Congressman Schrader Tells Lund Report: Democrats United Against Trumpcare

A Congressional Budget Office report released Monday shows 24 million people losing their health insurance under the healthcare plan released by House Republicans. In Oregon, disabled people and seniors could lose in-home care, cuts would limit Medicaid, and could hamstring CCO efforts.
U.S. Rep. Kurt Schrader, D-Ore.

The Congressional Budget Office estimates that 24 million people would lose their health insurance coverage under “Trumpcare” by 2026, more than half of them poor people receiving Medicaid.

The budget report estimates that 14 million people would drop coverage in the first year, while the healthcare overhaul would save about $34 billion a year.

The individual health market could also be at risk of a total collapse, as the Republican health would retain guaranteed coverage while repealing the individual mandate, which would likely create a death spiral.

Last week, House Republicans rushed through the Obamacare repeal through two committees in the wee hours of the morning, on party-line votes, without an independent analysis from the Congressional Budget Office.

U.S. Rep. Kurt Schrader, D-Ore., who serves on the House Energy & Commerce Committee, which was debating the American Health Care Act, dubbed Trumpcare, had urged a motion to wait until the budget office could provide analysis, but his motion was tabled.

Schrader told The Lund Report on Friday that he thinks the Republican healthcare repeal law has a 50-50 shot of passing the House, with a please-nobody plan that could end healthcare coverage for 24 million people while keeping in place the skeleton of Obamacare that many Republicans despise. Rep. Thomas Massie, R-Ky., attacked it from the right, calling it “a stinking pile of garbage.”

Trumpcare faces even harder odds in the Senate, where 10 Republicans and all 48 Democrats oppose the bill. “It gets destroyed in the Senate,” Schrader said

Schrader is a self-styled centrist “blue dog” Democrat representing a closely divided district from Clackamas County and Salem to the Oregon Coast. But he said no Democrats will support the Republican healthcare plan. “It’s tough to get Democratic votes unless they do the right thing,” said Schrader, who supports allowing more middle-class people to get tax subsidies and re-instituting a federal reinsurance program to offset costs for health insurers who take on the sickest patients.

As a compromise, he was also open to the idea of reducing credits for people who now receive them -- an idea that would not be popular with most of his party.

“The health industry has been the biggest job creator since the recession,” Schrader said. “I can’t support [the Republican plan], that’s clear. … It hurts my folks back home.”

The CBO report offered no information about the number of people in the healthcare sector who would lose their jobs if Obamacare is gutted, nor how much income tax revenue the federal government stands to lose from taxes on lost wages. The report said it did not have sufficient time to estimate macroeconomic impacts.

In a statement, Democratic Gov. Kate Brown promised a detailed analysis from state agencies on the impact to Oregon by Thursday.

“This bill will needlessly harm millions of Americans by increasing the prices for insurance 15-20 percent next year and eliminating important jobs in our critical health care sector,” she wrote. “It will especially harm rural Oregon, which is just starting to recover from a prolonged economic downturn.”

Oregon Republican Rep. Greg Walden has been a chief architect of the Republican health plan, but ironically, his district has benefited from Obamacare more than the state’s other Congressional districts, which are all represented by Democrats. His rural Eastern Oregon district saw 89,000 new low-income adults receive Medicaid -- more than any other district, and 32,000 people there bought plans on the federal exchange, second only to Rep. Earl Blumenauer’s Portland-based district, where 50,000 people bought plans and 87,000 were able to sign up for Medicaid.

Medicaid Decimated

The proposal would halt the Medicaid expansion in 2020, reducing the payments made to states from 90 percent to the match rate they get for traditional populations, which Schrader estimated at about 63 percent. This would more than triple the amount of the state’s share of funding coverage for low-income adults, a cost Oregon would likely be unable to afford.

“It cuts the legs out of doing real good wraparound work,” Schrader said, referring to Oregon’s unique coordinated care organizations, which are required to invest in social services that could improve the social determinants of health.

The state would keep the high match for adults enrolled by the end of 2019, but starting in 2020, new Oregon Health Plan members and people who try to re-enroll after a lapse in coverage, would get the lower match rate. Oregon is already struggling to fill a $900 million budget gap in the Medicaid program for 2017-2019, and the state would almost certainly be forced to close coverage for these new enrollees in 2020.

“That drop in match rate would be significant and hard to continue to serve those adults on Medicaid,” Oregon House Speaker Tina Kotek, D-Portland, told The Lund Report. “It’s a really bad bill.”

Receiving less attention, Trumpcare ends the K plan, which provides additional federal money to states like Oregon that choose to invest in more home- and community-based care for seniors and people with disabilities. Oregon greatly expanded these programs when it adopted the Affordable Care Act’s K Plan in 2013, and if the state were forced to revert to the old system because it couldn’t sustain programs with reduced funding, it would be particularly devastating to disabled children.

Prior to the K plan, the state capped these services at 800 kids, but now 3,300 children are receiving help.

The loss of the K plan would mean more seniors and disabled people ending up in more expensive institutional settings, undermining the savings from the cuts.

But Schrader was hopeful, that even if the Republicans do make drastic changes to Obamacare, they will be forced to retreat on the Medicaid cuts because of the expansion into Republican-led states like Arizona, Arkansas and Ohio. “Medicaid expansion, I think makes it because it works for so many states,” he said.

The Medicaid cuts also go against a campaign promise that President Trump made to protect Social Security, Medicare and Medicaid from Republicans who oppose these programs. The Republican healthcare plan would cause the Medicare trust fund to run out of money four years early by cutting payroll taxes for the wealthy.

Death Spiral for Individual Market

For the individual market, income-based subsidies and assistance with out-of-pocket costs would be traded for age-based tax credits. This would help many younger people as well as upper-middle class adults who currently cannot qualify for tax subsidies, while hurting most other people. Working-class people in their 50s and 60s would be hurt the most and be forced to pay thousands more for healthcare premiums.

One estimate showed healthcare premiums for a 64-year-old adult with an income of $26,500 rising from $1,700 to $14,600 -- leaving less than $10,000 to live on.

Those tax credits also would not be indexed to inflation like the current subsidies, so they would lose value over time as insurance premiums increase each year. Because Obamacare subsidies increase as premiums increase, most consumers on the exchange have not felt the impact of double-digit premium increases in the individual health insurance market.

The Republican health plan would eliminate the bronze-, silver-, and gold-tiering of plans according to actuarial value, encouraging health insurers to offer more high-deductible plans.

The CBO report stated that premiums would increase 15 to 20 percent the first two years as healthy people, faced with neither a tax penalty nor affordable plans, abandon the market. An estimated 14 million people would lose insurance in the first year -- 6 million from the individual health insurance market and 2 million from the employer market, as large employers would also no longer have to offer coverage.

A $100 billion stability fund would kick in to help mitigate premium spikes, but Schrader doubted it would work as intended.

Trumpcare ends the individual mandate and replaces it with a 30 percent surcharge for people who had been skipping out on coverage. This attempt to penalize people would likely backfire, according to health policy expert Jesse O’Brien of the Oregon State Public Interest Research Group.

“If people lose coverage or if they never had coverage, it’s a big disincentive to joining the risk pool,” O’Brien said. “It will have the impact of destabilizing and degrading the health insurance risk pool. It could lead to a death spiral.”

The people most likely to be willing to pay the 30 percent penalty would be those who are most likely to need care, creating adverse selection, driving up premiums and encouraging even more people to leave the market. The CBO report said that the stabilization fund would be enough to offset losses to health insurers and shore up the market by 2020, but that may be an overly optimistic assessment given the experience of similar insurance law changes in Washington state in the 1990s.

In the early '90s, Washington state enacted a health insurance law similar to Obamacare, which required health insurers to cover everyone, but the law came undone because of a death spiral similar to what could happen if Trumpcare became law.

In 1995, Republican legislators repealed the state law’s individual mandate. Prices skyrocketed, healthy people fled the market, and by 1998, the state no longer had any health insurance companies willing to offer policies on the individual market until the rest of the law, including guaranteed coverage, was repealed.

Reach Chris Gray at chris@thelundreport.org.