforms that are truly going to benefit people that need access to health are,” Bob Olsen, the vice president of the Montana Hospital Association, told MTN News this week.
Backers of the ACA repeal say the replacement bill presented by the Republican U.S. House majority is only a “first step,” and is bound to change.
Still, here’s a breakdown on health coverage in Montana, how it’s been affected by the ACA, and how those impacts could change under the current repeal proposal:
Medicare and employer health plans: Nearly 700,000 Montanans currently are covered by either by Medicare, the federal health insurance plan for the elderly, or health plans offered by their employer. This two-thirds of the state’s population has been largely unaffected by the ACA – and probably wouldn’t see many effects from a repeal.
Montanans covered by Medicaid: Medicaid, the state-federal program that pays medical bills for the poor and disabled, currently covers 238,000 people in Montana, or almost a fourth of the state’s population.
About 71,000 of those are childless adults who gained coverage in the past 15 months, under expanded Medicaid approved by the 2015 Legislature. This expansion is key element of the ACA, with the federal government covering nearly all the costs of the expansion.
Under the GOP plan, the federal share of financing for the entire Medicaid program in Montana would be given to the state in one lump sum, and the state would decide how, and on whom, to spend it (within certain federal parameters).
GOP officials say Montana would get the same amount of money it gets now, to finance the program. However, that amount is likely to change in future years – and would always be a capped amount.
They also say giving the state more flexibility would allow the state to design programs more suited to Montana’s needs.
Supporters of the expanded Medicaid plan under the ACA says it has greatly increased health coverage in Montana, including badly needed mental-health and addiction treatment for poor adults, and that changing its funding to block grants could lead to more limited coverage.
“A block grant intends to freeze funding at a certain level,” says Aaron Wernham, chief executive officer of the Montana Healthcare Foundation. “So it’s uncertain whether the (Medicaid) program would be able to respond to, for example, an economic downturn.”
Gov. Steve Bullock, a supporter of Medicaid expansion, put it this way last week: “The idea of flexibility always sounds good, on the one hand, but if flexibility doesn’t come with sufficient funding, those of us in the state are the ones that have to pick up the pieces.”
Montanans buying health insurance on the individual market: This segment of the population is fairly small — about 80,000 people in Montana – but has been a key focus of the ACA.
The GOP plan would get rid of federal subsidies that help low- and middle-income Montanans buy individual policies and replace them with federal income-tax credits, tied to one’s age.
Independent analyses have said this change would benefit higher-income households, who can’t get a subsidy now, and lead to more costs for those who are poor, older and live in rural areas.
“If you keep the premiums in the ballpark where they are now (for the policies), then a lot of people are going to find out they have a lot higher out-of-pocket costs for their premiums,” Olsen says. “We think that will discourage coverage.”
For example, someone who is older than 60 and has a low income is now getting a substantial subsidy to help them buy insurance, worth thousands of dollars a year. Under the GOP plan, they could get a tax credit of $4,000.
Someone earning $75,000 a year now gets no subsidy under the ACA – but could get a tax credit under the GOP plan, up to $4,000, depending on their age.
According to the U.S. Health and Human Services Department, about 44,000 Montanans got federal subsidies last year to help buy these policies.
Their average per-policyholder subsidy last year was about $3,700, enabling 77 percent to buy policies for less than $75 a month, HHS said.
However, for the 36,000 Montanans who bought these policies and didn’t get any subsidies – about 3.5 percent of the state’s population – prices have gone up dramatically in the past three years.
Many of these policies also have high annual deductibles, in the $6,000 to $7,000 range, meaning consumers have to pay thousands of dollars out of pocket before getting any benefits.
The GOP plan would replace the subsidies, which are available to those earning up to 400 percent of the federal poverty level, with the tax credits tied to a person’s age.
For example, if you’re under 30, your tax credit would be $2,000. If you’re 60 or older, it would be $4,000.
Tax cuts for high-income Montanans: The GOP plan cuts two taxes on wealthy households that have helped pay for the ACA’s expanded coverage: A higher Medicare tax on earned income and a 3.8 percent net investment tax, both reserved for income over $200,000 a year.
In 2014, about 8,300 Montana households paid $54.5 million in the investment tax, while 4,400 households paid $7 million in the Medicare tax. Some of those households paid both, but it’s not known how many, according to the Montana Department of Revenue.
The uninsured: Some 50,000 Montanans remain without health insurance. Under the GOP plan, they would no longer pay a penalty for not having insurance. However, if they go without coverage for several months, they could be charged an additional 30 percent premium by insurers when they do buy a policy.
Tomorrow: Supporters of the repeal say it will lead to more consumer choice, which can drive down costs.