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Repeal and Replace, will it really happen?

If you’re like most people in the health insurance industry, you’re at least mildly interested in this presidential transition process and the promise to repeal and replace the Affordable Care Act. Perhaps you’re concerned, or maybe you’re cautiously optimistic, but it’s difficult to be completely neutral. It’s also difficult, though, to form a true opinion since there’s so much uncertainty about what will happen.

At various times, President-elect Trump has called Obamacare a “horror” and a “disaster” and promised to repeal it on day one of his presidency. At other times, he’s promised to preserve Medicare and Medicaid and even some of the more popular provisions of the health reform law. And, notably, the ACA wasn’t even mentioned in his recorded “first 100 days” speech that he released November 21, causing some to question whether it’s still a top priority.

So what should we expect—an effort to quickly repeal the entire law, a longer and more contentious repeal and replace effort, or a series of incremental changes both sides can agree on that will address the most troubling aspects of the ACA? It’s hard to say, but we’re going to try anyway.

We’ll start by examining some of the replacement proposals. Contrary to what we’ve heard, Republican lawmakers do actually have some ideas about how to expand coverage and lower costs, but they have yet to pick a favorite plan to rally around.

Donald Trump’s Vision

President-elect Trump doesn’t have a fully-developed health care plan, but he does have a few ideas he’d like to implement, noting on his website that “There are other reforms that might be considered if they serve to lower costs, remove uncertainty and provide financial security for all Americans.” His top ideas include:

  • Modifying laws that inhibit the sale of insurance across state lines
  • Allowing individuals to fully deduct health insurance premium payments on their tax returns
  • Expanding Health Savings Accounts
  • Requiring price transparency from all healthcare providers
  • Block-granting Medicaid to the states
  • Removing barriers to entry for drug providers

Trump’s proposal on his website is just over 1,000 words, so it’s clear that he’ll let lawmakers add to the plan and fill in the details.

Paul Ryan’s Plan

Speaker Ryan’s ideas are not yet in bill format, but he has prepared a 37-page policy paper that makes a case for repealing the Affordable Care Act and outlines his ideas for replacing the health care law. His proposal has five main parts:

  1. More Choices, Lower Costs, Greater Flexibility
  2. Protecting and Strengthening Coverage Options for All Americans
  3. Medicaid Reform: Empowering States and Increasing Flexibility
  4. Promoting Innovation in Health Care
  5. Protecting and Preserving Medicare

Within each category, he has a number of recommendations. For instance, Paul Ryan, like Donald Trump, supports the sale of health insurance across state lines. He, too, would like to expand the use of Health Savings Accounts. He also likes the idea of block granting Medicaid to the states but would also give them the option of a per-capita allotment. Like Trump, he has some thoughts on accelerating drug discovery and development. Long story short, Ryan doesn’t really seem to disagree with President-elect Trump, though he has a lot of other ideas that Trump hasn’t addressed.

Two of Ryan’s most controversial proposals are capping the employer exclusion (which allows employees to receive employer-paid benefits on a tax-free basis) and privatizing Medicare. Both of these suggestions will face strong resistance from Democrats in both the House and the Senate.

Tom Price’s Bill

On Monday, November 28th, Donald Trump nominated Representative Tom Price (R-GA) for Secretary of Health and Human Services. This is a very high profile position with a lot of power—just think how much influence HHS Secretary Kathleen Sebelieus had in the rollout of the Affordable Care Act and Secretary Burwell has had during the past couple enrollment periods. Tom Price could have even more influence over the ACA replacement plan.

There are two reasons for this. First, Donald Trump’s health care plan isn’t as developed as President Obama’s was when he was sworn into office, which means that Trump will lean on others for a lot of the content. Second, Tom Price has a replacement plan that’s already in bill format. In fact, he’s introduced in each of the last four congressional sessions and even sponsored several of the ACA repeal bills that the House has voted on since the law was passed. Price’s nomination appears to be a signal that Donald Trump does intent to fulfill his promise to repeal and replace Obamacare.

Tom Price’s health care bill, the Empowering Patients First Act. His recommendations include:

  • An age-rated adjustable tax credit to help people purchase insurance in the individual market. The credit would even allow people “to opt out of Medicare, Medicaid, TRICARE, and VA benefits and receive tax credit to purchase a personal health plan instead.”
  • Expand Health Savings Accounts by providing a one-time $1,000 credit; increasing HSA contribution limits and allowing account holders to roll money over from their retirement account; allowing spouses to make catch-up contributions to the same account; allowing people with Medicare Part A to contribute to an HSA; changing the name from “High Deductible Health Plan” to “HSA qualified health plan” and more.
  • Cap the employer exclusion at $8,000 for an individual and $20,000 for a family.
  • Permit employers to provide a defined contribution amount to employees to purchase coverage in the individual market.
  • Allow for the sale of insurance across state lines.
  • Crack down on lawsuit abuse.

In short, Tom Price seems to agree with Paul Ryan on many of the proposals, so he certainly is a good choice for anyone who likes the ideas that Ryan has presented.

Even More Proposals

There are a lot of other proposals out there that lawmakers could draw from when putting their final replacement plan together. For instance, Senator Hatch (R-UT), Senator Burr (R-NC), and Representative Upton (R-MI) have put together a bill called the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act. Among other things, it would provide an age-adjusted tax credit for people with incomes up to 300% of the Federal Poverty Level, strengthen consumer-directed health care, modernize Medicaid, reduce defensive medicine practices, create transparency, and reduce the tax code distortion between the employer and individual markets. Senator Ted Cruz (R-TX) also has a bill that goes into great detail about selling insurance across state lines. It could be plugged in to the final replacement plan. And, as Paul Ryan points out in his policy paper, there are more than 400 individual bills introduced by House Republicans in the 114th Congress alone “that would improve our nation’s health care system.” Yes, Republicans do have some replacement ideas…

How to Make Sense of It All

With so many contradictory statements about repealing the ACA and so many different replacement proposals, figuring out how this could affect your business may seem like an impossible task. Fortunately, we’re here to help. In the coming year, we’ll provide additional details about how you can capitalize on all of the changes and use this time of uncertainty as an opportunity to grow your business.

While repeal, to whatever extent it happens, will certainly take some time, we do see quite a bit of overlap in the major replacement proposals. From these changes, new opportunities will emerge for brokers who are prepared to take advantage of them. And we’ll do our very best to make sure that you’re prepared.

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