What To Expect in 2017: Managed Care Year in Preview

Repeal and replace: Maybe not so fast, maybe not all of it


Robert Calandra

Rip up and replace: Rep. Tom Price tears up a page of the ACA. As HHS secretary, Price will be in a position to do much more than that to dismantle the health care reform law.

Candidate Trump seemed ready to take a scorched-earth approach to the ACA, vowing to repeal and replace Obamacare to big cheers at his rallies. In the very early going, President-elect Trump softened his tone and seemed to dilute his plans. Following a meeting with President Obama a few days after his upset win, Trump told the Wall Street Journal and later CBS’s 60 Minutes that he was considering leaving parts of the law in place, including provisions that allow individuals under 26 to stay on their parents’ insurance and the prohibition on insurers denying coverage to people with pre-existing conditions.

Selecting Rep. Tom Price to head up HHS sent a different signal. It was back to “game on” and then some.

Other priorities (and political realities) may intrude, but the Georgia Republican and former orthopedic surgeon may take the Trump administration beyond undoing the ACA into a bold attempt to revamp Medicare and Medicaid and the federal government’s role in health care. The future HHS secretary supports creating a premium support option in Medicare and turning Medicaid into a block grant program for the states. “Gutting Obamacare might be the least controversial part of Tom Price’s health care agenda,” proclaimed Politico.

Still, dismantling the ACA is likely to be the most important development in American health care in 2017 by far.

It may happen in bits and pieces. Senate Democrats could filibuster total repeal. Besides, junking the ACA in one fell swoop would be politically hazardous for Trump and the Republicans if it meant millions (20 million, by some estimates) of Americans suddenly losing their health insurance coverage.

But the Republicans need only a majority in the Senate to use a legislative tactic called budget reconciliation to undo important chunks of the ACA. Some observers have said the GOP should build on the reconciliation bill that they passed last year before it was vetoed, predictably, by Obama. If such a bill were to pass Congress and be signed by Trump, it would probably be seen by most Americans as satisfying the “repeal” half of the “repeal and replace” battle cry.

And what about replace? “The repeal part is a lot easier than the replace part,” says Mark Pauly, a professor of health care management at the University of Pennsylvania’s Wharton School. A quotation attributed to Sam Rayburn comes to mind: “A jackass can kick down a barn, but it takes a carpenter to build one.”

As we went to press, there was no one plan or proposal to go by and a fair amount of inconsistency to reckon with (a promise not to change Medicare was still on Trump’s campaign website after he announced that Price was his HHS pick).

But a Venn diagram would show a considerable amount of intersection among what Trump proposed as a candidate, Price’s 2015 “Empowering Patients First” bill, the “A Better Way” plan that House Speaker Paul Ryan and Congressional Republicans put out this summer that has elements of Price’s bill, and ideas that have been in the Republican health care playbook for some time.

Allowing insurers to sell health plans across state lines. Republicans have talked about this for years, and Trump mentioned it during his campaign. The underlying notion is that interstate sales will lead to competition, a greater variety of health plans, and lower prices. Ryan also says his plan would encourage interstate compacts. Skeptics, including some Republicans, say interstate competition would circumvent state-level insurance regulation and possibly lead to plans with substandard benefits—“a race to the bottom.”

Expanding health savings accounts. The Trump campaign website calls for health savings accounts (HSAs) to be tax-free (which they are, by definition) and exempt from estate taxes. Price proposed encouraging people to start an HSA with a one-time $1,000 tax credit, protecting HSA funds from bankruptcy proceedings, and allowing flexible spending account funds to be rolled over into HSAs. Ryan’s plan leans heavily on HSAs and health reimbursement accounts, along with high-deductible health plans. Encouraging that type of coverage helps patients understand the “true cost of care” and lets people pick a health plan that fits their needs, it says.

Turn Medicaid into a block grant program. The Trump campaign website says state governments know their people best and can better manage their Medicaid programs “without federal overhead.” The Ryan plan says the current federal-state matching system for financing Medicaid creates an incentive for state politicians and bureaucrats to maximize the federal share of Medicaid financing while burdening states with oversight and management from Washington. Block grants and possibly moving to per capita allotment would give states more authority and control of their Medicaid programs, the plan says.

Not every aspect of how the Trump administration might go about replacing the ACA is in the Venn intersection. For example, a major part of the Price and Ryan proposals is a system of age-adjusted tax credits to buy insurance on the individual market. Trump isn’t necessarily opposed, but he didn’t campaign on the tax credits.

In Price’s bill, the credits—which would be adjusted for inflation—would start at $900 for children younger than 18 and increase to $3,000 for those 50 and older. Republicans are positioning these tax credits as a way to make health insurance affordable and as substitutes for the premium subsidies for insurance bought on the ACA exchanges. Democrats and the ACA’s defenders say it is not nearly enough money.