Monday, December 9, 2019

The Trump/Republican 2020 Health Care Plan

The Republicans don't yet have a health care plan less than a year before the 2020 elections.

But based upon their 2017 Obamacare repeal and replace efforts, as well as a major document recently issued by the House Republican Study Committee, what might a Republican plan look like?
First, let's review the plan House Republicans passed in 2017 during their failed repeal and replace efforts.

House Republicans would have repealed the Medicaid expansion and the individual market subsidies and would have repackaged them into a program that took some, but not all, of that money and sent it to the states. Each state legislature would have then taken that money and crafted a health insurance plan of their own making.

Here is the Congressional Budget Office's (CBO's) July 2017 evaluation of that plan. The CBO calculated the Republican House plan would have spent $1.3 trillion less than Obamacare over ten years on Medicaid and insurance subsidies:

The CBO estimated that these funding cuts would have led to: 
  • Nine million people leaving Medicaid by 2020 growing to 14 million in 2026––and then having to enter the individual market as their only option for coverage unless they found their way to employer coverage.
  • The individual market shrinking by ten million in 2020 and six million by 2026. 
  • The CBO therefore concluded that the number of people eligible for the individual market would increase dramatically as the reduced Medicaid population was forced to seek private individual coverage while the individual coverage subsidies were substantially cut.
Obamacare has suffered because a relatively small number of subsidy eligible ever signed up for the program––about 40% at its high point. That in turn has led to very high premiums with an insufficient number of healthy people participating to pay for the costs of the sick.

The 2017 House Republican plan's combination of dumping more people into the pool by shrinking Medicaid––and therefore increasing the number of people eligible for individual coverage––and cutting the subsidies in the private market, could only have had the result of making the percentage of eligible people buying a private health plan even worse. That in turn could only lead to even worse individual market affordability and resulting underwriting anti-selection than what we have had under Obamacare.

Republicans saw moving the design and administration of health insurance reform to the states as an opportunity to administer the program at a more efficient and place that would also have given the states the ability to innovate. Critics only saw the potential for states to go backward on Obamacare's key market reforms, including pre-existing coverage guarantees and financial support.

While this plan passed the House, it never attracted a simple majority in the Republican controlled Senate.

Since the Republican Senate's inability to advance any kind of Obamacare repeal and replace bill, Republicans have not put forward any other comprehensive health insurance reform bill.

However, the House Republican Study Committee (RSC) recently issued a 58 page "Part One" health reform outline.

The RSC's document follows the broad outline of the failed 2017 House plan––taking the existing Medicaid and individual market subsidies and repackaging them into state block grants where fifty new health insurance reform plans would be created and administered.

This time, the Republican plan spends more effort to assure consumers that their pre-existing medical conditions would be covered, "Consequently, everyone with an existing condition who is seeking coverage in the individual market would be provided a pathway to obtaining complete coverage of all their medical conditions within just 12 months."––albeit in a system that could vary greatly from one state to another and has the potential to delay coverage for a pre-existing condition for up to a year.

The RSC outline is also vague on whether current Medicaid expansion and individual market subsidy expenditures would be cut prior to sending the money to the states in the form of block grants, saying only that "Funding for these grants would be derived from repackaging the ACAs premium subsidies and Medicaid expansion funding." 

In fact, the outline contains no spending or revenue projections.

Taken directly from the RSC document, here are the key points:
  • It is necessary to transform the individual marketplace’s current regulatory structure, unwind the ACA’s Washington-centric approach, and largely return regulatory authority to the individual states.
  • Protections pertaining to guaranteed issue and the prohibition on coverage exclusions would be retailored under the RSC plan to reward continuous coverage and promote portability in the individual marketplace. 
  • Additionally, in order to provide Americans with health insurance options that fit their individualized needs and do not add unnecessary expenses, the RSC plan would undo the ACA’s regulations on essential health benefits, annual and lifetime limits, preventive care cost-sharing, dependent coverage, and actuarial value. 
  • Each state would again be allowed to dictate the minimum attributes and cost-sharing parameters of plans to best meet the needs of their own citizens. 
  • The ACA’s medical loss ratio, along with its competition-killing and premium-increasing effects, would be eliminated as well. 
  • In no case, however, would carriers be able to rescind, increase rates, or refuse to renew one’s health insurance simply because a person developed a condition after enrollment. 
  • Additionally, states—and not the federal government—would be solely empowered under the RSC plan to establish restraints on the extent to which carriers could incorporate the health risks of individuals into premiums. 
  • Thus, the RSC plan would eliminate the ACA’s community rating, age banding, and single risk pool requirements. 
  • However, under the RSC plan, individuals with high risk medical conditions would have affordable access to state-run Guaranteed Coverage Pools under which their health care costs would be subsidized with federal grants and further contained by any state-enacted premium-setting restrictions.
  • Separately, the RSC plan would ensure states receive federal grants designed to assist the states in flexibly providing low-income individuals with access to affordable coverage. 
  • Funding for these grants would be derived from repackaging the ACA’s premium subsidies and Medicaid expansion funding. 

The Republican Study Committee is taking a very complex health insurance reform plan––Obamacare––and outlining another very complex health insurance plan to replace it with.

The RSC plan also assumes that taking this very controversial and complex health insurance reform challenge and simply delegating it to fifty state legislatures, who will then be expected to come up with fifty different decisions on how to proceed that they argue will all be better, is a risk voters will want to take. 

While this RSC plan tries to directly deal with the concerns people had with the original House plan over pre-existing condition reforms, it still creates the potential for many states to offer reforms that would likely be less than the seamless pre-existing protections people have today. 

The RSC only guarantees coverage for pre-existing conditions only so long as people remain continuously covered––if they do not they could have a gap in coverage for their pre-existing conditions for up to a year.

Democrats will argue that it would be better to take the baseline that Obamacare offers and improve what is broken––particularly the insufficient middle class subsidies––than to take the risk of wiping Obamacare off the map and taking our chances in 50 state legislatures. 

My sense is that Republicans will have a huge uphill fight to win that argument––even if Republicans keep the White House, hold the Senate, and retake the House next November. 

The irony is that Obamacare was built on a Republican policy chassis––the 1989 original Heritage Foundation proposal that was later adopted by the Democrats and morphed into the problematic Obamacare we have today.  

Republicans just have a huge hatred for anything labeled "Obamacare" and still appear unwilling to take that platform and overhaul it based upon Republican principles. 


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