The Price Is Wrong — Trump’s Health Secretary Is a Bad Sign for Health Reform

[This column was printed today on Commonwealth Magazine’s website.]

PRESIDENT-ELECT DONALD TRUMP has nominated Rep. Tom Price of George, an orthopedic surgeon and the House Budget Committee chairman, to be his first secretary of health and human services. For those lulled into believing that Trump was moderating his views on the Affordable Care Act because of recent statements on 60 Minutes that he leaned toward supporting ACA provisions on banning pre-existing condition requirements and allowing young adults to stay on their parents’ insurance plans, this nomination is a bucket of ice cold water.

UNITED STATES - APRIL 16: Rep. Paul Ryan, R-Wisc., right, Chairman of the House Budget Committee, and Rep. Tom Price, R-Ga., prepare for a hearing in Cannon Building titled "The President's FY2014 Revenue and Economic Policy Proposals," featuring testimony by Treasury Secretary Jack Lew. (Photo By Tom Williams/CQ Roll Call)
UNITED STATES – APRIL 16: Rep. Paul Ryan, R-Wisc., right, Chairman of the House Budget Committee, and Rep. Tom Price, R-Ga., prepare for a hearing  titled “The President’s FY2014 Revenue and Economic Policy Proposals,” . (Photo By Tom Williams/CQ Roll Call)

Price, a leading member of the House GOP’s “doctor caucus,” and a founding member of the Tea Party caucus, has been a strident ACA critic from the start, issuing and reissuing his own ACA replacement plan – the “Empowering Patients First Act” – on several occasions. He has carved a role as House Speaker Paul Ryan’s strongest ally in proposing a radical reconstruction not just of the ACA but of the entire US health security landscape, seeking not just to obliterate President Obama’s health legacy, but also that of President Lyndon Johnson, who signed Medicare and Medicaid into law way back in 1965.

The Ryan-Price agenda includes four key components:

  1. As far as possible, repealing the ACA’s private health insurance and Medicaid coverage expansions, along with most of the new taxes that finance them;
  2. Reengineering the Medicare program into “premium support” in which enrollees will receive fixed dollar vouchers to purchase health insurance policies;
  3. Reconstructing Medicaid into a “per capita allotment” financing model to drastically limit federal dollars to state governments that would be incentivized to limit eligibility and benefits to low income enrollees while increasing cost sharing; and
  4. Capping the federal employer health insurance tax deduction that would sharply increase insurance costs for workers and their employers.

The Ryan-Price plans are not secret. Ryan’s has been public since June 2016 in his “Better Way” series of policy documents, and Price’s blueprint was released twice, in 2013 and 2015. Paul Ryan and Vice President-Elect Mike Pence are among Price’s strongest allies. On Tuesday, we also learned of the nomination of Seema Verma to be the new head of the Centers for Medicare and Medicaid Services. Verma ran Indiana’s Medicaid program under former governor Mitch Daniels and worked with Pence, the state’s current governor, to implement new premiums and cost sharing for Indiana Medicaid enrollees last year. More than Trump, it seems that Pence is calling the shots on health policy for the new administration.

As it now appears, the GOP plan to achieve the Ryan-Price vision will unfold in early January in three phases. First, Republicans will use expedited “budget reconciliation” rules that block Senate filibusters to pass “repeal and delay” legislation to repeal the ACA’s private insurance expansions, including the individual and employer mandates. In early 2016, Republicans did a dry run of this in a reconciliation bill that was vetoed by President Obama. In that bill, they also voted to eliminate the ACA’s Medicaid expansion, earning a score from the Congressional Budget Office of 22 million persons who would have lost health insurance by 2018 from their bill. Because Republicans cannot pass a full replacement plan under restrictive reconciliation rules, their earlier mantra of “repeal and replace” will become “repeal and delay” as the effective date for coverage cancellations for up to 22 million Americans will be delayed, mostly likely to December 31, 2018 or 2019.

Second, Republicans are inclined to advance a second reconciliation bill later in 2017, this one tied to federal fiscal year 2018. In this measure, Ryan-Price et. al. will seek to advance goals relating to items 2, 3 and 4 on their agenda. Achieving their desired changes to Medicare, Medicaid, and the employer health insurance tax deduction will be controversial and risky, and may even put them at loggerheads with Trump, who promised no changes to Medicare while he was on the campaign trail. Time will tell.

Third, after the ACA’s death sentence is pronounced in the first reconciliation bill, Republicans will demand Democratic support for a minimal replacement law to mitigate the harm to the 22 million persons who will face loss of their insurance coverage. In the Ryan-Price blueprints, the ACA’s expansive and income-based subsidies will be replaced by a flat tax credit that will provide minimal financial support for most of the at-risk 22 million.

While the replacement bill will nominally include continuation of “guaranteed issue and no pre-existing condition exclusions,” this will only protect individuals who can maintain “continuous coverage.” Those unable to meet this requirement would be newly subject to medical underwriting and pre-existing condition exclusions by health insurance companies – a number that could easily grow into tens of millions of Americans. Republicans also will provide incentives to states to establish “high-risk pools” to provide back-stop coverage for individuals unable to obtain insurance elsewhere – a mechanism demonstrated as inadequate and unsuccessful in years prior to the ACA.

This three-part agenda holds significant risks for the new Republican majorities. Among them, some Republicans senators may be unwilling to support repeal without inclusion of a clear replacement. Also, during the two years of delay between enactment and implementation of repeal, the ACA’s health insurance markets may well collapse because of wholesale desertion by risk-averse health insurers (which insurer wants to the be last to leave?).

At risk is the whole individual health insurance market where about 20 million Americans buy their coverage, not just the 10 million who get it through the ACA’s marketplaces. That entire market is unstable and subject to collapse. Also, hospitals and many other parts of the health sector are unlikely to take these changes timidly.

Many clichés are circulating these days in health policy circles: “be careful what you wish for because you just might get it;” “the dog that catches the car;” “if you break it, you own it.”  These are catching on because they illustrate the extreme dangers of the current moment for our nation’s health care system.

Author: John McDonough

I offer insights and opinions on how to improve health care systems for everyone

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