Pence Pitches GOP Repeal Plan

Pence Pitches GOP Repeal Plan

by Deborah Yetter

CBO Report: KY Pays Price Under Congress’ Health Plan

Congressional Budget Office Estimates Show Health Repeal Would Cause Deep Harm

Despite many Americans gaining health coverage and vital patient protections, Congress is considering repealing the Affordable Care Act (ACA) and replacing it with the American Health Care Act (AHCA). According to an official estimate released today by the non-partisan Congressional Budget Office (CBO), passing the AHCA will result in 24 million Americans losing coverage.

“Reversing our gains in healthcare would be devastating for Kentucky,” said Dustin Pugel of the Kentucky Center for Economic Policy. “The CBO estimate confirms that restructuring Medicaid, eliminating expanded Medicaid and tearing up vital healthcare protections will hurt the health of Kentuckians, our budget and our economy as a whole.”

The legislation that the CBO provided estimates for, or “scored,” makes sweeping changes to the 2010 healthcare reform law by restructuring subsidies for people purchasing insurance through the marketplace, effectively eliminating expanded eligibility for Medicaid and making cuts to Medicaid through capping how much the federal government will contribute for the program. These changes will cut off healthcare for millions of Americans, shift billions of dollars of costs to the states and lower payments to healthcare providers, ultimately costing Kentucky jobs.

Since the ACA was passed and Kentucky decided to expand Medicaid, Kentucky’s healthcare landscape has been transformed. The rate of uninsured has been cut by more than half, uncompensated care has plummeted nearly 80 percent and a Harvard study showed low-income Kentuckians are already reporting better health. With the results of today’s CBO score, it is more evident now than ever that the proposed changes would roll back this historic progress.

More Federal Budget Cuts Would Especially Harm Kentucky

More than one out of every three dollars Kentucky spends each year on health care, education, job training, child care, transportation and other critical programs comes from the federal government. These resources are now at risk of being cut deeply in President Trump’s forthcoming budget proposal this week, the ACA repeal and other looming Congressional attempts to slash programs Americans rely on.

A new report from the Center on Budget and Policy Priorities shows that 37 percent of total spending by the Commonwealth comes from the federal government, compared to 31 percent nationally, meaning Kentuckians will be especially hard hit by anticipated cuts.

Source: Center on Budget and Policy Priorities.

Federal dollars flow through a variety of programs that benefit Kentucky, some that change as needs change and others that are fixed amounts determined by Congress. Spending on mandatory or “ongoing” programs like school lunch and breakfast, Medicaid and the Children’s Health Insurance Program (CHIP) is based on the number of eligible residents in a state, and eligibility is determined by law. Discretionary programs such as Title 1 grants for high-poverty schools, IDEA funds for special education, highway planning and construction grants and supplemental nutrition for women, infants and children (WIC) are funded through annual appropriations processes.

Both mandatory and discretionary grants face threats:

  • The plan from House Republicans to repeal and replace the Affordable Care Act would cut taxes for the wealthy and shift a large portion of Medicaid costs to states, including by capping payments to a certain per-person amount and freezing expansion enrollment in 2020. Kentucky’s General Assembly is unlikely to cover the resulting gap with state dollars, meaning cuts in enrollment, benefits and/or access to care for the kids, seniors, low-income people and Kentuckians with disabilities that receive Medicaid.
  • Congress may try to use the budget reconciliation process to cut taxes and pay for them by turning other mandatory entitlement programs such as SNAP (food stamps) into block grants. Turning our most successful anti-poverty programs into limited block grants will increase poverty in America, just like block-granting TANF has weakened our safety net.
  • President Trump’s forthcoming budget is expected to include a $54 billion cut to non-defense discretionary spending (and an increase in defense spending by the same amount). These cuts would reduce what Kentucky spends on education, infrastructure, community development and many other core public programs and services.

More cuts will lead to a reduction in services that are already funded at historical lows. Previous cuts under the 2011 Budget Control Act and additional cuts known as sequestration will likely remain in place.

  • In 2016, despite the influx of federal funds from the Medicaid expansion, total federal funding in Kentucky was still 4.8 percent lower, once inflation is taken into account, than in 2010.
  • Excluding Medicaid and CHIP, mandatory grants comprised a smaller share of the national economy in 2015 than any year since 1980 – just 0.42 percent of GDP.
  • At 1.05 percent of GDP, discretionary grants were a smaller share of the national economy in 2015 than in all but one year since 1980.

With more than a third of state spending in Kentucky coming from the federal government, Kentuckians have a lot to lose under even deeper reductions in funding. To find out more about the mandatory and discretionary grants that make up 37 percent of Kentucky’s budget, go here.

What’s at Stake in ACA Repeal by Kentucky Congressional District

Kentucky is among the states that gained the most from the Affordable Care Act (ACA). Our rate of uninsured dropped dramatically, more people are getting needed preventive care, and already, Kentuckians are reporting having better health. Kentucky’s 5th congressional district has the 3rd largest decrease in the percent of people uninsured of all 435 districts, and has the 3rd largest number of people enrolled in the Medicaid expansion.

All of these historic gains are at stake now with the American Health Care Act (AHCA), designed to repeal and replace the ACA. Many people purchasing insurance on the marketplace will see financial assistance cut; Medicaid expansion enrollment will be frozen and its funding drastically reduced, effectively ending that vital program; and for those who don’t lose Medicaid coverage, benefits like maternity care, preventive services and mental health could be revoked.

Beyond rolling back the ACA, the AHCA fundamentally restructures Medicaid by capping what the federal government will pay per enrollee. This radical policy effectively shifts billions of dollars in cost to the states, and will force Kentucky lawmakers to ration care or drop people from coverage altogether.

According to an estimate by the Congressional Budget Office, 24 million Americans will lose coverage by 2026, most of which will come from rolling back Medicaid. Working families, seniors, children, healthcare providers and our economy are all at great risk of harm if this legislation becomes law. These major changes will take us backward as a country and a commonwealth. Kentucky has six congressional districts with lawmakers in Washington who represent them. This is what’s at stake in each one:

Fact Sheets on the House ACA Repeal Plan by Kentucky Congressional District

James Comer: AHCA – KY 1st Congressional District

Brett Guthrie: AHCA – KY 2nd Congressional District

John Yarmuth: AHCA – KY 3rd Congressional District

Thomas Massie: AHCA – KY 4th Congressional District

Hal Rogers: AHCA – KY 5th Congressional District

Andy Barr: AHCA – KY 6th Congressional District






Updated April 27, 2017.

House Health Repeal Plan Would Worsen Kentucky’s Drug Problems

The devastating impacts of Kentucky’s opioid epidemic are well known and far-reaching. As a result of the Affordable Care Act (ACA), more Kentuckians struggling with addiction problems have been able to access much-needed treatment. However, the House GOP plan to repeal the ACA, the American Health Care Act (AHCA), would roll back opportunities for treatment — inevitably worsening the drug and overdose crisis in our state.

While the opioid addiction epidemic is a national problem, Kentucky has been one of the hardest hit states. In 2000, nine counties in the U.S. had drug overdose death rates of more than 20 per 100,000 people, and four were located in Kentucky. By 2014, 64 of Kentucky’s 120 counties had overdose death rates that high. And these rates have continued to rise. Kentucky has the third highest rate of death due to drug overdose, alongside Ohio.

Here’s what the ACA did to help our state’s drug problems:

  • The number of Kentuckians with health insurance increased thanks to the ACA, with 440,000 Kentuckians gaining coverage through the state’s expansion of Medicaid alone. Consequently, the rate of uninsured in our state dropped dramatically.
  • Addiction treatment was included as an essential health benefit. This means that expanded Medicaid and all individual and small group health insurance plans were required to cover treatment for opioid use disorders. Prior to the ACA many insurance plans did not cover substance use treatment. For instance, in 2012 326,000 Kentuckians were enrolled in individual-market or small-employer health insurance plans that were not required to cover these services and when they did cover treatment often included stricter limitations. Between 2014 and 2016, alcohol and drug use treatment utilization in Kentucky grew by more than 700 percent for those receiving insurance through the Medicaid expansion. In addition, more than 44 percent of prescriptions for the addiction treatment medication buprenorphine in Kentucky are currently paid for by Medicaid.
  • Under the ACA, insurers have to cover behavioral health care, including drug treatment, to the same degree they cover other kinds of health care, which is called “parity.” As a result, the benefits for treating an opioid use disorder in particular have to be comparable to the coverage of other medical procedures. These services can’t have higher cost-sharing, more restrictive limitations or more limits on the number of services than similar coverage for physical health conditions.

Here’s how the AHCA would roll back access to drug treatment:

  • Fewer Kentuckians would have health insurance. A big part of this is the effective end of the Medicaid expansion through the AHCA, but also due to the reduction in affordability in the private market that would occur due to lower subsidies for low-income people and insurance pools made up of sicker people, which will raise insurance costs. Nationally, the Congressional Budget Office expects 24 million people to lose coverage who would otherwise be covered by Medicaid, through work, or by purchasing insurance directly from an insurance company.
  • The AHCA would remove substance abuse treatment as an essential benefit for Medicaid, making it optional for states as to whether Medicaid covers such services.
  • The proposed per capita cap for Medicaid would gradually squeeze federal funding for the program overall, forcing the state to ration care among people and benefits and/or reduce payments to providers, all of which could reduce access to treatment. In addition, the formula won’t be responsive to spikes in costs — like we experienced with the opioid crisis — in the future.

The AHCA would inevitably worsen the severe addiction problems our state is already grappling with. Given that Kentucky’s drug problems are becoming even more challenging as overdose deaths related to the powerful opiates fentanyl and carfentanil are on the rise, we’d be likely left even worse off than before the ACA.

Updated March 15, 2017

Coverage for Kentucky Seniors Threatened by House Plan

The House GOP plan repealing the Affordable Care Act (ACA) includes a number of measures that would reduce coverage and affordability for Kentucky’s older adults. If the proposal becomes law, more seniors will fall into poverty or lose access to care.

One element of the plan involves a change in tax credits. The ACA provides credits to help people buy coverage in the insurance marketplaces. These credits are bigger for low-income people and phase out as incomes increase. The House plan changes those credits so they are no longer based on income and makes them a flat tax credit that increases with age but ignores the cost of premiums (and premiums are higher for older people).

The result is cuts to credits for low-income older Kentuckians that greatly reduces their ability to afford insurance. Credits are 30 percent to 70 percent lower across Kentucky counties than the ACA credits, according to an analysis by the Kaiser Family Foundation. Here’s how much annual assistance is reduced for a 60 year old Kentuckian making $20,000 a year in a handful of counties:

  • Pike: -$6,140
  • Pulaski: -$3,220
  • Fayette: -$2,550
  • Logan -$5,800
  • Campbell -$3,390

And a county-by-county breakdown is available here (larger version):

Along with much smaller credits, other aspects of the law will make premiums higher for older adults while increasing their out-of-pocket expenses:

  • The amount insurance companies can charge older people is increased — whereas companies could charge only three times more than younger adults under the Affordable Care Act, they could charge five times more under the new plan.
  • Premiums are also likely to be more expensive for older people because aspects of the plan will lead some healthy people (who tend to be younger) to skip getting covered.
  • Plans will get weaker: the Congressional Budget Office (CBO) estimates the share of medical costs insurers will cover will drop from 87 percent to 65 percent for low-income Americans. This means that people will likely have to pay more in deductibles, co-insurance, co-pays, and other out-of-pocket expenses, ultimately hitting older people harder as they typically need more medical care. And the plan eliminates cost sharing subsidies in the Affordable Care Act that pay for those out of pocket costs for people with incomes between 100 percent and 250 percent of poverty.
  • Adjusting the new tax credits only to the cost of inflation plus 1 percentage point means they will become even less valuable than the ACA credits (which grow as premiums increase) over time.

These changes add up: CBO estimates that a low-income 64 year old would see her net premium increase by $12,900, as premiums rise and subsidies drop.

As if that wasn’t enough, the bill makes other changes that hurt older adults:

  • The plan effectively ends the Medicaid expansion in 2020, denying Medicaid coverage to older Kentuckians who would otherwise qualify.
  • By capping federal Medicaid funding in the future, as the plan does, coverage for seniors is further threatened as dollars are squeezed over time. Medicaid pays for long-term care for low-income seniors, along with coverage for kids, people with disabilities and low-income people.
  • By providing tax cuts for wealthy individuals, the plan takes money from Medicare — speeding up the date when the Medicare trust fund becomes insolvent and likely leading to more cuts to Medicare benefits in the future.

These reasons and more are why AARP opposes the bill.

The impact on seniors is just one of the reasons Congress must reject the House plan, which will dramatically reduce the number of Kentuckians covered, squeeze the state’s budget and economy and set back Kentuckians’ health.

Updated March 15, 2017

House Plan Unwinds Coverage Gains and Makes Harmful Changes to Medicaid Program

By several measures, Kentucky has been the nation’s biggest winner from the Affordable Care Act (ACA). Nearly seven years later, those gains and more are at risk in the recently released American Health Care Act (AHCA) – which not only fails to replace the ACA, but goes beyond it to restructure the Medicaid program in a way that will further reduce access to coverage and benefits. Together, these changes will rip health insurance away from 24 million Americans according to the Congressional Budget Office.

Proposal Unravels Medicaid Expansion and Restructures Medicaid to Shift Costs to States

Per-capita-caps = an end to Medicaid as we know it

The AHCA proposes a highly consequential change to Medicaid in the form of capping payments to a certain dollar amount per enrollee starting in 2019, and then adjusting for inflation (medical-related inflation to begin with, though that formula is vulnerable to cuts in future). Because Kentucky would be on the hook for all the costs above and beyond what the federal government provides, the state would have to choose between increasing its share of payments, cutting benefits, scaling back the number of people enrolled or cutting already too-low payments to hospitals, clinics and other kinds of providers. This funding method also doesn’t take into account spikes in costs due to things like new, expensive medications, outbreaks that are more expensive to treat like the opioid addiction crisis or the larger share of older patients as baby boomers begin requiring more costly care.

This squeezing of federal funding for Medicaid could restrict coverage for all Medicaid recipients — including kids, seniors and people with disabilities.

Unwinds Medicaid expansion by freezing enrollment and ending the enhanced federal match

The plan would freeze enrollment for the Medicaid expansion in 2020, which means no new people would be able to join the program after that point in time and be subsidized with the so-called enhanced “Federal Medical Assistance Percentage” (FMAP). The FMAP is the percent of Medicaid costs that the federal government pays. For Kentucky, traditional Medicaid is 70 percent paid for by the federal government and 30 percent paid for by the state. In contrast, for Medicaid expansion, the federal government pays an enhanced FMAP of 90 percent.

The federal government would still pay 90 percent of the cost for existing Medicaid enrollees, but that group would disappear as they cycle out of the program because of income or other eligibility changes. According to a report from the National Academy for State Health Policy, Kentucky saw 13,000 people cycle between Medicaid and marketplace coverage in 2014 because changes in their incomes made them eligible or ineligible for Medicaid. In the Medicaid program as a whole, 19 percent of Kentucky recipients covered in 2012 were no longer covered in 2013. The result is a death by attrition for expanded Medicaid in Kentucky.

The cost of paying for expanded Medicaid with the lower state matching rate is hefty — an earlier estimate put it at $712.7 million in 2019 for Kentucky above what we would otherwise pay with the enhanced match. It is extremely unlikely that our legislature would be willing to pick up that tab in future years.

Between reducing the enhanced federal match and freezing enrollment for the expansion as well as instituting a per-capita-cap across the board, the Congressional Budget Office estimates that 14 of the 24 million fewer people with coverage would come from reduced Medicaid enrollment. By comparison, a little over 11 million people gained coverage from expanded Medicaid since 2014.

Plan Threatens Private Insurance Market and Reduces Premium Assistance for Low-income and Older Kentuckians

Help for buying insurance based on age, not income

The new plan would still offer tax credits for helping people purchase insurance plans, but not based on income. Rather people would receive a tax credit between $2,000 and $4,000 based on age, ranging from 30-60 years old. This puts older, low-income Kentuckians at a significant disadvantage. As an example, a 60 year old earning $20,000 per year in Pike County would see a $6,410 decrease in her tax credit and a $6,000 decrease in Muhlenberg County under the AHCA compared to the ACA. The plan cuts credits for some low-income people even while people with incomes higher than what is eligible for subsidies under the ACA (up to $115,000) could get tax credits for purchasing insurance. And the credits don’t come close to covering the cost of insurance, particularly for older Kentuckians, who under this law could be charged up to five times as much as a young adult (compared to only three times more now).

The “continuous coverage” requirement would likely damage private insurance market

Under the AHCA plan, there is still a requirement for insurance companies that they cannot turn people away or charge exorbitant premiums for those with preexisting conditions; this is called “guaranteed issue.” At the same time, the plan removes the individual mandate that requires everyone have insurance – but the mandate is necessary to make guaranteed issue work without destabilizing insurance markets. The way the plan proposes to fix this problem is by introducing a “continuous coverage” requirement. This provision says that once enrolled you have to stay enrolled without a lapse of more than 63 days. If you do experience a gap in coverage for longer than 63 days, insurance companies would be able to increase premiums by 30 percent.

In practice, this creates incentives for healthy people to avoid the 30 percent penalty by not enrolling in coverage until they are ill, leaving sick people in the insurance pool and making insurance more expensive, which we’ve written about here. Ultimately, that can mean skyrocketing premiums, large drops in coverage and weaker coverage for insurance markets. The Congressional Budget Office estimates that there would be a decline of nine million people by 2026 between the employer-based and individually purchased insurance markets based on changes in the AHCA.

The AHCA Would Set Back Our Health and Economy

Fundamentally restructuring Medicaid, unwinding the Medicaid expansion that has provided coverage for 440,000 Kentuckians, reducing help for low-income and older Kentuckians to purchase insurance, and destabilizing private insurance markets are all reversals of the healthcare successes we’ve experienced as a Commonwealth. These damaging policy changes are being made in the AHCA to pay for large tax cuts for the wealthy and corporations in the bill. Another concerning consequence is that it scales back the lifespan of the Medicare Trust Fund, putting pressure on future lawmakers to further cut healthcare for seniors.

Kentucky has seen enormous gains because of the ACA. Our rate of uninsured has been cut dramatically, our providers have seen an 80 percent decrease in uncompensated care and low-income Kentuckians are already reporting better health. There are 1.3 million Kentuckians covered by Medicaid, and 130,000 who get insurance through the individual insurance market, all of whom are put at risk in some way by this plan. Lawmakers in Washington should reject this plan, and any other healthcare proposal that jeopardizes our health and our economy.

Updated March 14, 2017

Statement on House Health Law Repeal

Statement on the House plan for the ACA by Jason Bailey, Executive Director:

“Kentucky has gained more from the Affordable Care Act (ACA) than any other state, and we have more to lose from its repeal. The new House proposal is a plan to give tax breaks to the wealthy paid for by dramatically reducing the number of people with health coverage. It would unwind the nation-leading coverage increases Kentucky has made, reducing Kentuckians’ health and taking dollars out of our local economies. And it would go further, undermining the traditional Medicaid program for kids, seniors, people with disabilities and more by squeezing its federal funding over time.

Better health is a key foundation of a stronger Kentucky, and this plan would severely weaken it. Instead of moving backwards, Congress should be building on the advances made by the ACA to further increase the affordability and quality of care and control costs.”

Testimony on Call for Constitutional Convention

HJR 54 and HCR13

House Elections, Constitutional Amendments and Intergovernmental Affairs Committee

Click to view this testimony as a PDF.

Thank you Mr. Chairman and members of the committee, my name is Jason Bailey and I am executive director of the Kentucky Center for Economic Policy.

The resolutions calling for a new constitutional convention, HJR 54 and HCR 13, would create a very risky and dangerous situation that would open the United States Constitution to potentially wide-ranging revisions of the freedoms and protections we all hold dear as a nation.

Experts say that a convention called under Article V cannot be controlled, and conventioneers would have the power to alter anything and everything about the United States government.

There is precedent for that in the only constitutional convention that was ever called, in 1787. That original convention had a single mandate—to amend the Articles of Confederation to promote trade among the states. Instead, the convention ignored their state legislatures’ instructions and wrote an entirely new governing document.

Not only did they go beyond the specific call, they rewrote the rules for ratifying their changes to make them easier to go into effect. Rhode Island opposed the kinds of changes being proposed to the Articles of Confederation and so boycotted the original constitutional convention, apparently confident that the requirement for unanimous state approval in the Articles meant it could block any resulting proposals that harmed its interest. Instead, the other states’ delegates bypassed Rhode Island and created a new ratification process that made the new Constitution effective with the consent of only 9 states and cut Congress out of the amendment process entirely.

Similarly, there are no safeguards for a runaway convention today. Article V is dangerously vague, providing no guidance for the rules under which a convention is called by Congress, raising huge questions—how will states’ votes be weighed? One person, one vote? One state one vote? Who are the delegates and how are they chosen? Under what rules will amendments be recommended by the conventioneers—majority vote? Two-thirds? Three-Quarters?

And even if Article V was clear on what rules a convention must follow, or if Congress did give specific instructions? Once called, a convention can could disregard those instructions and there is no enforcement mechanism. The constitution provides for no authority above that of a constitutional convention, as the courts themselves are a creature of the constitution. Even if the courts said they did have the authority to rule, they are unlikely to intervene because according to experts the Supreme Court would likely regard this as a political question inappropriate for judicial resolution. This also means that states cannot count on specific instructions or rules for their delegates—the courts would not step in to enforce any state disputes with their delegations.

And as mentioned, the conventioneers’ power extends not only to the rules they operate under but to the ratification process for any amendments that come out of it—they could put the amendments to a national vote, reduce the number of states required for ratification, or anything else they choose. They could also combine popular amendments with unpopular harmful ones to make them easier to pass.

The risk of a runaway convention is real. Former Chief Justice Warren Burger said:

“[T]here is no way to effectively limit or muzzle the actions of a Constitutional Convention. The Convention could make its own rules and set its own agenda.  Congress might try to limit the convention to one amendment or one issue, but there is no way to assure that the Convention would obey.”

This sentiment was agreed to by late Supreme Court Justice Antonin Scalia, who stated  “I certainly would not want a constitutional convention. Whoa! Who knows what would come of it?”

These risks must be taken very seriously because the convention is dangerously close to happening. 29 of the necessary 34 states have passed resolutions, and a number of states are debating the issue this year.

As you all know, the country is very divided right now and Americans’ faith in government and in institutions is at an all-time low. Now is not the time to throw open our founding document to a small group of people to make unforeseeable and potentially far-reaching changes to the constitution with huge unanswerable questions about how such a process would even go. For the sake of the Bill of Rights and other fundamental protections in our Constitution—as well as the societal stability we need at this time—I urge you to reject this call.

Thank you for your consideration.