Oba­macare Lite looms as al­ter­na­tive for GOP

Modern Healthcare - - NEWS - By Harris Meyer

The GOP must re­solve its in­tra­party dif­fer­ences on health­care ide­ol­ogy. And Democrats will have to de­cide how far they are will­ing to go in re­duc­ing cov­er­age and sub­si­dies be­fore sign­ing onto a re­place­ment pack­age.

Now comes the re­al­ity. It was a lot eas­ier to cam­paign against the Af­ford­able Care Act than to come up with a vi­able al­ter­na­tive.

With that dawn­ing re­al­iza­tion, health pol­icy ex­perts as­so­ci­ated with both po­lit­i­cal par­ties are ask­ing if Pres­i­dent-elect Don­ald Trump and con­gres­sional GOP lead­ers might de­cide it’s po­lit­i­cally smarter to reach a deal with Democrats this year to re­fash­ion and re­brand the ACA, rather than eras­ing it and try­ing to cre­ate a new sys­tem from scratch.

Both par­ties have pow­er­ful po­lit­i­cal rea­sons to avoid dis­rupt­ing health­care for the 30 mil­lion Amer­i­cans who ob­tained cov­er­age through the new in­di­vid­ual mar­ket­places or state Med­i­caid ex­pan­sions. Trump has vowed to come up with “some­thing ter­rific,” a prom­ise the op­po­si­tion party is cer­tain to re­mind vot­ers of through­out his term. Mean­while, 13 Se­nate Democrats last week sig­naled to GOP lead­ers they are will­ing to co­op­er­ate on im­prov­ing the law.

But both sides will have to make ma­jor con­ces­sions to reach a com­pro­mise. The GOP must re­solve its in­tra­party dif­fer­ences on health­care ide­ol­ogy. And Democrats will have to de­cide how far they are will­ing to go in re­duc­ing cov­er­age and sub­si­dies be­fore sign­ing onto a re­place­ment pack­age.

“The more prag­matic Repub­li­cans could say they re­pealed the parts of the law that are the most oner­ous, mod­i­fied it with con­ser­va­tive ideas and claim vic­tory,” said Chris Con­deluci, a po­lit­i­cal con­sul­tant who served as a se­nior Se­nate GOP staffer dur­ing pas­sage of the ACA. “But will they be able to roll the con­ser­va­tives who won’t go along with Oba­macare Lite, and win Demo­cratic sup­port to get it across the fin­ish line? It’s an open ques­tion.”

If Repub­li­cans in­sist on rolling back the Med­i­caid ex­pan­sion or cap­ping and cut­ting fed­eral Med­i­caid fund­ing, it’s un­likely many if any Democrats will go along. “I’m skep­ti­cal of a deal be­cause of the deep po­lar­iza­tion of the par­ties and, even more crip­pling, the split be­tween GOP prag­ma­tists in the Se­nate and Free­dom Cau­cus ul­tra­con­ser­va­tives in the House,” said Lawrence Ja­cobs, an ex­pert on health­care pol­i­tics at the Univer­sity of Min­nesota.

There are plenty of ar­eas where prag­matic Repub­li­cans and Democrats could reach agree­ment, such as tight­en­ing en­roll­ment rules to re­duce costs, giv­ing in­sur­ers more lee­way to sell cheaper plans to younger peo­ple, and re­plac­ing the ACA’s in­di­vid­ual man­date with strong in­cen­tives for peo­ple to main­tain con­tin­u­ous in­sur­ance cov­er­age.

The two sides also could come to­gether on giv­ing states greater flex­i­bil­ity to de­sign their own cov­er­age sys­tems. Red states would be free to move

Clashes also loom over the size of the sub­si­dies that would re­place the ACA’s tax cred­its and cost-shar­ing re­duc­tions; the ad­e­quacy and af­ford­abil­ity of the re­place­ment cov­er­age; and the per­cent­age of the pop­u­la­tion that would gain or lose in­sur­ance.

to voucher-type mod­els while blue states could keep the ACA frame­work or adopt a pub­lic in­sur­ance plan.

For Trump and con­gres­sional GOP lead­ers, a health­care deal with Democrats this year would get a po­lit­i­cally vex­ing is­sue off their backs and free them to tackle other ma­jor leg­isla­tive pri­or­i­ties such as job cre­ation, tax re­form, im­mi­gra­tion and trade.

Still, par­ti­san cal­cu­la­tions could eas­ily de­rail any deal as party lead­ers look to­ward the 2018 con­gres­sional elec­tions. Trump tweeted last week that Repub­li­cans shouldn’t rush into re­peal and in­stead should let Democrats take the blame for Oba­macare’s col­lapse. On the other hand, he called for Repub­li­cans and Democrats to work to­gether on a “plan that re­ally works— much less ex­pen­sive & FAR BET­TER.”

That goal could be im­pos­si­ble to achieve if Repub­li­cans push ahead to quickly abol­ish the ACA’s var­i­ous taxes and spend­ing cuts, which would elim­i­nate the fund­ing for an al­ter­na­tive cov­er­age sys­tem. “If Repub­li­cans kill the rev­enue sources right off the bat, that could kill a deal, be­cause you’d have to find the money some­where else,” Con­deluci said.

Fo­cus groups of Trump vot­ers con­ducted by the Kaiser Fam­ily Foun­da­tion last month found that most par­tic­i­pants want more af­ford­able health plans with low out-of-pocket costs, bet­ter ac­cess to cheaper drugs, and more ro­bust provider net­works. Ac­com­plish­ing that would be dif­fi­cult with­out ad­e­quate fed­eral fund­ing and sig­nif­i­cant reg­u­la­tion.

Al­ready, prospects for bi­par­ti­san co­op­er­a­tion are wan­ing. Democrats, health­care in­dus­try groups, and even some Repub­li­cans crit­i­cized the GOP’s moves last week to pass a bud­get res­o­lu­tion set­ting up an ex­pe­dited party­line re­peal of most of the ACA—per­haps as early as next month—while de­fer­ring con­sid­er­a­tion of re­place­ment leg­is­la­tion for months or years. House Speaker Paul Ryan’s an­nounce­ment last week that the re­peal bill would end fed­eral fund­ing of Planned Par­ent­hood’s women’s health­care ser­vices was an­other par­ti­san red flag.

“It seems Repub­li­cans just want to go through with re­peal and de­lay,” said Dr. Ezekiel Emanuel, a Univer­sity of Penn­syl­va­nia health pol­icy pro­fes­sor who helped draft the ACA. In a New Eng­land Jour­nal of Medicine per­spec­tive ar­ti­cle, Pres­i­dent Barack Obama warned that Repub­li­cans would be “reck­less” to re­peal the law with­out re­plac­ing it at the same time. “Tens of mil­lions of Amer­i­cans will be harmed,” he wrote.

Some con­ser­va­tive ex­perts have urged Repub­li­cans to slow down, draft a re­place­ment plan that could at­tract Demo­cratic sup­port, and pass re­peal and re­place as a sin­gle pack­age. That’s the ap­proach fa­vored by at least four Se­nate Repub­li­cans.

As part of a re­place­ment pack­age, James Capretta, a con­ser­va­tive health pol­icy ex­pert at the Amer­i­can En­ter­prise In­sti­tute, urged Repub­li­cans to em­brace univer­sal cov­er­age through tax cred­its; let peo­ple keep their ACA cov­er­age or switch to a new, con­ser­va­tive tax credit sys­tem; pre­serve Med­i­caid as a safety net sys­tem for the poor; and re­place the ACA’s in­di­vid­ual man­date with a sys­tem of au­to­matic en­roll­ment in ba­sic in­sur­ance, from which peo­ple could opt out.

“There’s a lot of over­lap be­tween con­ser­va­tives and lib­er­als—univer­sal cov­er­age, no pre-ex­ist­ing con­di­tions, af­ford­abil­ity, mak­ing it easy to shop,” said Emanuel, cit­ing con­ser­va­tives such as Capretta.

A tough but po­ten­tially solv­able is­sue will be how to en­sure that peo­ple can ac­cess in­di­vid­ual-mar­ket cov­er­age re­gard­less of pre-ex­ist­ing med­i­cal con­di­tions, while at the same time main­tain­ing a vi­able mix of health­ier and sicker peo­ple in the risk pool. Repub­li­cans want to es­tab­lish state high-risk pools that would of­fer plans to peo­ple with pre-ex­ist­ing con­di­tions. But that would re­quire large govern­ment sub­si­dies.

The Repub­li­can al­ter­na­tives to the in­di­vid­ual man­date, such as la­teen­roll­ment penal­ties and ben­e­fit wait­ing pe­ri­ods for peo­ple who have had a break in cov­er­age, will also face push­back from Democrats, who re­main skep­ti­cal about those ap­proaches. They note that peo­ple typ­i­cally have breaks in cov­er­age when they suf­fer ad­verse life events such as job loss and can’t af­ford to pay pre­mi­ums.

Democrats also op­pose high-risk pools, which gen­er­ally did not work well in the pre-ACA days. They want to avoid re­turn­ing to the days when in­sur­ers used med­i­cal un­der­writ­ing to de­cide whether to ac­cept ap­pli­cants and how much to charge them.

Still, some lib­eral ex­perts sug­gest Democrats could ac­cept auto-en­roll­ment and ben­e­fit wait­ing pe­ri­ods for peo­ple with in­sur­ance gaps. The idea, drawn from be­hav­ioral eco­nom­ics, pre­sumes the vast ma­jor­ity of peo­ple with­out in­sur­ance would not take the ex­tra step to opt out of an au­to­matic en­roll­ment sys­tem. “The ques­tion is whether there is a sweet spot that pro­vides suf­fi­cient (con­sumer) pro­tec­tion with­out reg­u­la­tions that con­ser­va­tives might view as too oner­ous,” said Larry Le­vitt, se­nior vice pres­i­dent of the Kaiser Fam­ily Foun­da­tion.

Clashes also loom over the size of the sub­si­dies that would re­place the ACA’s tax cred­its and cost-shar­ing re­duc­tions; the ad­e­quacy and af­ford­abil­ity of the re­place­ment cov­er­age; and the per­cent­age of the pop­u­la­tion that would gain or lose in­sur­ance. Repub­li­cans want to re­place the ACA’s in­come­based tax cred­its with smaller tax sub­si­dies for far more peo­ple. They also en­vi­sion leaner ben­e­fit plans with higher de­ductibles and out-of-pocket costs.

“It’s thin­ning the soup, a smaller pot avail­able to a larger num­ber of peo­ple,” said Joel Ario, a man­ag­ing di­rec­tor at Manatt Health So­lu­tions who served in the HHS dur­ing the Obama ad­min­is­tra­tion. “That’s a dif­fi­cult is­sue to get through.”

Trump re­mains the wild card. Even though he tweeted last week that the ACA is “lousy health­care,” some ob­servers won­der if he might break with con­gres­sional Repub­li­cans and push for a deal with Democrats to keep pop­u­lar pro­vi­sions in the law. Kellyanne Con­way, his se­nior ad­viser, said last week that Trump doesn’t want any­one who cur­rently has cov­er­age un­der the ACA to lose it.

In con­trast, Ryan and Se­nate Ma­jor­ity Leader Mitch McCon­nell, when asked last week if the GOP plan would pre­serve cov­er­age for ev­ery­one who has it un­der the ACA, both re­fused to com­mit. “I’m not go­ing to get ahead of our com­mit­tee process,” Ryan said.

The stakes are high for Trump. Get­ting to “some­thing ter­rific” can’t hap­pen with­out Demo­cratic co­op­er­a­tion. And if they don’t pass a re­place­ment plan and the in­di­vid­ual in­sur­ance mar­ket crashes, “Repub­li­cans will pay a huge po­lit­i­cal price,” Ario warned.

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