Keeping the good and fixing the bad… healthcare reform is gearing up for major surgery.
Almost comically analogous to Looney Tunes’ Wile E. Coyote finally catching the Road Runner, Donald J. Trump has assumed the mantle of President of the United States, and the question everyone is asking is: “Now what?”
With regard to the Affordable Care Act of 2010 (ACA), better known as Obamacare, “Now what?” is truly the $64,000 question. And given the complexity and sheer size of a $3-trillion industry, know that going forward, what Trump’s plans are for healthcare reform can and will impact every single American.
To answer the “Now what?” question, we don’t necessarily have to get out a crystal ball. Instead, we should look at the history of what has been said by those who are now in charge.
The results of the election go well beyond Trump in that the Republicans retained control of both houses of Congress and—for the first time since Herbert Hoover—will control both the executive and legislative branches of government. It is also noteworthy, although not with any immediacy, that Trump’s choice for the vacant spot (and Ginsburg’s spot?) on the Supreme Court will impact healthcare legislation for perhaps another generation.
Common-Sense Rules to Keep
Since the passage of the ACA in 2010, Republicans have been calling for “repeal and replace” of the historic act, and of course, Donald Trump based one of the tenets of his campaign on that very action. Now that the dogs have caught the car, so to speak, Republicans are almost politically compelled to repeal Obamacare simply to satisfy their base voters. However, call it what they may, Republicans (I hope) are not so stupid as to throw the baby out with the bathwater. (Although I did watch all three debates… so don’t hold me to that statement.)
It can be argued—and quite well too—that Obamacare is, in fact, a failed piece of legislation. While the ACA accomplished part of its objective by covering an additional 20 million Americans, 32 million Americans are still without any kind of health insurance. Given the stress on the healthcare system over the last eight years, it can be said that rationing has occurred. (Have you tried to get a GP appointment lately?) Most importantly, medical costs continue to skyrocket and well outpace the rate of inflation. Based on this history, Republicans should be looking to repeal and replace.
Nevertheless, there are some very good components of the ACA that should and must remain. Insurance carriers found that children under age 26 remaining on their parents’ health insurance policy was in fact a net-zero cost driver, and aside from Medicaid rolls, the largest reason for insuring the uninsured. Wellness mandates which cost the insured individual nothing out of pocket have helped lead a more health-conscious nation toward screenings that will result in dramatic savings going forward.
Finally, the elimination of pre-existing limitations, in its pre-ACA form, was absolutely the right decision to make. No American, when faced with a catastrophic illness, should have to fear the loss of their health insurance. While we should make some common-sense reforms toward maintaining coverage in order to keep those pre-existing clauses away, this was a great idea on behalf of the Obama administration, and I would argue the single greatest reason that we got Obamacare in the first place. I would guess that as the new administration works with Congress on how to move forward, these common-sense rules will remain with us.
Changes Going Forward
Fundamentally and to the heart of the matter, if one wants to predict the big changes going forward, we have to look at two elements:
- What did Trump promise in his campaign platform?
- What has his nominee to head the Health and Human Services (HHS) Department said about healthcare reform?
Like most of the rest of his platform, Trump was a little thin with his words on how he would remedy the healthcare issues that face our country. He did say—aside from “completely repealing Obamacare”—that he would “modify existing laws” and allow for insurers to sell insurance across state lines, and allow for pharmaceuticals from international suppliers that are “safe and reliable” to be sold within the United States. These market-oriented policies, while a good start, are hardly the complete answer to the healthcare industry’s problems.
What is most interesting is that Trump and his team seem poised to double down on Health Savings Accounts (HSA). Already a wonderfully designed, tax-advantageous product, Trump seems willing to extend the limitations of contributions and make the cost of the insurance underneath them tax-free. Employers are going to have to look harder at these plans, and understand that an investment into the HSA itself is necessary in order for these strategies to work for the employee.
Perhaps the greatest insights into what will happen with regard to healthcare reform can be seen by looking at Trump’s choice for Secretary of Health and Human Services, Congressman Tom Price. An orthopedic surgeon by trade, Price is a six-term House representative and an outspoken critic of ACA. He was compelled to run for Congress, if you believe him, because of the intrusion of the government into the relationship between doctor and patient. In fact, one of his primary pilgrimages has been tort reform, and I think you will see a slew of edicts from HHS under the Trump administration in an effort to make malpractice a greater burden to prove and thus reduce its impact on healthcare costs.
The biggest crystal ball we get from Price is the one piece of legislation that he has introduced and sponsored in Congress since the passage of ACA: the Empowering Patients First Act. This Obama-veto-guaranteed proposal was fundamentally in line with Trump’s current thoughts on reform, including investment into HSA accounts, multistate licensure to regional health carriers, greater ability to create associations and establishment of high-risk claim pools. Reading the fine print of the Empowering Patients First Act brings out the more interesting contexts of his proposed law. Price would like to bring back pre-existing limitations, but make it a much fairer rule, in that if someone has gone longer than 18 months without insurance, there will be some pre-existing limitations going forward. In an age of lessening personal responsibility, it is a worthy argument to engage some rule change such as this one.
Do not be surprised if you see the employer mandate go away rather quickly. Price would like to have the government give a dollar-for-dollar deduction on individual’s tax returns for those who are covered with health insurance. Obviously, that is a big how-do-we-pay-for-that, but as we are well reminded eight years post-ACA, the devil is always in the details.
No Silver Bullet
Regardless of what comes out of the new Congress and administration, remember that the ACA was not in any way close to an answer for our healthcare crisis of continued skyrocketing costs—nor for the 30 million Americans who remain uninsured. We cannot have an equitable, net-zero system when 10 percent of our population pulls from the healthcare system and contributes nothing in return. Moreover, many of the components of the ACA are not working; the individual marketplaces are clearing collapsing, and no one really understands how to implement the upcoming, yet delayed “Cadillac tax.”
Finally, remember too that every major piece of social legislation—Social Security and Medicare, most notably—required major legislative revisions eight to 10 years and more after their initial passage. We continue to need to work on this extraordinary national problem. Let us hope that this Congress and this president can put politics aside and get at a bipartisan solution that is good for all Americans. iBi
Tim Wyman is president of The Wyman Group. For more information, visit wyman-group.com.