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Colorado hospitals, health care experts give GOP's repeal of Obamacare a shaky prognosis

March 19, 2017 Updated: March 21, 2017 at 9:07 pm
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"Trust me, I'm extremely concerned," said Penrose-St. Francis Health Services President and CEO Margaret Sabin of congressional Republicans' proposal to transform the nation's health care. "I want to be honest about that. I'm extremely concerned." (Carol Lawrence, Gazette file)

Margaret Sabin considers herself an optimist.

But, as Penrose-St. Francis Health Services' chief executive, she won't mince words about congressional Republicans' proposal to transform the nation's health care.

"Trust me, I'm extremely concerned," she said. "I want to be honest about that. I'm extremely concerned."

Health care providers and experts across Colorado and the Pikes Peak region voiced unease in recent days about the American Health Care Act - the House GOP's latest proposal to replace the Affordable Care Act, commonly known as Obamacare.

The legislation - which is expected to arrive on the House floor this week - rolls back expanded Medicaid coverage for low-income residents, transforms financial assistance for purchasing insurance and scraps tax penalties for residents who go without coverage.

It remains a work in progress, with its chief architect, House Speaker Paul Ryan, R-Wis., expressing a willingness to change some provisions in exchange for votes.

One thing is sure: Health care in Colorado would change dramatically, health policy experts say. Among the changes:

- About 600,000 Coloradans could lose Medicaid coverage through 2030, due to a projected $14 billion drop in federal funding

- Imperiled coverage for at least 57,000 El Paso County Medicaid patients, because "there's not enough rabbits in that hat" to pay for their coverage, one policy expert said

- Steep increases to uninsured rates in El Paso County and the state - both of which reached all-time lows under the Affordable Care Act

- Likely rising uncompensated care levels at hospitals and at Peak Vista Community Health Centers - two-thirds of whose nearly 90,000 patients are on Medicaid

There will be winners and losers, said Joe Hanel, a Colorado Health Institute spokesman.

Younger, healthier and wealthier people who tend to live in urban areas and along the Front Range could see insurance costs ease through the proposed health law, he said.

Lower-income Coloradans and seniors not yet eligible for Medicare could see their coverage vanish or become far too expensive to keep, he added.

The same could be said for people living on the Western Slope, in ski-resort towns and rural areas of Colorado, many of which already face the highest insurance costs in the state.

Donna Lynne, the state's lieutenant governor and former top executive at Kaiser Foundation Health Plan, lambasted the proposal as undoing years of progress in helping Coloradans access health care. She assailed President Donald Trump for breaking his campaign promise to improve coverage rates.

"This certainly doesn't do that," she said. "It seems to me that this is just an attempt to reduce costs."

U.S. Rep. Doug Lamborn, R-Colorado Springs, the Pikes Peak region-congressman who will vote on the eventual plan, said he remains undecided.

As many Republican lawmakers have done in recent days, he dismissed certain findings by the Congressional Budget Office last week. Its report said 24 million Americans will lose coverage over the next 10 years - leaving more people uninsured than before Obamacare.

But Lamborn hailed the same report's findings that the law would slash the federal deficit by $337 billion.

"I want to repeal and replace Obamacare, but I want to make sure the measure we pass and send over to the Senate is as conservative as possible," he said.

Lamborn cited support for the measure by the National Federation of Independent Business as one reason for backing the proposal.

The association favors the legislation because of its tax cuts, the removal of mandates on businesses owners and the likelihood it will decrease premiums beginning in 2020.

Tony Gagliardi, state director of the National Federation of Independent Business, said its predecessor, the Affordable Care Act, had too many burdensome regulations and not enough tax credits to help small businesses cover employees.

"The American Health Care Act, while it's not perfect, it is a starting point," said Gagliardi, whose organization represents more than 7,000 small-business owners in Colorado.

Lamborn's stance highlights divisions in the Republican Party that have muddied the law's chances. Some - like Lamborn - want Medicaid's expanded eligibility ended more quickly. But that could cost the support of more moderate Republicans.

"It's a balancing act," Hanel said. "And it remains to be seen whether that balancing act will be good enough to get it through both houses of the Republican Congress."

House Speaker Paul Ryan of Wis., accompanied by Rep. Cathy McMorris Rodgers, R-Wash., right, speaks at a news conference following a GOP party conference at the Capitol, Wednesday, March 15, 2017, in Washington. (AP Photo/Andrew Harnik) 

Uncompensated costs

Many state and local health care leaders aren't convinced the Republican proposal is a good idea.

Throughout Colorado, uncompensated care costs at hospitals dropped by two-thirds from 2013 through 2016, the Colorado Hospital Association said.

But that could change if coverage protections are rolled back, experts say.

In a statement, Memorial Hospital's president and chief executive, Joel Yuhas, called it "essential" that the new health law not affect coverage rates or provider reimbursements, especially for Medicaid patients.

Meanwhile, Sabin said no federal or state programs could offset the amounts Penrose-St. Francis stands to lose if the law passes as is.

Uncompensated care - charity care and uncollectible debts - at Penrose-St. Francis dropped from more than $122 million in 2013 to nearly $44 million last year, in large part thanks to Medicaid's expansion, hospital figures show.

In that same time, patient visits rose 15 percent.

She stressed that Penrose-St. Francis can mitigate against many provisions in the law, due to partnerships with other organizations in the community, as well as cost-saving measures that focus on preventive care and wellness programs.

"We're going to make the best of the way things turn out," Sabin said. "We will be the leader - we will be the model in how we respond to this."

Even then, Sabin said the hospital will have to re-evaluate how it delivers care, should the measure pass and people lose insurance.

"One person is one too many," she said. "And if it's millions, that's hard to even imagine."

Medicaid cuts

Their concerns stem from the fact that gains made in lowering the state's uninsured rate will likely be wiped out under the Republicans' proposal, local health care policy experts and industry leaders say.

Under Obamacare, the state's uninsured rate dropped from 15.8 percent in 2011 to 6.7 percent in 2015 - an all-time low, according to the biennial Colorado Health Access Survey.

Experts said that could change - largely due to cuts in the state's Medicaid program.

Before 2014, Medicaid was typically only available to poor children, pregnant women and people with disabilities. But it expanded under Obamacare to include other adults earning up to 138 percent of the federal poverty level - about $16,400 for an individual and $33,500 for a family of four.

In 2020, the proposed law would begin slashing that funding - leading about 600,000 Coloradans to lose Medicaid coverage and become uninsured by 2030, a Colorado Health Institute report issued Thursday found.

Colorado faces a $14 billion drop in federal Medicaid funding over that time. Few - if any - options exist for state lawmakers to fill that funding gap, said the health policy institute spokesman.

"There's not enough rabbits in that hat to be able to keep Medicaid expansion without doing serious damage to the state budget," Hanel said. The institute analyzes health care proposals affecting Coloradans, but it does not lobby or take positions on proposed legislation.

More than 57,000 people in El Paso County gained coverage under Medicaid's expansion - a major reason the county's uninsured rate plummeted to 7 percent.

In all, more than 400,000 Coloradans became enrolled with its expanded eligibility - creating an economic boon for the state.

It created 31,074 jobs while spurring $3.8 billion in economic activity, according to a study by the Colorado Health Foundation and the Colorado Futures Center at Colorado State University released in early 2016. It also helped boost annual household earnings by $643 in that time.

The proposed law also caps Medicaid spending by allocating federal money based on the number of Colorado's patients - not how much it spends on them every year.

That funding level would rise annually at the rate of medical inflation. However, health policy experts say health care costs often far outpace that rate of inflation.

"It would ultimately leave Colorado with less funding to provide care to seniors, people with disabilities and children - the populations that have traditionally been covered by Medicaid prior to the Affordable Care Act" said Adam Fox, of the Colorado Consumer Health Initiative.

Even that could change. On Friday, Trump endorsed giving states fixed "block grants," rather than per-person allocations, The Washington Post reported. He also endorsed adding work requirements on childless adults, the newspaper reported.

Lamborn assailed Medicaid as "way oversold." He questioned whether enrollees' health improved under the program, and at the same time criticized the program's traditionally low reimbursement rates to providers.

Lamborn ranks among several dozen Republican lawmakers who want to stop Medicaid's expansion far earlier than 2020.

"I'd like it as soon as possible," Lamborn said.

Few organizations rely on Medicaid more than Peak Vista Community Health Centers.

The organization, which cares for nearly 90,000 people from Cripple Creek to Kit Carson County, struggled with a 9,000-person waiting list before the Affordable Care Act.

It vanished, however, once coverage expanded under the law. Meanwhile, its share of uninsured patients dwindled.

Before the law, more than one in three patients cared for by Peak Vista were uninsured. By 2016, that ratio had dropped to about one in eight.

Pam McManus, the nonprofit's president and chief executive, said it remains too early to gauge exactly how Peak Vista might be affected. But as the proposal stands, the organization likely will have to increase its fundraising and cut services to make up for the upcoming spike in uncompensated care.

"I don't believe the current proposal is good for the community," McManus said.

Insurance mandate

Some provisions of the Affordable Care Act could remain in place, while others will be scrapped.

Insurers still couldn't deny coverage to people with pre-existing conditions, and children can stay on their parents' plans until age 26.

But the individual mandate - the tax penalty under the Affordable Care Act charged to people who went without health insurance each year - would be gone.

In its place is a 30-percent surcharge on insurance policies purchased after people go more than two months without coverage. The provision is meant to act as an incentive for people to keep their coverage, rather than merely purchase it when they get sick.

The new law still includes financial assistance for purchasing health insurance - though much more money is available for the middle class.

Individuals earning up to $48,200 now can earn tax subsidies through the state's exchange, Connect for Health Colorado.

The proposed law raises that benchmark to $75,000.

But rather than base the size of those tax credits on how much a plan costs, the new law bases it solely on a person's age.

It also allows insurance companies to charge seniors far more than people who are younger.

Insurance carriers can only charge seniors three times as much. The new law would allow insurance companies to charge five times as much.

Lamborn praised Ryan's decision to scrap the individual mandate, but he chided the replacement surcharge as "uncomfortably" similar to the mandate. He said he wants to see it reduced or dropped before the law comes to a vote in the House.

He cast doubt on the notion that all people would miss their coverage - private insurance or Medicaid.

"People were forced in large measure - some were enticed - but some were forced into ACA," Lamborn said. "And so if they're no longer being forced, they're going to vote with their feet and get out."

The surcharge provision has also come under criticism by the Colorado Consumer Health Initiative.

The move could leave insurance companies covering a larger share of sicker and older people - straining risk pools and possibly further raising insurance rates.

"There's a strong chance that this will destabilize the individual market," Fox said. "To what extent, I think is a question."


The Associated Press contributed to this report.

Contact Jakob Rodgers: 476-1654

Twitter: @jakobrodgers

Facebook: Jakob Rodgers

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