By Scott Rollett, MBA, CMPE
In recent weeks, there has not been a lot of talk about the G.O.P.'s plans to "Repeal and Replace" the Affordable Care Act (ACA). In fact, from the silence coming out of Washington on the topic, one might mistakenly believe that this has dropped pretty far down on their priority list. However, nothing could be further from the truth. The fact is, Republicans have used these last few weeks to come up with a viable strategy to try to accomplish a repeal of the ACA without the appearance of throwing 30 million people under the bus who have gained access to healthcare through the ACA, without destabilizing the health insurance industry, and without damaging the economy in the 31 states that have already expanded Medicaid.
Insiders report that the G.O.P. now has a "working outline" of what they hope to pass in early-to-mid March 2017. Below are some of the key ideas and elements that are believed will make up the core of the Republican’s ACA’s Replacement legislation.
· Fixed Tax Credits vs. Income-Adjusted Premium Subsidies. Under the ACA, if one meets the eligibility criteria, one can receive a premium subsidy to offset the cost of a Marketplace Exchange policy. The G.O.P.'s plan would, instead, offer an aged-based flat tax credit to anyone purchasing an individual health insurance policy. On the surface, this would seem like a good idea as the current ACA subsidies phase out at 400% of the Federal Poverty Level. However, the proposed tax credit would not be income-adjusted and would likely be significantly less that than ACA subsidies and/or the actual cost of health insurance premiums. One healthcare analyst suggested that the proposed age-adjusted tax credits might look something like $1,200 (per year) for individuals 18-35; $2,100 for those $35-50, and $3,000 for those 50+. The average ACA premium subsidy is currently estimated at about $3,500 . Hence, the average person who is presently getting an ACA premium is likely to find themselves paying more out-of-pocket for their premium in 2018.
· Decreased Coverage. One of the criticisms of the ACA is that it “raised the bar” in terms of the types of things that are required to be covered in order to be considered a Qualified Health Plan (QHP). Things like free mammograms, free preventative cancer screens, and free wellness visits were thought to help decrease healthcare costs in the long run through the use of early detection and prevention. However, critics state that this has only served to increase the cost of premiums as insurers adjust to the increased cost basis. The G.O.P.’s theory is that they can make health insurance premiums “affordable” again by dumbing down the coverage and that’s one of the primary goals of an ACA repeal. In fact, Speaker of the House, Paul Ryan, recently said this measure would then “allow people to buy the health coverage that they want". It's a nice sentiment, especially if you are young and healthy. But he didn't address at all the situation that most Americans find themselves in - - how can they afford the health care coverage that their families need?
· Health Savings Accounts (HSA's). Coupled with the expectation that making premiums more "affordable" for families comes with increased deductibles, more cost-sharing, and lesser coverage, it should surprise no one that increased utilization of tax-free Health Savings Plans would also be a core piece of any ACA Replacement plan. Speaker of the House, Paul Ryan’s “A Better Way” blueprint, he proposes to raise the annual allowable HSA contribution to $6,550 for single people and $13,100 for families . This DOES make sense to expand the use of this tool to help set aside tax-free monies to cover increased health care expenses. The problem with HSA's is that most lower and middle-income families can’t afford to contribute to them. For example, the Average Household Income in the State of Indiana in 2015 was $50,532 . In order to make the maximum contribution under Speaker Ryan’s plan, a Hoosier family would need to allocate 26% of their Household Income to their HSA. Therefore, Health Savings Accounts are an insufficient tool for a majority of Americans and primarily benefit the wealthy as a tax shelter.
· Medicaid Reform. Medicaid plans, including the Children’s Health Insurance Program (CHIP) are administered by the individual 50 states. However, in order to qualify for federal funds, there are minimum standards and universal guidelines that must be followed unless CMS grants the state an 1115 Waiver. It is thought that any ACA Replacement plan will focus heavily on giving states much more flexibility to administer their Medicaid Programs the way they think is best. Now this isn’t necessarily a bad thing. As some of the Innovation Programs funded under the ACA have demonstrated, there are cost-saving ideas out there that could help decrease the overall cost of states’ Medicaid Programs. The only downside is that the current protections offered by CMS to all recipients of Medicaid will likely be diminished.
· Medicaid Block Grants. For decades, state Medicaid Programs have been jointly-funded by state governments and the Federal Government. Depending on the state, the federal “match” could range anywhere from 50%-74% of total Medicaid expenditures . Further, the ACA took the burden of Medicaid Expansion off the states by funding 100% of the expansion costs in the beginning but decreasing to 90% over a period of about 9 years. The G.O.P.’s Replacement plan proposes to end the federal “match” and cap it instead through the use of “Block Grants” or a “Per Capita Allotment”. This, in turn, caps the federal investment in the 50 states’ Medicaid Programs and forces them to cover the additional costs themselves or cut benefits or reduce eligibility for the program. With 70 million Americans now on Medicaid, that’s a lot of people who will likely see their current health care coverage reduced or eliminated .
· Elimination of Medicaid Expansion. The 2015 “Obamacare Repeal” legislation that was passed by the G.O.P. Congress and vetoed by President Obama was widely considered to be the “test run” for an ACA Repeal bill. This bill called for the elimination of Medicaid Expansion. However, now that President Obama is no longer available to block this bill from becoming law, some Republican legislators are realizing just how much this would harm a sizeable portion of their constituents back home as well as the economies in the states they represent. It is estimated that 11 million people gained coverage through Medicaid Expansion in 31 states, including 16 Republican-led states, and including VP Mike Pence’s home state of Indiana (HIP 2.0) and Mitch McConnell / Rand Paul’s home state of Kentucky (Kynect) . It’s a conundrum for sure as Medicaid Expansion flies in the face of the conservative ideal, but the success of Medicaid Expansion under the ACA cannot be denied. Therefore, in order to secure the necessary votes for a successful ACA Repeal, compromises are going to have to be found. Some proposals have called for “transitional plans” that eventually ease these 11 million people off of Medicaid Expansion over time and into “something else”. Other proposals call for eligibility reductions back down from 138% of the Federal Poverty Level under the ACA to 100% which would have the same effect . Of all of the current ideas in the ACA Replacement Plan, this one is the thorniest and perhaps most difficult to find G.O.P. consensus.
In a nutshell, these core elements represent the basic tenets of the coming Republican ACA Replacement Plan. If you oppose these ideas, I encourage you to write your House Rep and your two Senators and urge them to vote against this bill when it comes before Congress. There is still time to preserve the ACA and all of the good that it does, but not much. Let your Congressional Reps know TODAY how you feel. Call them, email them, or fax them. Just let your voice be heard. Finally, remember this, we don’t need to convince 52 Republican Senators to vote against the ACA - - we only need to convince 2 or 3!
 Matthews, Merrill. “Now We Know What The Republican Obamacare Replacement Plan Will Look Like,” Forbes.com, last modified December 1, 2016. http://www.forbes.com/sites/merrillmatthews/2016/12/01/now-we-know-what-the-republican-obamacare-replacement-plan-will-look-like/
 Luhby, Tami. “Three ways Republicans want to replace Obamacare,” CNN.com, last modified February 17, 2017, http://money.cnn.com/2017/02/17/news/economy/obamacare-republicans/index.html
 Sullivan, Peter. “Republican Senators Wrestle with Changes to Medicaid”, thehill.com, last modified February 9, 2017. http://thehill.com/policy/healthcare/318789-republican-senators-wrestle-with-changes-to-medicaid/