What Republican Plans for Repealing and Replacing the ACA Could Mean in Colorado
By Chris Stiffler
CFI Economist
Republicans in Congress have vowed to make a repeal of the Affordable Care Act a top priority in 2017. To better understand the health care debate coming in 2017, we need to understand how Obamacare changed health care policy in Colorado and just what is at risk if the ACA is repealed.
What did Obamacare do in Colorado?
As a result of the major changes from the Affordable Care Act (often referred to as Obamacare) Colorado expanded Medicaid and created a health insurance marketplace. Medicaid, which is jointly funded by state and federal dollars, provides health care to low-income individuals and children, elderly individuals and Coloradans with disabilities. Traditional Medicaid does not cover low-income adults without children. Colorado’s legislature voted to expand Medicaid in 2013 which expanded coverage to low-income adults. The ACA also created a health insurance marketplace for individuals who don’t get insurance through an employer or other means. Many Coloradans buying private insurance through the marketplace get assistance from the federal government in paying monthly premiums.
Most of the Medicaid expansion and much of marketplace is supported by federal dollars
The Medicaid expansion population is mostly funded by federal dollars. In 2017, federal dollars will pick up 95 percent of the expansion costs and the other 5 percent will be funded through a mechanism called the Hospital Provider Fee (a fee paid by Colorado hospitals to the state which then generates federal matching funds). No dollars from Colorado’s General Fund are used to pay for the Medicaid expansion. This means that rolling back the Medicaid expansion would not free up additional state dollars to pay for other important priorities like schools, roads or colleges.
The federal match ratio steps down until the federal government pays for 90 percent of the cost in 2020.[1] This is a significant amount of funding that flows through Colorado health care facilities and local economies.[2] All those federal dollars represent a huge injection of economic activity into Colorado. It is estimated that more than 31,000 jobs in Colorado were created because of the expansion of Medicaid and the large injection of federal dollars into Colorado.
Coloradans buying private health insurance through the marketplace also get a chunk of change from the federal government via the individual subsidies. Currently, the federal government provides subsidies to individuals below 400 percent of the federal poverty line to help offset the cost of their monthly premiums. In 2016, Coloradans who enrolled in the marketplace received an average premium tax credit of $318.[3] Nationwide, statistics show that the federal credit covers 73 percent of the total monthly premiums for comprehensive coverage.
What does this mean for health equity in Colorado?
The marketplace and the Medicaid Expansion could be in jeopardy if federal funding is cut. Last year 324,000 adults enrolled in Medicaid because of the expansion. Many of these adults are working in low-wage jobs that don’t pay enough to boost them above the poverty thresholds for Medicaid. Without the several billion dollars of federal dollars to flow into Colorado to pay for the expansion population, many will lose health insurance. Pulling back the Medicaid expansion and eliminating the federal subsidies in the marketplace would cause the uninsured rate to double in Colorado to more than 1 million people.
That’s almost one in five Coloradans.
It’s projected that the Republican alternative to the ACA would create an insurance market very welcoming to young, healthy and upper-income people while being less welcoming to sicker, older and low-income individuals. For instance, there are currently mandates for insurers to include a standard package of benefits for each health care policy. Eliminating those mandates would allow younger/healthier people to buy cheaper plans while simultaneously making those benefits more expensive for those who need them. There are also limits on how much insurers can charge their oldest enrollees compared to the youngest. If those limits are removed, it would make private insurance more expensive for older enrollees and less expensive for the young.
The bottom line
Years of work by advocates to expand Medicaid to low-income Coloradans and to lower the rate of uninsured are now in jeopardy of being reversed substantially. As the year begins, here are some important things to watch for:
- Before March, Congress is likely to enact some repeal of Obamacare.
- A replacement could include block granting Medicaid, reducing the expansion match rate from the current 90 percent to a 50 percent match or completely eliminating federal support for expanded Medicaid.
- Federal subsidies for moderate-income Coloradans to buy insurance could be rolled back or eliminated.
- By May, insurers must submit bids to participate in Colorado’s marketplace. Depending on what happens to Obamacare, insurers may choose not to enter the marketplace, potentially driving up premiums due to less competition.
Check out our quarterly publication called Health Divides, to learn more about equity and economics in health care.
[1] See the Colorado Health Institute’s analysis on the Medicaid expansion: http://www.coloradohealthinstitute.org/uploads/downloads/MK_Expansion_Report.pdf
[2] See The Colorado Health Foundation’s report: http://www.coloradofuturescsu.org/wp-content/uploads/2016/08/medicaid-expansion-2016-full-report.pdf
[3] http://www.cbpp.org/sites/default/files/atoms/files/12-7-16health-factsheets-co.pdf
