Local hospitals brace for Obamacare repeal

The inauguration of President-elect Donald Trump is on Friday, Jan. 20 and congressional leaders are wasting no time delivering on one of his major campaign promises: the repeal of the Affordable Care Act. And while details are scant on what kind of replacement legislation will be offered, local county and hospital officials are voicing deep concerns that gutting parts of the landmark health care law could force millions of Americans to lose their health coverage.

Last week, the Senate voted 51-48 to start the process of creating a budget resolution that would defund and eliminate key parts of the Affordable Care Act, also known as Obamacare. Since then, Republican lawmakers have moved at breakneck speeds to dismantle the law, and are planning to report the repeal legislation to the Senate Budget Committee by Jan. 27.

Immediately after the November election, Santa Clara County officials got to work assessing just how much they stand to lose if congressional Republicans succeed. At a gloomy Nov. 9 Health and Hospital Committee meeting, Deputy County Executive Rene Santiago said Santa Clara County is likely going to have to bolster its relationship with the state on health care funding, and prepare for a Trump administration committed to cutting down on federal obligations. Based on previous Republican proposals, Medicaid could be doled out to states through a block grant or per-capita allotments, each of which have the ultimate goal of reducing federal spending. This, in turn, would mean less coverage for those currently eligible through Medi-Cal — California’s Medicaid program — and less matching funds for California.

County staff are still rounding up a list of all the laws and funding streams that could be on the chopping block, as well as ways the county can intervene and preserve as many federal health care programs as possible.

“My sense is that we’re going to have to do more with less,” Santiago said.

Republicans plan to use a process called reconciliation, which only requires a simple majority in the Senate, in order to repeal parts of the law that have a budgetary component: premium support, taxes and Medicaid expansion, according to Burt Margolin, the county’s health care consultant. Other parts of the law, including the provision that prevents insurance companies from denying coverage or charging more based on pre-existing conditions, cannot be put in a reconciliation bill.

Still, that leaves plenty of integral parts of the health care law open to demolition. The individual mandate, which requires most Americans to have some type of health insurance, is likely to be a primary target, along with the the expansion of Medicaid that has covered 3 million new enrollees in California who were previously ineligible, according to the Legislative Analyst’s Office.

“We’ve never before encountered this kind of hostile environment,” Margolin said. “There’s never been an environment in Washington where the resources, the attitudes and philosophies have aligned to put this kind of threat forward to health care funding.”

The exact details on the repeal, and eventual replacement, of the Affordable Care Act are still unknown, making it all the more challenging for county and hospital officials to plan ahead. William Faber, the chief medical officer for El Camino Hospital, said the hospital hasn’t had a summit or high-level discussion on how to react because they don’t know what’s coming down the pipeline.

The big worry, he said, is that walking back the Medicaid expansion will mean the millions of new Medi-Cal enrollees risk losing their coverage. Hospitals across Santa Clara County, particularly Valley Medical Center, would then have to bear the brunt of serving more uninsured patients, who show up in the emergency room in need of care.

“Medicaid is not a great payer, but it’s better than no pay at all,” Faber said.

Making matters worse for hospitals, Republican lawmakers have shown no appetite for ending cuts to Medicare that were originally intended to offset the cost of the Affordable Care Act, meaning hospitals will likely have to withstand price cuts to Medicare while also losing the upside of expanded coverage. Previous repeal legislation proposed by Republicans, which was vetoed by President Barack Obama, left the rate reductions intact.

Faber said hospital officials are “very concerned” about future cuts to Medicare. Just over half of the patients El Camino Hospital serves are insured by Medicare, and the hospital already loses money on the whole when providing services to Medicare patients. But the impending cuts have less to do with the Republican-majority Congress and more to do with a bipartisan effort to bring down the cost of Medicare.

“Medicare is going to be under strict control regardless of who is in the White House,” Faber said. “Medicare will become insolvent of we don’t find ways to become more efficient.”

Although county and hospital officials have some indication of what might get cut from the Affordable Care Act, Margolin said there’s very little information available about what the replacement legislation might include. This is particularly worrying, he told Health and Hospital Committee members last month, because the county has to prepare for a new health care law within the next two to three years without knowing what’s going to be in it.

“What they are essentially telling state legislatures and county supervisors to do is make their plans,” he said. “How do you plan for a replacement that doesn’t exist yet?”

County Supervisor Joe Simitian, who serves on the Health and Hospital Committee, said Santa Clara County might want to join state and nationwide coalitions in order to advocate for and preserve parts of the Affordable Care Act, rather than try to influence congressional lawmakers on its own.

“Neither the president or the Congress of the United States is waiting with bated breath to hear what the good people of Santa Clara County want in the way of health care,” Simitian said. “We’re going to have to make our case with others to have any hope or expectation of having any impact at all.”

County Executive Jeffrey Smith told committee members that he wasn’t too concerned about the future, and that he predicts lawmakers in Washington are going to quickly realize the political realities of dismantling the Affordable Care Act — and by extension removing billions of dollars of federal funding from the economy. Republicans may talk about how the United States spends too much money on health care, he said, but they neglect to point out that the money is going to insurance companies, pharmaceutical companies and major health care providers.

“It’s an enormous removal of profit for one sector of the economy on the brink of another recession,” Smith said. “I don’t think an administration focused on business and stimulation of the economy is going to be all that anxious to destroy the economy.”