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March 6, 2017

What Trump Wants to Do on ACA

Summary:

What Republicans are putting forward may bear only a passing resemblance to the reform we get at the end of a long, messy slog.

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President Trump’s speech to a joint session of Congress on Feb. 28 covered his commitment to repeal and replace the Affordable Care Act. What did he say, what did he mean and what will be the impact on the ACA?

What He Said

The president said, “I am also calling on this Congress to repeal and replace Obamacare with reforms that expand choice, increase access, lower costs and, at the same time, provide better healthcare.”

Then, he proclaimed, “We must act decisively to protect all Americans. Action is not a choice — it is a necessity. So I am calling on all Democrats and Republicans in the Congress to work with us to save Americans from this imploding Obamacare disaster.”

He cited five principles that “should guide the Congress as we move to create a better healthcare system for all Americans.

“First, we should ensure that Americans with pre-existing conditions have access to coverage and that we have a stable transition for Americans currently enrolled in the healthcare exchanges.

“Secondly, we should help Americans purchase their own coverage through the use of tax credits and expanded Health Savings Accounts — but it must be the plan they want, not the plan forced on them by the government.

“Thirdly, we should give our great state governors the resources and flexibility they need with Medicaid to make sure no one is left out.

See also: What Trump Means for Health System  

“Fourthly, we should implement legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance — and work to bring down the artificially high price of drugs and bring them down immediately.

“Finally, the time has come to give Americans the freedom to purchase health insurance across state lines — creating a truly competitive national marketplace that will bring cost way down and provide far better care.”

What He Meant

I hesitate to try interpret what the president means when he, well, uses words. We’re talking a moving target here. However, given the gravity of the speech, I assume what he said was thoroughly vetted and intentional. So, I’ll go try to interpret the president’s message. Full disclosure, however: Republicans are already fighting over the meaning of his five healthcare reform principles, so there’s clearly room for differing interpretations.

Pre-existing Conditions:

In the past, Trump has expressed the desire to keep the ACA’s guarantee-issue provisions that prevent insurers from declining coverage because of a consumer’s health status. Last night, however, he used different wording, stating that pre-existing conditions should not bar Americans from having “access” to coverage. These are two different things. The ACA requires that carriers accept consumers, even those with expensive medical conditions, into any plan for which the consumer is eligible. Calling for access means that, as an alternative, these Americans could be shunted into high-risk pools or plans designed specifically for high-cost insureds.

Offering access to high-risk pools means Americans with existing medical conditions would have fewer choices and limited benefits and would pay higher premiums than their healthier neighbors. In testimony before a California legislative committee, I once referred to high-risk pools as “a ghetto of second-hand coverage.” The author of the legislation establishing the state’s pool sat on the committee. Oops! But I stand by my description.

The president’s indicating a willingness to accept high-risk pools was good news for House Speaker Paul Ryan, who supports them. However, there are millions of Americans with pre-existing health conditions. How will they react to being removed from the “normal” market? And how will they, and their family and friends, express those feelings at the polls?

Tax Credits and HSAs:

Health Savings Accounts have long been a staple of Republican healthcare reform proposals. In a draft of Speaker Ryan’s Obamacare replacement bill, tax credits are the primary means of making health insurance premiums affordable. Conservatives have pushed back against tax credits, calling them a new, non-means-tested entitlement program. The president’s backing of this approach will give the speaker some leverage in negotiations with these members of the GOP caucus in the House.

Medicaid:

President Trump’s call for giving governors more say in how their states implement Medicaid seems to support efforts to move federal payments for the program into block grants, which aligns the White House with Republicans in the House. Currently, states receive funds based on Medicaid enrollment (subject to a host of adjustments for a variety of factors, but let’s keep it simple for now). Block grants would give states a fixed amount to spend within very broad federal guidelines. This approach enables the federal government to cap their spending on the program and leaves it to states to manage the program.

Lowering the Cost of Care:

Too often, the debate over health insurance affordability ignores a harsh reality: The major driver of health insurance premiums is the cost of medical care. Most of the president’s principles concerning healthcare reform focus on healthcare coverage. But he’s also seeking to lower costs through malpractice reform and through taking steps to drive down the cost of prescriptions. That the president is addressing medical expenses at all is a good thing. Let’s hope that, as a replacement to the Affordable Care Act moves through Congress, there will be an even greater emphasis placed on reducing the cost of medical treatments and services.

Interstate Sales:

Trump and many Republicans invoke letting consumers buy out-of-state coverage with the same passion as Hogwarts students learning their first spells. Republicans proclaim out-of-state coverage will increase competition and lower premiums across the country. Like that school of witchcraft and wizardry, however, this proposal is, unfortunately, a fantasy. I’ll write a post on why soon, but for now consider just one factor: Virtually all health insurance policies sold today rely on discounts offered by “in-network” doctors, hospitals and other providers of care. Plans sold in State A may look good to a consumer in State B, but if that carrier doesn’t have a strong network in State B, what good is that policy?

The Impact

Let’s assume I’ve interpreted what the president said correctly. What will be the impact of his position on whatever Obamacare repeal-and-replace bill emerges from Congress and lands on his desk to sign?

See also: Is the ACA Repeal Taking Shape?  

First, it is very significant that the president’s healthcare reform principles align as closely as they do with those of Speaker Ryan. This gives the speaker a powerful card to play when herding his splintered caucus behind his preferred legislation.

Second, it seems to signal that the White House is ceding the responsibility to develop an ACA replacement to Congress. The president carved out no bold vision for what he wants, nor are his principles in conflict with longstanding Republican positions. The only exception is his call for federal action to lower prescription drug costs. But would Trump veto a bill that meets all of his principles except for this one? Doubtful.

Third, we’re only at the beginning of a long, arduous march to reforming or replacing the Affordable Care Act. Many more parties will be heard from, including Senate Republicans, insurers, pharmaceutical companies, doctors, hospitals and other special interest groups. The public will have a lot to say on this subject, too. Plus, any reform package will likely require support from Democrats, and negotiations for those votes have not yet begun.

As I’ve written previously, what Republicans are putting forward now may bear only a passing resemblance to the healthcare reform we will get at the end of what will be a very long, messy slog.

This article was originally posted on Alan Katz’s blog.

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About the Author

Alan Katz speaks and writes nationally on healthcare reform, technology, sales and business planning. He is author of the award-winning Alan Katz Blog and of Trailblazed: Proven Paths to Sales Success.

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