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AHCA Would Shred Healthcare Infrastructure

Analysis  |  By John Commins  
   March 15, 2017

It is estimated that the Republican plan to repeal and replace the Affordable Care Act would reduce federal Medicaid spending by $880 billion over the next 10 years. That would have a devastating effect, particularly in rural America.

As many as 24 million Americans could lose their health insurance over the next decade if the American Health Care Act is enacted. That's according to the nonpartisan Congressional Budget Office's staggering assessment of the Republican plan to repeal and replace the Affordable Care Act.

As a result of this draconian contraction in coverage, the AHCA is also expected to generate about $337 billion in net savings for the federal government between 2017-2026.

The CBO says most of that savings would come from reductions in federal Medicaid spending, which would amount to $880 billion over the 10-year span, in part because of a shift to a per-capita, capped entitlement. That estimate does not include the billions of dollars in state Medicaid matching funds cuts that are likely when the federal dollars disappear.

Let that sink in.

Rural America is disproportionately dependent upon Medicaid as a primary health insurance source for a generally older, sicker, poorer population.

It has been widely reported that the AHCA's ill-effects would be felt mostly by older, rural Americans (ironically, a key demographic for President Donald Trump.) We can well imagine what will happen to the quality of life for millions of Americans who may find themselves without healthcare coverage if the ACA's Medicaid expansion is repealed and alternative coverage becomes unaffordable.

Beyond that debacle, imagine how a $880 billion funding loss in the public healthcare safety net is going to be absorbed by thousands of hospitals across the United States, many of which are already under financial duress.

The demand for healthcare services doesn't evaporate when the funding dries up. These tens of millions of newly uninsured people will access care through the emergency department, just as they did before Obamacare.

Unintended Consequences
As bad debt and uncompensated care soar, how many of these hospitals will shutter, and what will the impact of those closures mean, not just on care access, but on the economic vitality of the communities these hospitals serve?

This is a major unintended consequence that American Health Care Act fails to acknowledge. Medicaid is not just a healthcare program.

It is also one of the largest infrastructure and economic development programs that the federal government has ever devised. Instead of building roads, railroad tracks, bridges and dams, Medicaid provides a vital funding stream (however paltry the reimbursement) that keeps the doors open at many hospitals in rural America.

Community Impact
Community and critical access hospitals are economic engines for the communities they serve. They are often one of the largest employers in town, and the dollars that fund those relatively steady, well-paying hospital and ancillary jobs churn through the local grocery store, the car dealership, the restaurants, the hair salon, and the furniture store, and boost local sales and property taxes.

Beyond that, a healthy hospital is a critical component in every community's business recruiting portfolio. When the local hospital closes the doctors leave, the local healthcare infrastructure withers, and prospects for attracting industry dwindle. Why would any industry locate to a town that's incapable of supporting something as fundamental and vital to community life as a hospital?

Talk about a death spiral!

It's possible that the CBO's analysis could be in error. The Trump administration has challenged the estimates, even though an analysis from the White House's Office of Management and Budget on the effects of the AHCA are worse, and project that 26 million people would lose coverage.

It's also possible that the CBO estimates are too rosy, because their focus is the effect on the federal budget. If federal Medicaid dollars go away, states very likely will not increase their funding match to account for the difference.

Plight of the Poor and Sick
More likely, if Medicaid is transformed into a per-capita, capped program under the ACHA, there may not be sufficient federal oversight or leverage to ensure that states maintain adequate funding levels.

As in Congress, the poor and sick don't carry much weight in state capitols.

It is no small irony that the nearly $1 trillion in proposed cuts to Medicaid mandated by the AHCA came just one week after President Trump unveiled a $1 trillion infrastructure plan that was embraced as a job-creating stimulus plan by most pols and pundits.

The nation's transportation grid needs a significant investment. Cannot the same argument be made for the nation's healthcare delivery grid, a job-creating economic engine that powers rural America?

We should debate whether the United States should continue to spend close to 20% of its gross domestic product on healthcare. There is plenty of waste in the nation's healthcare delivery system, and every dollar that is spent on healthcare is a dollar that is not spent on other vital areas, such as education.

Argue the case, but acknowledge the risk when healthcare funding is slashed.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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