What might a minimum “replacement” plan look like?

Supporters of the Affordable Care Act have a tendency to say that Republicans have no plans for comprehensive health reform. That’s not quite right; they have a great many plans—one, two, three, four, five, six at least—but have coalesced around none. Repeal and replace, if the GOP decides to pursue it in earnest, will be incredibly challenging.

At least since the 2012 election, repeal has never actually seemed within reach for Republicans; repeal and replace was a political mantra. As recently as Monday, Paul Ryan conceded that the expected Clinton victory would be the final death knell for repeal efforts, though the rhetoric would persist.

But Monday was four days ago; we’re in a different era now. The new question of interest is this: What policy changes would be minimally necessary for Republicans to claim that they’ve succeeded in “replacing” Obamacare? I posed the question to Twitter, and also laid out my own guesses. Some of you asked me to turn that into a blog post, so here goes. I think the following policy changes—leaving most of the individual market infrastructure in place—would be seen as sufficient to rebrand the law. (None of this is intended to suggest that I endorse the provisions.)

1. Turn the individual mandate into a continuous-coverage mandate. On Friday, Trump stated that he wants to maintain the ACA’s protections for people with pre-existing conditions, which are favored by two-thirds of Americans. Of course, these protections are why the individual mandate exists, to ensure that the risk pool has an adequate number of healthy people to balance out the sick. But it seems politically untenable for Republicans to leave the individual mandate intact after making it the central constitutional challenge to the law. The American Enterprise Institute advanced the idea of a “continuous-coverage mandate” in their 2015 white paper, making guaranteed issue and community rating contingent upon people carrying insurance without any lapses in coverage. This, of course, is problematic for many people with chronic conditions and volatile incomes. Redesigning the mandate would require legislation (though repealing the mandate could be done through reconciliation).

2. Block-grant Medicaid (but otherwise preserve expansion). Though it doesn’t purport to keep expansion in place at current funding levels, a central feature of Speaker Paul Ryan’s “Better Way” plan is to turn Medicaid into a block grant (funding would be structured using per capita, not global, spending caps). But unwinding Medicaid expansion would put governors in many red states in a bind, and would be out of step with Trump’s populist message. Trump has condemned the individual market, but hasn’t really attacked Medicaid. My bet is that Republicans don’t want to claw back coverage, but to rebrand the program they’ll insist on restructuring its financing. CBPP has estimated that block grants proposed by Paul Ryan in the past would dramatically inflate the number of under- and uninsured. This would require legislation.

3. Narrow essential health benefits. The law enumerates 10 categories of “essential health benefits” that insurers are required to cover. However, those categories are broad—”hospitalization” and “prescription drugs,” for example—and the Secretary is given responsibility for more explicitly defining EHBs. The Obama administration punted this obligation to the states, but a Trump administration could plausibly redefine each category much more narrowly through the regulatory process, with or without congressional support. This could include, as Sarah Kliff has noted, withdrawing copay-free coverage for birth control.

4. Reduce minimum actuarial value permitted on the individual market. Right now, bronze plans offer an actuarial value of 60 percent; enrollees can, on average, expect that the plan will cover 60 percent of their medical expenses. For reference, employer plans tend to have actuarial values north of 80 percent. However, if you lowered actuarial values, you would commensurately lower premiums, and Republicans would likely label these plans “catastrophic” insurance (though many folks consider the current bronze level to be near-catastrophic). Avik Roy proposed reworking the metal tiers in the ACA to have actuarial values of 40, 55, 70, and 85 percent for bronze, silver, gold, and platinum plans, respectively. Expect anything like this to be paired with policies around HSAs. Actuarial value levels are written into the statute, so this would require legislation.

5. Loosen the age band. The Burr-Hatch-Upton plan would establish a 5:1 band; Roy’s plan would make it an even wider 6:1. Based on an analysis by the Urban Institute, this is unlikely to change premiums much for people in the middle half of the age range, but could make coverage considerably cheaper for young adults (and commensurately more expensive for the near-elderly). This would be the least controversial of the reforms I’ve suggested might surface, but would still need to be legislated.

There are three other things worth keeping an eye on: the Cadillac tax, IPAB, and CMMI. The Cadillac tax was already delayed for two years and—given that economists are its only cheerleaders—it seems likely the Congress will either keep delaying or outright repeal it. It seems likely that IPAB, the so-called “death panel,” is on the chopping block, too. I’m less convinced that Republicans will maintain their eagerness to repeal CMMI under a Republican president, but any aggressive action using CMMI will have to contend with the party’s reaction to the Medicare Part B proposal.

Everything requiring legislation will be a battle, as long as the filibuster remains intact. However, Republicans could use reconciliation to “sunset” key parts of the ACA, imperiling the stability of the individual market, and use that to pressure legislators into passing “replacement” provisions. It’d be a risky and ugly game of chicken, with lives literally hanging in the balance. But this is 2016, so I’m not ruling anything out.

On the other hand…


Adrianna (@onceuponA)

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