House of cards

Meridith Woods is worried.

Day after day over the past several months, she’s read dire reports about the future of health care reform. Congressional Republicans, now with majorities in both houses, pledge to “repeal and replace” the Affordable Care Act, aka Obamacare, as quickly as possible—and Donald Trump pledges to sign the bill into law as soon as he can after his inauguration as president.

This is not just a matter of politics for Woods, a native of our nation’s capital. She’s a hairstylist in Chico, her home of 22 years, who relies on the ACA for her health insurance. She’s single and an independent contractor; if not for ACA provisions, she would exceed the income threshold for a subsidized or lower-cost policy.

“I feel threatened,” Woods said last Thursday (Jan. 4). “Right now, things seem unpredictable to me. When I look at the news and see each new headline, I just feel like I’m not sure what’s going to come next. And it’s a concern—a big concern.”

She needs health coverage. She uses it. Woods, 48, has rheumatoid arthritis, a degenerative autoimmune disease in which the body attacks its own cells, predominantly in the joints. Specialists in Sacramento also diagnosed her with Raynaud’s disease, a rare vascular disorder that causes blood vessels to narrow and skin to discolor, typically in the fingers and toes.

Her condition first manifested in her hands—the conduit of her professional expression—around a decade ago, when she had private insurance through her then-husband. She lost that coverage after divorcing and turned to homeopathic remedies. With the passage of the ACA in 2010 and the establishment of a state exchange, Covered California, Woods regained insurance in the program’s first year, 2014.

She’s found a provider for primary care through Ampla Health, a physician who monitors her regularly. Fortunately, her arthritis has been in remission over the past four years, but the nature of the disease is such that a flare-up could happen at any point.

“You need to be aware and keep an eye on things,” she said, “rather than wait for something to happen.”

Woods relies on the preventative care, plus the safety net of catastrophic care, provided by her policy through Covered California.

So to her, repeal-and-replace talk means “a realistic fear” of losing her insurance—perhaps as early as Jan. 21, the day after Trump’s inauguration.

“I just don’t know,” Woods said, “because he’s been so unpredictable.”

She’s not alone with this concern. Approximately 14 percent of Butte County—32,000 residents—received health insurance because of the ACA last year. Woods was among the 7,400 who received reduced-cost policies through Covered California; the rest qualified for “expanded Medi-Cal,” a new tier of California’s federal- and state-funded Medicaid program created when income qualifications changed under the ACA.

California Healthline, a news service of the nonpartisan and nonprofit California Health Care Foundation, determined that 3.7 million Californians who were not eligible for Medi-Cal before the ACA have gotten covered. Figures for 2017 are pending, since open enrollment continues through Jan. 31.

Between Medi-Cal and Medicare (approximately 45,000 subscribers), Butte County’s health system depends heavily on money from public insurance plans. Doctors, clinics and hospitals—already pinched by supply and demand in this medically underserved area—also cast wary eyes toward Washington, unclear on the impacts of repeal and replace.

This much, however, does seem clear: Congress may toss the ACA, and Trump may make that the first order of his presidency, but only after—as House Speaker Paul Ryan said last Thursday (Jan. 2)—“weeks and months unfold” could their actions hit home.

“Whatever would happen Jan. 20, you would doubt the change would take effect Jan. 21; it’s going to take some time,” said Monty Knittel, CEO of Feather River Hospital in Paradise, which offers primary care among its outpatient services. “We’ll put considerable effort into figuring out how best to react to that and how best to remain caring for our communities.”

Mike Wiltermood, his counterpart at Enloe Medical Center in Chico, agreed: “In our community, the hospital has enough resources to weather the initial hit. Long-term, I have no idea; we can’t really say we know what’s going to happen in the next couple years or how bad it can get.”

In the short-term, Covered California and expanded Medi-Cal policyholders needn’t panic. According to Lizelda Lopez, deputy director of communications and public relations for Covered California, the state’s insurance contracts cover the calendar year.

“Any change to federal law will take time,” she said by email. “We are encouraged by the statements of congressional representatives and President-elect Trump saying that they want to both make sure that no one loses their coverage, and that pre-existing conditions should not be used against people to deny them insurance.”

Trump, in particular, has expressed support for continuing to require insurers to cover patients with “pre-existing conditions” and adult children until age 26 on parental plans. Meanwhile, other Republicans have advocated postponing a replacement plan—not just months, but years—in a strategy called “repeal and delay.”

So it seems 2018, not 2017, might mark the turning point.

Explained Amy Adams, senior program officer for California Health Care Foundation: “Even if they say they’ll repeal it and set the implementation date out a few years, the concern is … a lot of insurers will want to leave that [exchange] market as soon as they possibly can, which would ostensibly be before the next open enrollment period, because there would be so much uncertainty and so much risk for the insurers.

“Without a fully developed replacement plan in place, there will be a lot of chaos in the health care market.”

The ACA (formally titled the Patient Protection and Affordable Care Act) became law with President Obama’s signature on March 23, 2010. Not since the establishment of the Medicaid and Medicare programs 45 years earlier had the federal government embarked on such a sweeping health care reform.

Along with expanding access for tens of millions of uninsured Americans, the ACA aimed to leverage technological and clinical advances to improve care and stem the tide of rising expenses. The most conspicuous means: requiring computerized medical charts, known as electronic health records, instead of paper files of handwritten notes maintained at individual offices and hospitals.

“A lot of the emphasis has been to figure out ways to lower costs and improve quality at the same time, so there are [financial] incentives around that,” Knittel said. “We’re all focused on that—we were focused on it before—but you’re penalized if you don’t meet the criteria now.”

Medicaid programs such as California’s Medi-Cal typically cover children but have earnings thresholds for lower-income adults. The ACA allowed states to raise this threshold by increasing the federal contribution for Medicaid and creating subsidies for workers who could not afford insurance through their employer or did not have insurance available at work.

The law also prevents insurers from denying coverage to people with a previously diagnosed ailment (pre-existing condition); requires inclusion of certain services and medications (“essential health benefits”), including preventative and wellness care; and bans lifetime caps on coverage amounts, among other strictures.

Knowing that these insurance plans would attract older, sicker individuals—thereby creating a “risk pool” with financial imbalance for insurers—legislators required adults to have insurance or face a federal tax penalty. Republicans sued to challenge this element of the ACA, known as the individual mandate, but the U.S. Supreme Court ultimately upheld it on a 5-to-4 vote.

The GOP opposed the ACA from the outset and mounted repeal efforts around 60 times during the previous three sessions of Congress. The Republican who authored most of the repeal bills, Rep. Tom Price of Georgia, is Trump’s nominee for Secretary of Health and Human Services.

Rep. Doug LaMalfa, the Richvale Republican whose district encompasses the North State, lists “the repeal of Obamacare” as “one of many priorities in the upcoming months” in a news release on his congressional website. (He did not comment to the CN&R by deadline.)

Ironically, the GOP and Trump drew electoral support from districts much like LaMalfa’s: rural, industrial, working-class, lower-income—places that will get hit hard if large proportions of people lose insurance.

Butte County has a public health department but no public hospital. Enloe, Oroville Hospital and Orchard Hospital in Gridley are standalone nonprofits. Feather River is part of Adventist Health, a West Coast organization affiliated with the Seventh-day Adventist Church. Northern Valley Indian Health and Ampla operate multiple clinics in the area; urgent care facilities, labs, imaging centers and private practices fill out the local health system.

Dr. Andy Miller, the county’s public health officer, said his department is monitoring developments.

“People’s coverage under Obamacare, Medi-Cal, whatever forms it might take in the future, is important to Public Health because it affects the health of the people of Butte County,” he said. “The public health clinic tries to take care of the things that either no one else is prepared or able to, so if there are more gaps or more problems with access, it is quite possible we might have to fill in where we could.

“Our ability to do that is very limited; we’re not a primary care institution or organization.”

Hospitals, too, have limits—particularly for primary care. Enloe operates urgent care facilities but does not have primary care practices under its umbrella. Private practices in Chico often have waiting lists for patients with private-carrier insurance, let alone publicly funded policies that reimburse providers at lower levels. Feather River likewise tends to have waiting lists for providers at its federally qualified health center, which receives higher Medi-Cal reimbursement than private practices.

This is with ACA insurance taking pressure off emergency rooms. By law, a hospital must treat all comers to the ER, regardless of ability to pay. The ACA dramatically reduced the uninsured rate in Butte County from 22.5 percent in 2013 (the year before the exchange) to 5 percent in 2015. Enloe has seen an increase in Medi-Cal patients by around 10 percent, to nearly a third of its total, and an overall increase in volume.

“If we lost the Medicaid expansion, we would definitely feel it,” Wiltermood said. The medical center is operating in the black, though below the 5 percent annual surplus he said lenders target for nonprofits, with continued growth in surgery and inpatient services “but especially in the outpatient services we’ve seen tremendous growth—and part of that has to be attributed to the increase in Medicaid and health care coverage.

“People just probably feel safer coming in knowing they’ve got insurance to cover it.”

Finances are tighter at Feather River, which laid off 16 of its approximately 1,100 employees in late December. Knittel said the decision was not made anticipating changes in federal funding, but rather year-end “adjustments to what the business model has done”: that is, having outpatient care become a greater share of the operation, now around 80 percent at FRH.

“We have to adapt to what the environment is today,” he added, drawing an analogy to airports built after 2001 that incorporate greater security infrastructure. “We will always adapt and change with health care.”

The ACA repeal may seem like a done deal, with Senate Republicans removing the biggest hurdle last Thursday by allowing the needed bills to pass their chamber on a simple majority vote.

That required support from all their members; however, not all 52 agree on the path forward, with several expressing unwillingness to vote for a repeal without a ready replacement and several others unwilling to (in the words of Arkansas’ Tom Cotton) “kick the can down the road for a year or two more years” with repeal and delay. The House, with a 47-vote edge, has the same level of divisiveness, further fomented by Sen. Rand Paul rallying a cadre of 24 conservative congressmen to oppose the repeal on balanced-budget principles.

“A lot of Republican senators and House reps told their constituents that they’re going to repeal it and Trump campaigned that way, but Trump has already backed down on a couple things,” noted Bruce Jenkins, an insurance broker in Chico who specializes in Medicare supplement and Covered California policies. “He says he doesn’t want to throw out people who have insurance already, and he doesn’t want to do away with the fact that pre-existing conditions are no longer a factor….

“Every article that I read says you can’t have your cake and eat it, too. If you’re going to repeal the thing in its entirety, you can’t keep components of it, because economically it’s not feasible.”

Indeed, key components of the most widely reported replacement plans—culled by Adams and the health care foundation—present challenges.

First and foremost, repealing the individual mandate, which Adams calls “a common element across all the proposals,” necessitates an entirely new system or the insurance structure becomes a house of cards.

“If you repeal that and keep in place the requirement that health insurers cover everyone, there’s only an incentive for the sickest to sign up and not the healthy folks, and you create a problematic risk pool,” Adams said.

Legislators have discussed shifting more responsibilities to patients: cost-coverage with higher-deductible policies and cost- management on patients with health savings accounts. A person with an HSA deposits pretax money and can use the money without accruing tax liabilities as long as it’s for medical-related purposes.

“The people who are benefiting from Obamacare the most really can’t afford to put any money or much money in the bank,” Jenkins said.

Other common denominators include “changing or eliminating the comprehensive nature of the benefits that need to be covered,” Adams said, “and overall less regulation of insurance companies.” That could open the door to something Trump favors: interstate competition, as opposed to the current restrictions under which insurers must get state by state authorization for policies.

There’s also talk of capping the amount the federal government would contribute to states’ Medicaid programs, on a per-capita basis, perhaps funding the program via block grants.

“There’s a range of ideas out there about that,” Adams said. “They share in common essentially less funding.”

That, of course, is what health care providers fear.

Knittel said hospitals took a cut in certain reimbursement rates under the ACA with the promised counterbalance of more insured patients. If that offset goes away, via reduced Medi-Cal funding, what are the chances the reimbursement rates will return to the previous level?

Wiltermood, meanwhile, explained that the financial influx from ACA funding has included some matters of accounting. It’s true that Enloe has experienced a reduction in its amount of “charity care” write-offs; however, the hospital has experienced a near-corresponding increase in bad-debt write-offs from patients with high-deductible insurance plans who prove unable to make those payments.

“If you get $1 for one patient and zero for another, it’s the same as getting 50 cents for both, and that’s kind of how it shook out for us,” Wiltermood said. “There was definitely not a windfall due to the expanded program; we definitely did get a lot more volume, and I would attribute any success we’ve had in business to the increase in volume rather than the increase in payments.

“The scary thing [would be] if I had $1 for two patients and now I’m going to get 75 cents. If they can keep it relatively budget- neutral, I think we can be OK.”

Woods, newly established in the Hair Is salon on Nord Avenue after seven years at the Chico Mall, recently renewed her Covered California policy for 2017. Jenkins, her agent, assured her the coverage will be good for the rest of the year.

Does she believe him?

“I want to,” she said. “But … everything just seems so topsy-turvy, it’s hard to feel secure. It’s a time of concern.”

Should she lose her insurance, Woods said she’d go back to herbal medicines.

“I don’t mind using that now,” she said, “but it’s just nice to know that in the event of something catastrophic …

“I’m of the age where I could wind up having a stroke or something.”

Were that to happen—to her or any other local resident—the hospital CEOs stressed that their facilities will be ready, whatever happens with the ACA. Moreover, if health care falters here, they’re sure the ripples would reach Woods’ hometown of Washington.

“I can say with a reasonable degree of confidence that if a hospital like Enloe Medical Center and the system that we have in Butte County appreciably suffers because of something that the government has done, then we’ve got a national problem, not a regional problem,” Wiltermood said. “Hopefully that will get Congress’ attention and they’ll be able to make the appropriate changes.”