Replacing Obamacare not an easy path for new administration

January 26, 2017

Dismantling Obamacare was a campaign promise that President Donald Trump intends to keep.

Dismantling Obamacare was a campaign promise that President Donald Trump intends to keep.

 

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However, Republican lawmakers are finding that their options for an alternative plan are not easy to implement nor are they necessarily going to be politically popular, according to health policy experts presenting at the After Obamacare: The Future of U.S. Health Care webinar, sponsored by the USC Annenberg Center for Health Journalism.

Experts discussed the current state of affairs along with potential paths a repeal-and-replace effort could take, including the challenges of each option.

Joseph Antos, an economist and resident scholar at the American Enterprise Institute, a Washington, DC-based think tank, said Trump doesn’t care about the details of a repeal effort, because he harnessed the general angst about the program and promised to get rid of it. The specific policy details are of little concern as long as he can deliver on his promise.

There has been little to go on, other than his prior comments supporting children staying on their parents’ insurance until age 26 and insurance companies being banned from denying care to those with pre-existing conditions. The lack of specific policy ideas has pushed the details to the Republicans, primarily those in the Senate.

 

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But Antos warns there are no real clues to be drawn from prior Republican replacement proposals, including one from Secretary for Health and Human Services nominee Tom Price, because the plans were designed to score political points more than anything, because none ever had a chance of getting past a veto by President Obama.

Currently, there are no options on the table, and the timeline for a possible replacement is now realistically expected to be February or March, Antos said.

Next: What options do Republicans have?

 

What options do Republicans have?

The way the Affordable Care Act (ACA) is structured, the insurance companies bear the risks, but the federal government provided four tools to help, according to Jonathan Gruber, an economics professor at MIT.

 

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The four tools are:

 

·      Expand Medicaid to take care of the poorest people

·      Offer tax credits to promote getting healthy people into the insurance pool

·      Mandate a penalty for those that don’t come into the pool

·      Pay money to the insurers to help offset the costs of the sick

Together, these tools enabled private insurers to provide greater coverage to Americans. The challenge, said Gruber, is that Republicans have vocally opposed all four options, meaning they cannot use any of them in a plan of their own, unless they want to face a backlash.

“They either have to break from the strong positions they have taken or things will fall apart,” said Gruber.

 

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The one tool Republicans have discussed is the use of tax credits, but the credits discussed do not vary by income. Someone with a $4,000 tax credit to use on insurance that costs $8,000 isn’t going to be helped much, said Gruber. Similarly, health savings accounts are not a solution for low income people, which he dismisses as a “nice talking point, but they are really irrelevant for the vast majority of low-income people.”

Next: Two options remain

 

Another idea that’s been discussed is to put all  sick indviduals in their own high-risk pool, but Gruber notes that the only way to make insurance affordable in that scenario is to offer massively government subsidized insurance, which would be more expensive than the ACA.

 

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This leaves Republicans with two options:

1)    Repeal the ACA, forget about replacing it, and go back to the old ways with up to 20 million more uninsured.

2)    Cave on the principles regarding the four tools mentioned above. This might mean Republicans could repeal the ACA and then pay insurance companies lots of money to stay in the exchanges. “Unless Republicans are willing to back off in their opposition, then there is no replacement and there is no real alternative,” said Gruber.

Gruber said that repealing the ACA and not doing anything else is a very real option. “There is no replacement option that is realistic,” he said.

Two other points of note from the webinar:

·      Neither Gruber nor Antos expected any changes in Medicare Access and CHIP Reauthorization Act (MACRA) and its value-based payments to doctors. In fact, Gruber sees Price as a cheerleader for the program.

·      The community rating aspect of the ACA is just as important as a ban against pre-existing conditions. The community rating prevents charging the sick more than the healthy, said Gruber. If the community rating goes away, people with pre-existing conditions couldn’t be denied insurance, but the insurance companies could charge them whatever they wanted for coverage, defeating the point of any ban.