The MacArthur Amendment: the Latest ObamaCare Replacement Plan Explained

The MacArthur Amendment (the Latest ObamaCare Repeal and Replace Plan);

or, the One that Takes RyanCare / TrumpCare and adds to it the Ability of States Exclude to Essential Health Benefits, Charge More Based on Health Status and Age, and Exempts Congress

We explain the MacArthur amendment to the AHCA that allows states to waive essential health benefits, charge more for preexisting conditions, and exempts Congress.

More specifically, we explain an amendment to the Republican “ObamaCare Repeal and Replace plan,” American Health Care Act (AHCA), that has been proposed by Congressman Tom MacArthur (R-NJ) and subsequently discussed by Republicans.

TIP: The MacArthur amendment allows states to waive essential benefits, age ratings, and community ratings. It therefore could price people with preexisting conditions out of care indirectly. It doesn’t however allow for direct discrimination based on health status or gender.

Amendment #33 offered by the Hon. Thomas MacArthur (NJ) says:

“—The amendment allows states to waive essential health benefits, age rating, and community rating. Health insurers would not be allowed to [deny coverage,] discriminate based on gender or [limit access based on] preexisting conditions. States must explain how the waiver will reduce average premiums for patients, increase enrollment for residents, stabilize the state’s health insurance market, stabilize premiums for individuals living with preexisting conditions, or increase patients’ health care plan options.”

A Quick Summary of What the MacArthur Amendment Does

The gist of this is:

1. It is an addition to the AHCA (an “amendment”), so it’ll still be TrumpCare (AKA tax credits based on age, the freezing of Medicaid expansion, and tax breaks for high incomes and industry).
2. The amendment allows states to undo key ObamaCare protections at a state level. This will, in many cases, result in Republican led states being able to charge the sick and elderly more while giving younger and healthier people a break, in the name of “encouraging fair health insurance premiums.” To offset the fact that the sick can be pushed out of the market, and to attract insurers to states to increase competition, it also creates a risk adjustment program (like ObamaCare had).

The planks of the amendment (detailed below) are accomplished by a set of three state-based waivers which you can read about at health affairs.

A Summary of the Waivers of the MacArthur Amendment

1. A waiver for community health ratings (so the sick and elderly can be charged more),
2. A waiver for essential health benefits (so states can exclude certain conditions for annual, lifetime, and other cost sharing limits), and
3. A waiver that allows for risk adjustment measures including an “invisible risk pool” (explained below).

The result of this will be that, although it doesn’t exclude preexisting conditions explicitly, those with preexisting conditions not covered by the risk-pool could be pushed out of the market due to cost (along with some older Americans who have not yet reached Medicare Age).

The amendment later provides: “Nothing in this Act shall be construed as permitting insurers to limit access to health coverage for individuals with preexisting conditions,” but that is precisely what health status underwriting does. Health status underwriting could effectively make coverage completely unaffordable to people with preexisting conditions (in other words, by charging a sick person more the result is the same as if they were excluded; that is they don’t have access to coverage).

– Timothy Jost was explaining how state-based waivers for Community ratings can result in care for the sick rationed by cost.

Meanwhile, the MacArthur Amendment Exempts Congress and Their Staff From the Changes

As if the above wasn’t questionable enough, the MacArthur Amendment insultingly exempts Congress and their staff members from the changes.

They use confusing legal language that only a “wonk” could decipher (TIP: they did the same thing in the main bill with Planned Parenthood).

This hints they are purposefully trying to cover up unpopular items and ensure that government officials and their staff can keep the ACA (ObamaCare) despite any changes at a state level.

This means that conservative states would be able to file a waiver that lets them undo key ACA protections at a state level, but it protects staffers or congresspeople working in that state.

Simply, Congress is trying to pass a law that will charge sick and older Americans more and offer slimmer benefits, yet exempts them from state standards and allows them to keep ObamaCare’s protections.

The Pros and Cons of the Amendment

Below is a quick list of pros and cons of the MacArthur Amendment.

Pros of the MacArthur Amendment

Benefits are centered around the idea that having lax standards will result in less expensive plans. These plans have higher cost sharing and are less robust in terms of protections and coverage, but I think we all agree that cheaper plans would be a real boon right now!

With that in mind, the main benefit of the plan is that it could, by offering restrictive insurance with fewer benefits, increase competition in the marketplace and result in cheaper plans for employees. Many of these cheaper plans would be worse, but the competition could drive prices of those worse plans (and even better ones) down over time.

That may seem like a backhanded compliment, but it isn’t fully that.

The market system does work. Supply side, trickle down, and all economic theories involving deregulation and tax breaks for the rich do work (in some respects at least).

My doubt isn’t strictly put on the shoulders of supply side in general, it is rather that I don’t think supply side along is going to solve the healthcare crisis.

I’m not sure if “proper care” trickles down any better than “proper education,” and that is a real gamble for a nation who wants to remain #1 in the eyes of its citizens and the world.

In other words, it is a pro that deregulation is being used in some respects, but I can’t mention that pro without considerations. After-all, we are talking about healthcare, not luxury items.

Moving on…

Another benefit, at least for progressive liberals, is that the Amendment and AHCA, in general, imply that progressive states could offer increased benefits via a system like single payer at a state level (under separate ACA waivers).

However, unless funding is guaranteed, it would mean those states would be footing the bill for expanding health care (which again is “a pro, but with a consideration.”)

Cons of the MacArthur Amendment

The main problem with this bill isn’t in the policy; it is the intention behind the policy. It is that Republicans seek lower cost plans for the healthy, shift costs to poor, sick, and elderly, shift profits to non-healthcare industries, add in deregulation for businesses, and do not seem to believe in providing universal healthcare.

In other words, the problem with this plan and Republicans in general is: They consider economics first, and healthcare goals second if it all. The correct way to come into healthcare is by saying, “we want universal healthcare, how do we do it?” Instead Republicans keep trying to solve the healthcare crisis with Reaganomics (trickle down, supply side).

The supply side idea here is that somehow health care will trickle down, alongside lower costs. The problem is, to what extent it doesn’t trickle healthcare all over the poor, sick, and elderly, it will mean tens of millions of uninsured Americans we have to rely on, as they always have, the emergency room.

Under the Emergency Medical Treatment and Labor Act of 1986, people cannot be denied care for life-threatening conditions in hospitals regardless of ability to pay (this is very good).

However, they will not receive treatment for care that might have prevented their health from deteriorating to such a critical point. Also, uncompensated care provided under the EMTALA is a significant cost that is passed along to the rest of us.

The problem is then, this isn’t a flat screen TV or a cell phone, it is healthcare.

This is something that most other developed countries, FDR’s Second Bill of Rights, and the international bill of rights essentially considers a right alongside education.

This “ought to be” a human right, not a chance to try trickle down again while booting tens of millions of sick, poor, and elderly out of the market.

Secondary problems include:

1. issues over funding, which are problems only for states that want to use previously existing 1332 and 1115 waivers to roll all their federal programs into a single payer system so they can join the rest of the world and champion human rights and
2. Pushing sick people and low-income Americans out of the market due to costs in states that allow for community ratings to be waived.

A Summary of the Details of the MacArthur Amendment

This last section is a summary of the main planks in the amendment.

The first part on the waivers is a summary of what is explained by the health affairs blog post noted above, and the last three are a breakdown from business insider. The bill itself is written in a way that it constantly cites other bills, so it won’t be readable to the average person. This is, however, the gist of what it does:

TIP: Remember, all this is added to the AHCA (TrumpCare 1.0), and all of this is subject to change.

• There are three different types of waivers: One waiver allows for cost ratios to be adjusted so instead of charging 3 to 1 based on the age they can charge 5 to 1. One wavier allows for essential benefits to defined by the state; the ACA caps lifetime and annual limits on essential health benefits, so if these are changed, that means lifetime and annual limits and other out-of-pocket caps could start to apply to treatments we might all today consider “essential.” The Third waiver allows for states to provide financial assistance to high-risk individuals, set up a reinsurance program to help offer insurance to insurers to get them to enter their state’s market, and to participate in the federal invisible high risk sharing program. In this program, certain conditions qualify a person to have a portion of their insurance plan covered by the insurer in exchange for the insurer getting reinsurance payments from the risk pool fund; i.e. the fund pays the insurer, and the insurer covers the customer, who qualifies based on certain conditions.
• Allows states to waive essential health benefits: Under ObamaCare, health insurance plans are required to cover a baseline of health benefits such as maternity care and emergency-room visits. Under the new amendment, states could define their own essential health benefits if they show that doing so would cause prices to decrease. This could allow states to eliminate some of the baseline benefits in the AHCA since covering fewer benefits would allow insurers to offer cheaper plans, but it could also result in slimmer plans and less care for people enrolled.
• Allows states to waive aspects of the community rating: Under Obamacare, community-rating rules make it so insurers must charge the same price to consumers in a certain area regardless of gender, preexisting condition, and other factors. Under the AHCA’s new amendment, states could get around this rule if they provided some funding for people with preexisting conditions to get coverage, participate in the “invisible high-risk pools” established by the AHCA, or “provide incentives to appropriate entities” to “stabilize premiums.” While the bill says the waiver cannot limit access to people with preexisting conditions, it is unclear what the baseline of funding would be to grant this waiver. Therefore, people with preexisting conditions could still end up having higher costs.
• Default approval: States requesting a waiver would have to be denied within 60 days of notifying the Department of Health and Human Services. If the HHS does not explicitly deny the waiver request, it is approved. This would allow the Trump administration to decide how rigorous the process would be for states.