It’s Not the “Repeal” …It’s the “Replace”

The inauguration is over and we already have the first executive order from President Trump regarding the repeal of the ACA. In case you missed it, that order directs federal agencies to take (rather vague) steps to ensure the government's implementation of the ACA minimizes the burden on impacted parties (including individuals, states, manufacturers and more). This order should come as no surprise, given that Trump’s campaign vision for the healthcare industry included the following:

“…to create a patient-centered healthcare system that promotes choice, quality and affordability”.

We don’t have a complete plan as to how to get there, but we do have preliminary facts and actions to date:

• The executive order could enable HHS to decrease enforcement of the individual mandate portion of the ACA, which requires all individuals to have health insurance. There aren’t enough details in this order to spell out exactly what the intent is, nor are there specific points on what the next course of action is. Regardless, the idea that the individual mandate can be weakened to any extent through this order without a replacement plan in place is cause for executives – particularly those of health insurers – to have concerns. The existing health insurance exchanges simply do not work unless everyone is in the system – this is a proven fact about insurance risk pools.
• Tied very closely to the individual mandate is the concept of “guaranteed coverage” (i.e., no pre-existing conditions). If the young, healthy are not required to be in the individual insurance risk pool, then the remaining insurance buyers will tend to be older and sicker. We do not yet know the plan for reconciling these two concepts in a “replace plan”, but this is one very important detail.
• Closely tied to the individual mandate is the concept of federal subsidies for lower income individuals to purchase insurance. All key Republican plans authored to date (Price, Ryan, and Cassidy) have called for an end to insurance subsidies and the institution of individual HSAs plus tax deductions for insurance premiums paid. Such a development could quickly lead to the demise of public health insurance exchanges, as many consumers would not be able to afford current policy prices without outright subsidies.
• During Rep. Tom Price’s Senate hearing on January 24 (Price is nominated to be the Secretary of HHS), he stated he is committed to “…all Americans having access to healthcare”. He also explained a vision for state block grants for Medicaid to operate similar to the TANF program. This fact, combined with Seema Verma’s  nomination to head CMS, means it is more likely that the intent of Medicaid as a state block grant program will have increased focus on the following:
• Customized eligibility requirements for each state, with a real potential for decreased overall federal funding, requiring states to be more creative in their approach – such as increasing involvement of managed care, population health, and/or work requirements for able bodied recipients. There are both real opportunities and challenges here for state Medicaid organizations to implement different solutions for balancing coverage and costs.
• This week at group of Senators (including Susan Collins and Bill Cassidy) introduced “replace” legislation essentially allowing individual states to choose to remain with the existing ACA framework, or enact their own version of reform. While this may seem as the ultimate plan for state choice and governance, the idea of up to 50 different health reform plans among the 50 states seems confusing.
• The Aetna-Humana merger, being effectively blocked by the U.S. Department of Justice, does not bode well for the planned “mega-mergers” among the largest U.S. health plans. Time for plan B…and that doesn’t necessarily include the big getting substantially bigger anytime soon.

All of these facts to date add additional uncertainty to an industry faced with unsustainable cost growth, and a growing and aging population requiring evolving care modalities, including specialty pharmaceuticals, telehealth, remote monitoring, and proscriptive analytics. The overwhelming fact for the insurance market is insurers need to make key decisions on their 2018 insurance products, rates, and whether or not they will participate in the public insurance exchanges by late April. Product and rate filings will be due to state insurance commissioners beginning in early May. If Congress and White House cannot come up with a sound, repeal AND replace framework by then that is encouraging to insurers, there may be continued exits from the individual insurance market, and/or significant increases in premium amounts (especially given the uncertainty re: enforcing the individual mandate).

As an individual market consumer, I am just as anxious personally as well as professionally as to what happens next. Stay tuned…