On January 20, 2017, Donald J. Trump was inaugurated as the 45th President of the United States, giving control of the White House, the House and the Senate to the Republican Party.
Congress is expected to move quickly on President Trump’s agenda: one of the top priorities is the repeal of the Patient Protection and Affordable Care Act (PPACA, more commonly referred to as the Affordable Care Act or Obamacare). Despite countless previous failed attempts and a ruling from the Supreme Court, Republicans remain keen on repealing and replacing the ACA.
To drive home this point, Trump named Dr. Tom Price, a long and vocal opponent of the ACA, to be his Secretary of Health and Human Services. There is much uncertainty surrounding the proposed changes, many of which have not been clearly defined by the young administration or by the Republican leadership in Congress.
Herein, I will examine some of the merits and downfalls of repealing the ACA and I will evaluate some of the proposed alternatives, with particular focus on the individual mandate, the sale of insurance across state lines and the proposed changes to Medicare and Medicaid.
Repealing the ACA would eliminate the following important provisions (not an all inclusive list): the individual mandate, guaranteed insurability, income-dependent tax credits to subsidize private health insurance for eligible patients, federal funding for the expansion of Medicaid to 138 percent of the federal poverty level in states willing to accept expansion, maintaining dependents on family insurance plans until the age of 26, coverage for preventive health services, medical loss ratios set at no less than 85 percent to protect patients from excessive insurance costs and coverage for mental health and substance use disorder services at parity with medical and surgical benefits.
Repealing the individual mandate and guaranteed insurability without adequate replacement has been estimated to cause up to 18 million Americans to lose their health insurance. Perhaps realizing this potential disaster, Trump has now proposed the idea of keeping guaranteed insurability after initially promoting complete repeal of Obamacare. However, to keep this provision, the individual mandate is essential: the two are interdependent. Without a mandate, many healthy individuals would likely forgo buying insurance. This sort of selectivity would likely result in high risk pools, and insurance companies would subsequently have to raise premiums and consumer costs to stay afloat. This would create an environment similar to what existed prior to the enactment of the ACA. Even with the individual mandate, rising costs have remained a problem because not enough healthy people are buying policies to pay the mounting costs of covering millions of previously un- and under-insured individuals.
Next, Medicaid expansion, which was adopted by 32 states (including the District of Columbia), has provided insurance to about 7 million more Americans. Data suggest that this funding has increased Medicaid enrollment, reduced uninsured rates, improved access to care and improved health outcomes in these states. Furthermore, Medicaid expansion has significantly reduced emergency room visits. Recognizing the positive impact of Medicaid expansion, Republicans may not eliminate Medicaid expansion dollars after all, and most or all Republican states that accepted federal dollars for Medicaid expansion will continue to do so, which is great news for some of our most vulnerable patients. As an alternative to outright repeal of Medicaid expansion, some Republican states have implemented or plan to implement personal responsibility policies, which require Medicaid beneficiaries to pay premiums and co-pays and meet certain work requirements. One potential problem with these personal responsibility policies is that they may deter enrollment, and thereby cause the loss of insurance for some of our most vulnerable patients. Studies have demonstrated that having insurance increases the use of preventive services. When medical care becomes unavoidable for uninsured individuals, it is generally extremely costly in comparison to insured individuals. Furthermore, many of the uninsured are of lower socioeconomic status, and therefore medical costs can consume a high percentage of their income and can be financially devastating.
Separate from repealing the ACA, it appears that some Republicans hope to reform or even repeal Medicare , the government’s single-payer system that most Americans over age 65 rely on to cover their health care costs. Speaker of the House Paul Ryan has proposed to replace Medicare with a voucher system, which seniors could use to buy private health insurance plans. The vouchers would likely cover some of an individual’s health care costs, but careful analyses estimate that vouchers would likely leave seniors with higher out-of-pocket expenses compared to traditional Medicare. One estimate suggests that a typical 65-year-old Medicare beneficiary would spend up to twice as much on health care under the Ryan plan. Another problem is that the total cost of health care for seniors would increase (i.e. not just the amount out-of-pocket amount, but also the total cost of their care). This is because private insurers have more administrative costs than a government plan, and Medicare has greater leverage to negotiate some aspects of the health care costs (although, unfortunately not drug prices).
The Republicans also want for health care plans to be sold across state lines. Prima facie this sounds like it would increase choices and competition and lower costs for many Americans. However, critics claim that this leads to a “race to the bottom” with more low-cost insurance plans that do not provide adequate coverage. These low-cost plans are likely to appeal to the healthiest people, thereby again isolating individuals with per-existing conditions. Currently, individual states can decide whether to allow insurers to sell plans from other states in their state. A study by the Georgetown University Health Policy Institute analyzed outcomes from six states that have previously passed legislation to allow insurance companies to sell across state lines. The study reported that these policies were universally unsuccessful and did not achieve the stated goals of increasing consumer choice and competition. This is thought to have been due to the tremendous administrative barriers to entering a local health care market (i.e. negotiating with local health care systems and practices).
Another proposal made by some Republicans is to convert Medicaid payments into a block-grant system provided to the states. A block grant is a sum of money given to states without many specific instructions in terms of how to allocate the funding. This is in contrast to the current system of disbursing Medicaid dollars, which guarantees states $1 for every $1 spent on health care of their Medicaid enrollees. Additionally, the federal government paid 100 percent of Medicaid costs for new enrollees after the ACA’s provision for expanding Medicaid eligibility to up to 138 percent of the federal poverty level. The rationale behind the block-grant proposal is that it would give individual states more control over Medicaid funding. Furthermore, the block-grant proposal is thought to incentivize states to eliminate fraud, waste and abuse, and to help reduce government spending, as net government spending would be less with a block grant compared to the current system. However, block grants may reduce the number of Americans eligible for Medicaid and reduce coverage for existing beneficiaries because of less federal funding for state Medicaid programs, which would force states to impose stricter enrollment criteria.
The ACA is not flawless, but it has provided 22 million more Americans with health insurance. As future health care professionals, we must protect our patients and ensure that whatever changes are made to the ACA, insurance for these 22 million Americans is provided and all Americans have access to health care worthy of the richest country in the world.
Contributing Writer
University of Wisconsin School of Medicine and Public Health
Ryan is a Class of 2020 MD/PhD student at the University of Wisconsin School of Medicine and Public Health. He graduated in May 2012 from the University of Wisconsin-Madison with a BS in molecular biology. He enjoys thinking and writing about health care policy, and is also an avid tennis player, instructor, coach, umpire, and fan.
