Trump’s ACA Reform Principles and What They May Mean

President Donald Trump gave a speech to a joint session of Congress Tuesday night. A significant portion of his speech dealt with his commitment to repeal and replace the Affordable Care Act. What did he say, what does what he said mean, and what will be the impact on the ACA?

What He Said

President Trump devoted considerable time to discussing his goal to repeal and replace Obamacare. Here is what the President said, “Tonight, 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, after reciting his criticism of the Affordable Care Act 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 then 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.

“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 President Trump 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 health care reform principles, so there’s clearly room for differing interpretations.

Pre-existing conditions: In the past, President Trump has expressed the desire to keep the ACA’s guarantee issue provisions that prevents insurers from declining coverage due to a consumer’s health status.  Last night, however, he said used a different wording, stating that pre-existing conditions should not bar Americans from having “access” to coverage. These are two different things. The ACA requires 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, limited benefits and 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 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 health care reform proposals.  In a draft of Speaker Ryan’s Obamacare replacement bill, leaked last week, 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 health care reform focuses on health care 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. Hopefully 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: President Trump and many Republicans invoke letting consumers buy out-of-state coverage with the same passion as Hogwarts students learning their first spells. They proclaim it 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? In short,

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 that emerges from Congress and lands on his desk to sign?

First, it is very significant that the President’s health care 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 to Congress the responsibility to develop an ACA replacement. 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 President Trump veto a bill that meets all of his principles except for this one? Doubtful.

Third, we’re only at the beginning of long, arduous march to reforming or replacing the Affordable Care Act. There’s 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 health care reform we get at the end of what will be a very long, messy slog.

Please check out my health care reform magazine on Flipboard for constantly updated, curated articles.

An ACA Tweak: Miracles Happen

Just when you thought Congress and the White House were officially incapable of agreeing that the days of the week actually end with the letter “y” they come up with a surprise — a tiny sliver of light that penetrates the cynical gloom in which most Americans shroud Congress. Lawmakers today passed legislation that amends the Patient Protection and Affordable Care Act.

Yes, that’s not a misprint. Congress amended the ACA.

It wasn’t a major change, more of a tweak, but a change nonetheless. Specifically, both chambers of Congress passed the Protecting Affordable Coverage for Employees Act (H.R. 1624). The legislation allows states to set the definition of “small group” as opposed to being required to adopt the definition set in the ACA. HR 1624 is on its way to President Barack Obama’s desk for his signature. Given the strong support in Congress (it was passed by unanimous consent in the Senate) I’m optimistic the President will sign HR 1624 into law. And the President did sign HR 1624 on October 7th.  <I’ll update this post when the President acts.

What’s going on here? As far as the substance of the bill is concerned: currently, the small group market covers companies up to 50 full-time equivalents (“FTEs”). Small groups are subject to a host of requirements under the ACA concerning plan design, pricing, medical loss ratio, and more. Large groups (currently defined as companies with 51-or-more FTEs are subject to different regulations. (Full time equivalents is a measure that takes into account part-time employees when calculating a company’s size under the ACA).

On January 1, 2016 the definition of “small group” is changing to include companies with 100-or-fewer FTEs. This is going to result in substantial changes for these companies — more than a few of those changes of the unpleasant variety. Some carriers are averaging 35%-to-40% rate increases in this market segment. A company of 51-to-100 FTEs will find fewer plan options and other limitations at which they are likely to chafe.With the enactment of HR 1624, many companies will now be able to remain in the large group market. (To be fair, there’s some benefits to being considered a small group that these companies may regret missing out on, but overall most brokers I talk to report that their impacted clients would like to avoid entering the small group market).

In practice, HR 1624 doesn’t change the definition of small group under the ACA. It simply allows states to set their own definition: think of it as permitting state preemption of the federal definition.

Consequently, HR 1624 may or may not matter. States may decide to move forward with the redefinition of small group to companies with up to 100 FTEs (California is a state likely to take this position). Your state Association of Health Underwriters chapter will be a good source for learning what your state is doing.

What’s going on here politically is even more interesting. Allowing states to set their own definition of what is a small group is the kind of tweak that’s supposed to happen when Congress passes complex legislation. In the old days after passing something like the ACA, Congress and the Administration would work together to refine the law into something less burdensome and more effective. That’s what HR 1624 does, but getting it this far was no easy task. It took a bipartisan group of lawmakers in Washington (that’s a phrase becoming increasingly rare) and the urging of many business and industry groups like the National Association of Health Underwriters to push the bill over the line.

Which is why, while the substance of the law is significant, what’s most significant is that the law passed Congress at all. The current Congress is not known as a “can-do” group of folks. Getting them to agree on anything meaningful is a Herculean task. That they came together on the Affordable Care Act is newsworthy — they usually prefer to use health care reform to bludgeon one another about the head. For this Congress at this time to make any change to the ACA is remarkable.

The passage of HR 1624 is remarkable, but not unprecedented. Congress, for example, previously removed an onerous provision of the ACA that would have required businesses to issue 1099s to any vendor they spent $600 with in a year. Everyone realized that was silly and they repealed the provision. So enactment of HR 1624 is not unprecedented.

It is, however, welcome and remarkable.

 

Health Care Reform Bills: Coming Soon to a Nation’s Capital Near You

President-elect Barack Obama won’t take the oath of office for more than two months, but the drive for health care reform is about to get under way. Senate Health, Education, Labor and Pensions Committee Chair Ted Kennedy has been working from his home, where he’s fighting brain cancer, seeking to pull together a consensus bill. Meanwhile, Senator Max Baucus, Chair of the Senate Finance Committee introduced his health care reform plan today.

Senator Baucus’ Finance Committee and Senator Kennedy’s Health, Education, Labor and Pensions Committee share jurisdiction over this issue. According to Politico, the staffs of the two committees have been meeting with stakeholders since the summer and the two committee chairs have been in contact. The details of Senator Kennedy’s plan have not yet been released.

Senator Baucus’ health care reform plan contains several elements that align with the reforms President-elect Obama called for during the campaign. These include the creation of government-run “exchanges” to allow Americans to shop for coverage from multiple carriers and a requirement that carriers accept all applicants regardless of pre-existing health problems. Significantly, Senator Baucus goes a step further and would require all Americans to purchase coverage “once affordable options are available.”

Requiring everyone to purchase coverage was a contentious issue during President-elect Obama’s hotly contested primary fight against Senator Hillary Clinton. She was for a mandate to buy; he opposed it. As has been previously noted, a requirement to sell insurance without a requirement to buy results in higher premiums. Senator Baucus apparently agrees noting that the uninsured incur medical costs that are then shifted to those with insurance. By bringing everyone into the system, Senator Baucus believes the average cost of insuring each American will be reduced. By including an alternative for those who cannot afford coverage he avoids one of the most vociferous objections to requiring consumers to buy coverage.

Senator Baucus’ health care reform plan would also allow those between the ages of 55-and-64 to purchase Medicare if they lack access to public insurance programs or a group health plan. According to the New York Times, four million people in this age group are currently uninsured. He would expand the State Children’s Health Insurance Program to include children in families at or below 250 percent of the federal poverty level ($44,000 for a family of three) and he would lift the ban preventing legal immigrants to enroll in SCHIP until they’ve been in the country for five years. Like President-elect Obama, Senator Baucus supports tax credits for small businesses that provide health insurance coverage and for individuals and families, below 400 percent of the federal poverty level, who purchase their own coverage.

We haven’t heard from the Republican side of the aisle on this issue yet, but it shouldn’t be long now. There proposals will likely be more market oriented and less far reaching.

The key question is whether lawmakers in Washington have the bandwidth to fashion a comprehensive health care plan while simultaneously dealing with a crashing economy, a host of international issues and energy policy. Personally I think they’ll make the time. Health care reform is too entwined with people’s sense of financial and is too much a part of the economy to be put off. As I’ve written before, if health care reform is positioned not as a cost item, but as in investment in the nation’s infrastructure, it becomes very compatible with other economic stimulus efforts.

On the other hand, it is interesting that Senator Baucus, the Chair of the Senate Finance Committee, has apparently left out the funding mechanism for his reform package. That in itself is a telling reminder of how difficult achieving meaningful reform in today’s economic climate will be. That it is difficult, however, does not mean it’s impossible.

Note: I haven’t been able to find

Yes It’s the Economy, But It’s Health Care Reform, Too

In 1992, James Carville wrote down the key messages then Governor Bill Clinton’s campaign had to focus on in order to win.

  1. Change versus more of the same
  2. The economy, stupid
  3. Don’t forget health care

Throw in a cup of national security and you’ve got the same recipe for presidential success in 2008. Anyone listening to a speech by Senator John McCain or Senator Barack Obama will appreciate that their campaigns understand this reality. And given the recent credit crisis and financial maelstrom, the economy has become an even more central part of this election. In interpreting the public’s demand for change, however, the dominant position of economic issues should not hide the fact that voters want health care reform, too.

According to the October Kaiser Health Tracking Poll, no surprise here, the economy is overwhelmingly, the most dominant issue in this year’s campaign. 62 percent of the survey’s respondent’s listed the economy as “the single most important issue in [their] vote for president.” 13 percent of the respondents cited Iraq while 12 percent named health care.

Economic concerns emerged as the key issue long before the current financial crisis, however. In the December 2007 poll, Iraq was the top issue, with 30 percent of the respondents listing it as the most important issue. It was followed by the economy at 23 percent and health care at 21 percent.

In February 2008, the economy had moved into first place, having been named by 43 percent of respondents. The percentage name Iraq and health care as the most important issues remained constant at 29% and 21 percent, respectively.

By August 2008 49 percent of respondents were citing the economy as their top issue while Irag had dropped to 25 percent and health care to 16 percent. The Kaiser survey interviewed “likely voters” by phone between October 8th and October 13th, well after the economic crisis had set in, making the big change in the results understandable.

One might conclude from this that health care reform is moving off the public’s radar as a salient issue. That would be a mistake. The Kaiser survey shows that 75 percent of Democrats and 61 percent of independents believe “it is more important than ever to take on healthcare reform.” Even 42 percent of Republicans agreed with this statement. What it shows is that health care reform and economic security are intertwined and inseparabe. A key aspect of “fixing” the economy will involve “fixing” health care.

According to the Kaiser study, 35 percent of respondents themselves or a family member had put off getting health care they needed because of the economy. 31 percent said they skipped recommended medical tests or treatment and 27 percent said they didn’t fill a prescription. 28 percent of the respondents reported they had problems paying for health care and health insurance as a result of recent changes in the economy.

Restoring consumer confidence is a substantial part of recovering from economic set backs. So it is significant that half of the respondents (51 percent) said that “lower prices for health care and insurance would make a big difference in their family’s financial situation.” That’s more than the 45 percent who said a rebound in the stock market would make a big difference in their situation.

Senator Obama has cited health care reform as one of the top three issues he’ll address as president. There are numerous plans already circulating in Congress to jump start the reform process, including a bipartisan health care reform package backed by 12 Senators, six from each party. Senator Ted Kennedy, who is at home battling brain cancer, is talking with lobbyists, policy mavens and lawmakers from both parties to develop a framework for health care reform for the new president. Senator Kennedy intends to introduce his legislation as soon as the new Congress convenes.

So yes, the economy will be the dominant issue between now and election day. And it will dominate the president-elect’s wait to move into the White House and it will dominate his first months — perhaps his first term — in the oval office. The economy will dominate, but it won’t eliminate other issues. The American people expect health care reform to be among those other issues — and it will be.

What may surprise some is how quickly the health care reform effort will get underway. My guess is the new president will give a major address on the issue before inauguration day. Health care reform is simply too tied to the reality and perception of Americans’ economic security. It’s too important to Senator Kennedy. It’s too important to helping businesses recover and grow. The American people want the new president to address health care reform. And the new president will need to.