Editor’s Note: This article was written before the American Health Care Act was released.
For all the philosophy imbedded in the arguments and debates around the Affordable Care Act (ACA), the reality is the program isn’t perfect. While much of the law is a win for emergency medicine, financing of the program is not. The expansion of Medicaid coverage, requirements to cover preexisting conditions, coverage of children up to age 26 on a parent’s policy, and the establishment of a minimum benefit standard including the prudent layperson standard for emergency care are great for those of us who bear the biggest burden of the uninsured population when they have no other access to care. However, the mechanisms to fund these benefits for the long-term were inadequate even on the day the ACA became law. Expecting that healthy young people would opt to pay even a 50 percent discounted health care premium (let’s say $6,000 per year) versus paying 2.5 percent of their income (which is $1,000 if they are making $40,000 per year) wasn’t going to work. Without healthy people paying into the system, the existing increase in tax revenue isn’t enough to finance the whole program. Expecting that insurance companies would continue to sell policies in regions where they are losing money despite subsidies is wishful thinking at best. Given their operating losses, and the loss of additional revenue under a risk corridor program that was defunded by Congress, insurers are leaving the ACA program. As of the beginning of this year, nearly 35 percent of potential ACA enrollees have only one insurance company to choose from in the health care exchange, and another 19 percent have only two choices.
How will President Donald Trump and Congress ensure access to health care insurance—without removing the components of the ACA that everyone likes—without individual or employer mandates? That remains to be seen. Newly confirmed Secretary of Health & Human Services (HHS) Tom Price, MD, has been an ardent opponent of the ACA and will have wide latitude to change the program based upon the large number of regulatory actions that have been taken to implement and operate the program. In his first official act after his swearing in, President Trump issued the “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” order. This directed HHS and all departments and agencies, “to the maximum extent permitted by law,” to “delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or individual,” “provide greater flexibility to states and cooperate within them in implementing healthcare programs,” and “encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance.”
While Sec. Price is just settling into his new office, Congress has already begun the process of undoing the law. Under a process titled budget reconciliation, the Senate and House passed a resolution directing the respective chambers to develop legislation that is linked to the passage of the budget. Although Congress, together with the president’s signature, can’t change the language of the ACA that is purely “policy” without being subject to the possibility of a filibuster in the Senate, they can effectively defund the program by changing the budget. Under the Congressional Budget Act of 1974, the Senate can pass, with only a simple majority and limited debate, legislation that can be used to change laws that are scored by the Congressional Budget Office (CBO), which is essentially anything that costs money or is implemented as a tax. Although the budget reconciliation process seems somewhat undemocratic, it was this same process that the Democrats utilized in 2010 to fund certain aspects of the ACA.
What will “replace” look like? The president’s health care reform plan included a number of policies, in addition to the “complete repeal of Obamacare.” Those include:
- Modify laws that inhibit the sale of insurance across state lines.
- Allow individuals to fully deduct health insurance premiums from tax returns.
- Allow individuals to use health savings accounts (HSAs) without annual limits.
- Block-grant Medicaid to the states (see below).
House Speaker Paul Ryan released his vision for addressing the issues facing the country in his “A Better Way” agenda in June 2016. “A Better Way to Fix Health Care” is a 30-page document within the agenda where Ryan lays out his key policy cornerstones for health care reform, including:
- Provide a refundable tax credit for people without access to employer-sponsored coverage.
- Expand the use of HSAs.
- Allow sales across state lines.
- Protect patients with preexisting conditions and allow dependent coverage up to age 26.
- Empower states to design Medicaid programs “that best meet their needs.”
- Give future Medicare beneficiaries (starting in 2024) the option to choose private plans versus traditional Medicare.
Clearly, the president’s and the speaker’s approaches share some common themes about a comprehensive “replace” package. Republican leaders have talked about creating a “health care backpack” concept that would allow people to carry different components of coverage throughout their lives depending upon their age or their personal circumstances. It is unclear how the process of crafting a bill will actually occur as many Republicans want a quick replacement and others are calling for a more measured approach with perhaps a delay component built in to prevent a decrease in the number of insured Americans as the ACA is defunded.
Today, Medicaid provides insurance coverage to more than 70 million Americans and costs more than $530 billion, representing approximately 13 percent of the federal budget. Approximately 11 million Medicaid recipients are people who were covered under the Medicaid expansion program of the ACA. Aside from the broader expansion of health care coverage under the ACA, Medicaid expansion significantly changed the health care delivery landscape in the United States. Under the expansion program, 31 states and the District of Columbia opted in. The incentive was that the federal government would pay 100 percent of the additional cost to cover these newly eligible individuals from 2014 to 2016, 95 percent from 2017 to 2019, and a fixed level of 90 percent by 2020. For emergency medicine, having more patients insured is an improvement both from a professional fee perspective and in providing a greater opportunity for follow-up care after an emergency department visit. What would happen to those extra payments under an ACA repeal? Would states be on the hook to continue coverage, or would they have to cut people from their Medicaid roles? Another challenge for repeal would be reconciling reductions in payments to hospitals occurring as part of the changes to the disproportionate share hospital (DSH) payments. Under the ACA, hospitals are scheduled to see a reduction in these payments of more than $17 billion. Would these payments return to pre-ACA levels or some other amount by a newly defined formula?
The nature of Medicaid being a shared-responsibility program between the federal government and the states makes any repeal of the ACA more complicated than the repeal of the health care exchanges. Given that some states opted not to participate in Medicaid expansion, there has been an unequal effect of the ACA in those states that chose to participate versus those that did not. Since the implementation of the ACA, 37 states are participating in 1,115 demonstrations or waiver projects, providing flexibility in a number of areas of the Medicaid program, including provider incentives for state-specific performance goals.
All the Other Stuff
Although the Medicare Access and CHIP Reauthorization Act of 2015 replacement for the flawed sustainable growth rate payment formula received bipartisan support and is unlikely to be repealed, many of the secondary programs that are part of the big picture of payment reform will be subject to revision or replacement. Accountable care organizations, Medicare shared savings programs, and the Center for Medicaid & Medicare Innovation Center could all go away.
Historically, newly inaugurated presidents get some degree of cooperation by the opposing party during a “honeymoon” period, especially when the president’s party controls both houses of Congress. That is clearly not going to happen this year. The Democrats have already taken a very hard line in opposition to the president, as demonstrated by their refusal to vote for or even attend committee hearings for some cabinet nominees. The president has not softened his “campaign tone” and continues to push hard on controversial issues such as the immigration/travel ban. What the replacement of the ACA will look like and how it will affect emergency medicine will be interesting for all of us and will play out within the next few months.