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The Repeal and Replace Architects: How Two Key Players Could Shape the Future of the ACA (Part I)

There is a daily stream of updated predictions regarding the fate of the Affordable Care Act (ACA).

In discussions around the ACA there is no shortage of opinions on what can or can’t be done and why it will or will not work. Regardless of the outcome, in addition to President Donald Trump, it seems likely (barring a nomination block) that there will be two main actors on the stage representing what change might look like:

  • Paul Ryan, Congressman from Wisconsin and current Speaker of the House of Representatives, and
  • Tom Price, Congressman from Georgia and current nominee for Secretary of Health and Human Services

In this two part series—instead of focusing on the mechanics of change— we take a look inside the two Republican playbooks most likely to be used to better understand the change vision for the current healthcare system and potential impact on employer-sponsored healthcare.

In the interest of brevity, we will not include the proposal recommendations on Medicare and Medicaid systems.

Part I:

Paul Ryan
A Better Way: Our Vision for a Confident America

In some ways, this House Republican document is similar in approach to the Republican’s 1994 Contract with America, spearheaded by Newt Gingrich. Healthcare is one of five issue areas that are outlined in Speaker Ryan’s plan which also addresses poverty, the Constitution, the economy and tax reform.

The healthcare section proposal is built on the following five principles:

  • Repeal of the ACA
  • Provide all Americans with more choices, lower costs, and greater flexibility
  • Protect our nation’s most vulnerable citizens
  • Spur innovation in healthcare
  • Protect and preserve Medicare

To address more choices, lower costs and greater flexibility, the following recommendations have been outlined:

  1. Expand Choice through Consumer-Directed Care:
    • Removing some of the limiting rules required of Health Savings Accounts (HSA’s):
      • Allow spouses to make catch up contributions.
      • Allow reimbursement of qualified medical expenses incurred prior to establishment of the account as long as the account is established prior to 60 days.
      • Set the maximum HSA contribution at the combined maximum of the deductible and out of pocket plan in place. The higher that your out of pocket costs are, the more pre-tax benefit you can attain.
      • Expand eligibility to excluded groups (TriCare, Indian Health Services).
  1. Making Support for Coverage Portable:
    • The proposal introduces the concept of a healthcare “backpack”. A universal, advanceable, refundable tax credit will be offered for those who do not have access to job-based coverage, Medicare, or Medicaid.
    • The payment, which would be available every month and adjusted for age (older people would receive more support), could be used to purchase the plan of their choice vs. a “one size fits all” payment.
  1. Purchasing Coverage Across State Lines:
    • Removes the obstructions in place that will allow people to purchase coverage in another state.
    • Makes it easier for states to enter into interstate pooling arrangements, thus increasing health competition and returning more authority to the states to regulate coverage.
  1. Expanding Opportunities for Pooling:
    • Allow small businesses to band together for the sole purpose of purchasing health insurance in association health plans (AHP).
    • Allow individuals to band together for the sole purpose of purchasing health insurance in association health plans (IHP). 
  1. Preserving Employee Wellness Programs:
    • Remove the concerns regarding violations of the Americans with Disabilities Act of 1990 (ADA) and the General Information Non-Discrimination Act (GINA) as it relates to financial incentives and the voluntary collection of medical information. 
  1. Protecting Employers’ Flexibility for Self-Insurance:
    • Though the new administration tone may change this, there was a general concern that the current administrations Department of Labor and/or the Department of Health and Human Services might attempt to redefine “group health insurance coverage” to include Stop Loss insurance. This type of change would open the door for federal regulation.
    • This proposal would eliminate that concern and maintain the unique advantages, if not encourage, the use of self –insurance. 
  1. Medical Liability Reform:
    • To reduce the negative impact that the medical liability system has on overall health insurance costs , injured patients, and the economy in general, the proposal includes:
      • Caps on non-economic damage awards preventing impact of excessive lawyer contingency fees.
    • Look to states for innovation (e.g. loser-pays, proportional liability, etc.).
  1. Addressing Competition in Insurance Markets:
    • Currently, the McCarran-Ferguson Act of 1945 provides limited anti-trust exemption to the “business of insurance”.
    • In an effort to evaluate lack of competition in the health insurance marketplace, the proposal recommends the study and impact of the limited anti-trust exemption on the lack of competition in insurance markets.

The second section of the playbook provides recommendations focused on – Protecting and Strengthening Coverage Options for All Americans as follows:

  1. Protections for Patients:
    • Maintain that no one can be denied coverage on the basis of a pre-existing condition.
    • Allow dependents to remain on parents plan up to age 26.
    • Removal of lifetime limits.
    • No cancellations of policies due to sickness.
    • Patient protection for continuous coverage – individual moving from group to individual coverage would be charged “standard” rates, regardless of health status.
    • Allow state to determine age-rating ratio – premium rate for younger individual vs. premium for older individual. Currently dictated at 3 to 1, it would be expanded to 5 to 1.
    • Provide states with $25 billion in grants to craft premium reduction programs and wellness initiatives.
    • Help states establish robust high risk pools with $25 billion in federal funding.
    • Establish one-time open enrollment for individuals who have not maintained continuous coverage regardless of their health status.
  2. Protecting Life and Conscience Rights:
    • Provide protections for providers to maintain freedom to exercise their conscience when it comes to procedures like abortion.
    • Ensuring that taxpayer dollars are not used to end life.

While we have much to learn about the fate of the ACA, the coming days, weeks and months will be critical as the repeal and replace conversation moves forward and we begin to see action on this front. Our role as your broker is to navigate through these uncertain times and provide you with peace of mind for the ever-changing healthcare landscape.

Next up: Part II outlining Tom Price's Empowering Patients First Act plan