Florida PIRG Education Fund
On March 23, 2010, after a long congressional debate, President Barack Obama signed into law comprehensive federal health care reform legislation, known as the Affordable Care Act, or ACA. But the enactment of the law did not end the debate. Even the law’s strongest proponents acknowledge the need for improvements. And across the country, state legislators and Governors have been urged to slow or stop work on implementation of key provisions. The courts are considering legal challenges to the law. Members of Congress will consider attempts to repeal both the law as a whole and its key provisions. This year, Florida’s elected officials will face their own choices regarding proposals to repeal or roll back existing law. This report examines the costs and benefits of repeal for the taxpayers, consumers, and businesses of our state.
The Consequences of Repeal
Coverage Denials and Discriminatory Pricing on the Individual Insurance Market: Repeal of the law would allow insurers to deny coverage to the 3,240,000 residents of Florida who have pre-existing health conditions, if they seek individual coverage. Florida women in the individual market would continue to pay higher rates than men for their health insurance coverage.
Health Insurance Options for Young Adults: 86,300 uninsured young adults in Florida will lose the opportunity to purchase affordable coverage through their parents’ plans if the Affordable Care Act is repealed. For many of these young adults, there will be no source of coverage or the only offer of coverage they will be able to find will be expensive and exclude many important covered services that they need.
Cost and Quality of Coverage on the Individual Market: Repeal of the reformed state health insurance marketplaces, known as “exchanges,” would lead to premiums that are 14-20% higher for the same coverage than they would be under current law. Repeal would also increase the tax burden for the 28.6 million Americans and 1,962,600 residents of Florida who would otherwise benefit from new health insurance affordability tax credits.
Costs of Employer-Sponsored Coverage: A report commissioned by the Business Roundtable estimates that cost-saving reforms in the Affordable Care Act could reduce the rate of growth in health care costs, generating more than $3,000 in savings per employee with health insurance per year by 2019. Repeal of these provisions would force Florida workers and businesses to pay more than $3,000 more per employee.
Cost Burdens Facing Small Business: If the new law is fully repealed, small businesses could not pool their buying power in the exchanges. And more immediately, roughly 246,000 Florida small businesses will lose tax credits that can cover as much as 35% of the average small business’ health care costs.
Impact on Job Creation: By reversing provisions like the exchanges, which are designed to provide options to those without job-based insurance and to hold down costs, repeal would impair workers’ ability to change jobs or open small businesses. This could help slow the rate of job creation in Florida by 17,417 jobs a year in 2019.
Funding for Community Health Centers: Repeal would eliminate new funding for 372 new or expanded health centers in California.
Examining the Arguments in Favor of Repeal
Reform opponents contend that certain provisions in the law will harm Florida, but Florida policy makers should not accept these claims without careful scrutiny.
The Minimum Coverage Requirement: Opponents have suggested that the law’s requirement that all residents purchase qualifying insurance plans or pay a fine will burden consumers with costly insurance. But a similar coverage requirement, implemented by the state of Massachusetts, actually resulted in a 20% reduction in premiums, by ensuring that people did not wait till they got sick or injured to start paying into an insurance plan.
Expansion of Medicaid: The Affordable Care Act requires every state Medicaid program to cover all eligible people with incomes up to 133% of the Federal Poverty Level, as of 2014. Opponents of the law have claimed this will result in an increased burden to the states. But 100% of the cost of the Medicaid changes in the first five years and 90% of the cost over the long term will be borne by the federal government. This increase in federal Medicaid dollars will bring $20.1 billion to Florida by the year 2019, providing a critical boost to the state’s economy.
Medicare Advantage: The new health care law requires privately-run insurance options within Medicare (called “Medicare Advantage” plans) to compete for beneficiaries with lower levels of government subsidies than they have enjoyed in recent years. Proponents of repeal contend that this new system will hurt Medicare Advantage beneficiaries. But in fact, these changes have already led to the announcement of a decrease in Medicare Advantage premiums for the calendar year 2011.
Recommendations and Conclusion
The evidence suggests that the costs of repeal are substantial and many of the asserted benefits of repeal do not stand up under scrutiny. But Florida’s policy makers have additional options. Florida instead should adapt the law’s implementation to its needs and take the steps to lower health care costs which the federal law fails to take. Paths open to Florida include:
• Shaping our own state health insurance exchange can ensure that this new health insurance market is adapted to the needs of Florida’s consumers and businesses.
• Accelerating administrative streamlining and reducing health care paperwork can lower costs for consumers, providers, and insurers.
• Limiting the worst marketing practices of the drug and medical device industries can deliver more affordable medical treatments.
• Encouraging state-level support for research into the best treatments, and integrating this new knowledge into health IT systems, can reduce medical errors and help doctors.
• Ending the practice of billing consumers directly when hospitals are dissatisfied with the out-of-network reimbursements paid by insurers will protect patients.
Outright repeal of the federal health care law simply is not a prudent choice for Florida, but if Florida’s elected officials decide to work together for constructive policy changes like these, opportunities exist to make real progress.