The incoming Trump Administration and Congressional Republicans have made “repeal and replacement” of the Affordable Care Act one of their primary goals. But there are many options in how it might be replaced, and some popular aspects of Obamacare will likely remain. Experts discuss likely scenarios and how they would affect Medicaid, Medicare, insurance exchanges and the overall market.
- Ed Haislmeier, Senior Research Fellow in Health Policy, Heritage Foundation
- Dr. Paul Ginsburg, Leonard Schaeffer Chair in Health Policy Studies, Brookings Institution and Professor of Health Policy, University of Southern California
Healthcare Under Trump: What to Expect
Reed Pence: If you talk to people on the left side of the political aisle, one of the hallmark accomplishments of the Obama administration has been the Affordable Care Act – what most people call “Obamacare.” It succeeded in dropping the uninsured rate to an all-time low, but those on the right side of the aisle say the ACA did in mostly the wrong ways. One of the first-day goals of the new Trump administration will be to tear Obamacare down. Ed Haislmaier, senior research fellow in health policy at the Heritage Foundation says some of its main features are in the crosshairs first.
Ed Haslmaier: Obamacare, or the ACA, imposed really on the individual/small employer market a whole set of changes that have driven up costs. They were essentially attempting to expand coverage, not by directly funding programs through the government, but by reaching out and controlling and regulating private insurance. And thus, passing those costs off-budget – in other words, not collecting them as taxes. And so we have seen the results of that, particularly this fall with some very substantial premium increases and obviously, the people getting hit with those who are not seeing any subsidies to off-set, are some of the people most upset.
Pence: Haislmaier says some 8 million Americans are getting insurance through exchanges many of them with the support of subsidies. However…
Haslmaier: The thing that I think is more pressing is not so much the people who are receiving subsidies, it’s the 30-some million people out there in the individual and the small employer market, who have been subjected to all of these things in the law that have driven up their cost of care. The higher premiums you’re seeing, the higher deductibles, the fewer choices of insurers, the narrower provide network – and these people have been hit with this and are not getting any offsetting subsidies. The danger is that if you don’t act soon enough if you have a different president or a different Congress – you would see more and more of those people losing their private coverage. This election happens to occur right at the time when I think, in many respects, the ACA was about to shift from insuring the uninsured to uninsuring the insured – and that is the bigger danger.
Pence: People who don’t think they need insurance also lost their freedom to go without under Obamacare without paying a penalty.
Haslmaier: At a very fundamental level the mandates on employers and individuals’ really sparked objection across the political spectrum, it’s sometimes easy to forget that a lot of the objection to that came from the left side of the political spectrum as much as it did from the right side of the political spectrum. In fact, going back to 2009 when it was first being debated in Congress, so those are deeply unpopular for different reasons, but across the political spectrum.
Pence: And then there’s Medicaid – Obamacare allowed states to expand Medicaid and paid the entire cost at first, then 90% of it. Haislmaier says 12 million people were Medicaid insured as a result.
Haslmaier: The expanded Medicaid, which is the welfare program to able-bodied adults 85% of whom have no dependent children, half of them are between the ages of 19 and 34, so that is part of I think what you say in the larger context of this election that a preference of work over welfare is what was being expressed in the election. And essentially what the Medicaid expansion was doing was putting able-bodied adults onto welfare instead of work. It was also quite costly, and that brings in a third element, which was the taxes put in to pay for it that people object to – the taxing health insurance premiums, taxing medical devices, pharmaceuticals, etc.
Pence: But while lawmakers have been salivating to repeal and replace, it could take years to pass a replacement, or for the repeal of some features to take effect. Few lawmakers have a complete plan, but the preside elect designate for Secretary of Health and Human Services does. He’s Dr. Tom Price, an orthopedic surgeon, and current House Budget chair, who’s made no secret of his distaste for Obamacare. As HHS Secretary, he would be overseeing the very programs he aims to chop. Price’s plan is called the ‘Empowering Patients First Act,’ and one of its main features is to repeal the Medicaid expansion with no replacement. But some experts don’t think Congress would take the risk of throwing millions of people out on the street uninsured. Dr. Paul Ginsberg is Leonard Schaeffer Chair in Health Policy Studies at the Brookings Institution and Professor of Health Policy at the University of Southern California.
Dr. Ginsburg: I doubt that they would do that. You know many observers have believed that once 2014 came around is when the insurance expansion parts of the Affordable Care Act were implemented and you had a big gain of people with coverage – ‘cause that would actually ensure its longevity. There was an expectation that the expansion would continue, but that states would just be given a lot more flexibility in how to run their Medicaid programs. And I think that would be potential of compromise.
Pence: Many voters were attracted to Donald Trump’s candidacy because of his promises to bring back jobs that have fled the country. Jobs that would presumably go to the able-bodied unemployed that Haslmaier believes shouldn’t be on Medicaid. But until those jobs do come back, should those people lose their insurance?
Haslmaier: It’s not that there aren’t jobs out there, and in fact, one of the things you’re hearing from some employers is that they have people turning down jobs because they’re better off staying on benefits. However, the employment situation has to do with other economic policies, reducing the more general burden of regulation and taxes, etcetera. With respect to how you deal with the Medicaid expansion, it was not simply an issue of expanding to a group of people that – historically the solution had been not to give them benefits, or to say, “get a job.” It was also; this is going to be particularly important – the states were going to get reimbursed much more by the federal government for that population than they are for the population for which Medicaid was really established, which is poor children and disabled adults. And there’s a great inequity in that, there’s also a great cost in that.
Pence: Haislmaier says continuing the Medicaid expansion may come down to this – states can cover those people if they want, but the federal government won’t pay for it. So cash-strapped state maybe be forced to pull the plug, or Congress may eventually given states even more latitude on Medicaid spending, by turning it into a block grant program – an idea endorsed both by president-elect Trump and House Speaker Paul Ryan.
Dr. Ginsberg: The notion of Medicaid block grants or something similar but of per-capita caps, has been Republican thinking for many man-years. And what motivates this concern about, well they’re really two things, one is to give the states more discretion about how to run their Medicaid programs, but the other is to avoid the situation where the federal government is paying a large percentage of the bill through matching rates and then the state’s incentives to manage the program efficiently are greatly diluted. So, you know in the sense of a block grant changes those state’s incentives, where then if a state saves a dollar then the entire dollar goes to them.
Pence: However Ginsberg says over time, block grant increases are unlikely to keep pace with cost increases. So states would either have to cut benefits or somehow raise revenue. But while the Medicaid expansion might go away with new administration, most legislatures and president-elect Trump as well, want at least one aspect of Obamacare to remain – the right for people get insurance no matter their health condition. However, those people are extremely expensive to insure and that’s one reason why the ACA requires everyone to get insurance. Healthy people in the pool help pay for those who are sick, but if repeal and replace gets rid of the individual mandate, insurance rate for unhealthy people could go through the roof. For them to be insured, Haislmaier agrees, healthy people have to be in the pool. But he says, requiring insurance isn’t the way to do it.
Haislmaier: The rules around that have to be tweaked. You can’t make it a blanket thing, you have to have a set of incentives that say, you know, look in exchange for this you have to buy keep coverage when you’re healthy and not just when you’re sick and that’s something that simply can’t be done, because the mandate is not strong enough nor will be given its unpopularity.
Ginsberg: Some of the Republican replacement plans have been focusing on allowing people to continue to buy coverage without being subject to pre-existing conditions, as long as they maintain coverage continuously. So in the initial period, when anyone could buy coverage – but only those that maintain that coverage would not be subject to medical underwriting after that. They’ve also been toying with the idea of subsidizing high-risk pools for some of the people who have not maintained continuous coverage and have finally figure out if they really need coverage. I’m not sure if that’s going to work, because it seems to me that the ability to get into a high-risk pool really takes away a lot of the incentive of maintaining continuous coverage.
Pence: The plans of both Congressman Price and speaker Ryan, require insurers to offer coverage regardless of condition and offer those policy seekers cost incentives if they’ve had continuous coverage. The plans also call for high-risk pools, though at different funding levels, Price’s plan cuts the minimum benefits any plan is required to offer and that should allow cheaper premiums. However when it comes to the government’s involvement in healthcare, most people think of Medicare first and while Medicare wasn’t part of the ACA, the overturn of Obamacare may put it into play now anyway. The president-elect has said, he doesn’t want to touch Medicare but speaker Ryan wants to move it toward privatization vouchers. He says Medicare is going broke and Obamacare is why. Ginsburg agrees that Medicare will eventually run out of money, however…
Dr. Ginsburg: I’m a little baffled by the statement that the Affordable Care Act is responsible for Medicare’s fiscal outlook because indeed the Affordable Care Act actually cut Medicare spending, it actually increased the life of the hospital insurance trust fund. So I’m baffled about that one.
Pence: Still, Medicare is already moving towards privatization. Haislmaier says about a third of recipients are already Medicare Advantage Plans, but putting the whole program into private hands is a big change and how it might be rolled out is anyone’s guess.
Dr. Ginsburg: In some versions actually traditional Medicare would go away for say, people whose Medicare eligibility might be ten years off and below. In some other versions, Medicare, for example, issued a version along with Democratic senator Ron Widen where traditional Medicare would stay and it would compete actively with Medicare Advantage – which is the private plans that are substitutes for traditional Medicare. And, you know, I think a lot can be said in favor of having the traditional Medicare program continue as it is today is one of the options for beneficiaries alongside Medicare Advantage plans.
Pence: All of these changes could be coming, but despite the plans of lawmakers one thing many experts agree on is that Obamacare is not going away completely. New polls show that only about a quarter of Americans want a complete repeal of the ACA. There are too many aspects that people like, such as the ability to keep kids on a parent’s plan until age 26 and the requirement to offer coverage to people with pre-existing conditions. But Republicans plan a market-based approach to reach those goals.
Haislmaier: The question then becomes, “How do we do a better job of getting our money’s worth in health and medical care?” Ideally getting more and better and paying less, and we can certainly do that when it comes to things like personal phones and television – why can’t we do that in health care? And you can get a broad consensus around that, where the vision comes is the how to do it. This the group; the conservatives/the Republicans, believe that the way to do that – and I would agree with it – is to make healthcare more like other markets, where people who produce better value are rewarded with more business. But that means you gotta stop propping up people who aren’t doing a good job – unfortunately, we don’t do that in healthcare, we keep propping up the losers.
Pence: There will be winners and losers in repeal and replace as well and who those will be can’t yet be identified even if we know these broad brush-strokes, because the devil is in the details. You can find out more about all of our guests on our website, Radiohealthjournal.net. I’m Reed Pence.
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