Repeal and Replace Obamacare? With What?

The president-elect has promised, time and again, to replace Obamacare with something better, though he has been short on specifics. The handful of details one can glean from his pronouncements are:

1. Expansion of coverage to the more than twenty million Americans who have purchased health insurance through the exchanges will not be eliminated, though the level of continued subsidies and the mechanism for financing the subsidies are unspecified.
2. Pre-existing condition exclusions will not be returning (though presumably limitations will apply, as existed pre-ACA, such as creditable coverage requirements).
3. Medicaid will be converted to a block grant program, thus granting states even more flexibility in designing their own programs, and presumably limiting future federal financial commitments.
4. The sale of insurance plans across state lines would be permitted.

Since Trump will have to work with Congress to implement a new approach to regulating the health care payment and delivery system, it is instructive to take a look at the House Republican framework for repeal and replacement of Obamacare, part of a broader framework modestly titled “A Better Way,” released this past June in conjunction with one of the five dozen or so votes taken over the years to repeal the Affordable Care Act, and promoted by Speaker Paul Ryan. (Read the full policy paper, fact sheet, snapshot, “by the numbers” sheet and FAQ.)

Here’s a summary of some of the framework’s key points, via Fierce Healthcare:

A new approach to exchanges. The Republicans’ plan would offer everyone who doesn’t qualify for employer coverage, Medicare or Medicaid to access a refundable tax credit to use in the individual market—instead of the ACA’s current policy of offering tax credits to just those of certain incomes. The credit is also age-adjusted, the report says.

“Association health plans,” in which small business and groups such as alumni organizations and trade associations band together to offer healthcare coverage at better rates via improved bargaining power with insurers. This would “free employers from costly state-mandated benefit packages and lower their overhead costs,” the document says.

Robust high-risk insurance pools. The plan would set aside at least $25 billion to fund programs that Republicans say would give financial support for those with high medical costs who find themselves priced out of coverage. Premiums for those participating in the high-risk pool would be capped, and wait lists would be prohibited, according to the document.

A one-time open enrollment period for the uninsured, regardless of health status. If consumers who lack coverage don’t enroll in a plan during that open enrollment period, they forfeit continuous coverage protections and could face higher insurance costs in the future.

The sale of insurance across state lines. This often-cited GOP policy proposal, according to the document, will make the insurance market more competitive and give consumers the ability to access the most affordable policies.

The preservation of certain ACA protections. The plan would prevent those with pre-existing conditions from being denied coverage, as well as allow individuals to stay on their parents’ insurance plan until age 26.

Medicaid reforms that would allow states to choose between either a per capita allotment for their programs or a block grant. States would be allowed the flexibility “to charge reasonable enforceable premiums” or offer a limited benefit package. The proposal also takes several steps to “modernize” the Medicaid demonstration waiver process, requiring them to be budget neutral while grandfathering in some successful waiver provisions.

The framework contains no specific legislative language, no specifics on funding and, frankly, rehashes many Republican health reform proposals from over the past ten years or so.

Much of the Republican rhetoric about the need to repeal and replace Obamacare is tied to the perceived cause and effect relationship between implementation of the ACA and increased out-of-pocket expenses (premiums, deductibles, coinsurance and copayments), the individual mandate (people should be free to not buy insurance), and broader complaints about increased costs and reduced individual choice.

The campaign rhetoric (to the extent that any attention has been paid to health reform in this campaign) has centered on returning freedom of choice to individuals and reducing federal government interference in the health care markets. The initial challenge to the ACA, when decided by the Supreme Court, yielded the elimination of the mandate to states to expand Medicaid with federal dollars. Congressional action over the years has defunded key components of the ACA (for example: CO-OPs). It is reasonable to expect a net reduction in federal dollars in any Trump/Ryan health care proposal.

It remains to be seen whether the GOP, with its historic control of the White House, both houses of Congress (though necessarily working within the confines of the budget reconciliation process) and, presumably soon, the Supreme Court, can fashion a workable set of solutions to the intransigent problems posed by the U.S. health care system.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting