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JAMA Forum Archive, 2012-2019: Health policy commentary from leaders in the field
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What Might an ACA Replacement Plan Look Like?

The US House of Representatives and Senate recently took initial steps towards repealing the Affordable Care Act (ACA), passing budget resolutions that pave the way towards a “budget reconciliation” measure that can repeal major aspects of Obamacare with a 51-vote majority in the Senate.

Larry Levitt, MPP

This budget procedure allows the tax and spending elements of the ACA to be repealed without requiring any votes from Democrats, assuming almost all Republicans—who hold 52 seats in the Senate plus the vice presidency, which serves as President of the Senate—hang together.

A trial run for this legislative approach was used in early 2016. The Republicans in Congress passed a bill that repealed the ACA’s premium subsidies and Medicaid expansion (with a delayed effective date for the repeal, to allow time for a replacement plan to be developed). This bill also eliminated immediately the law’s individual mandate, employer mandate, and tax increases. President Obama vetoed that bill, but the expectation is that President Trump would now sign it.

Affordable Care Act advocates, as well as some Republican critics of the ACA, have expressed concern that this “repeal and delay” strategy could destabilize the individual insurance market, and argue that a repeal vote should only occur once the details of a replacement plan are known. The public is also divided on whether and how the ACA should be repealed. According to December polling from the Kaiser Family Foundation, 47% do not want the ACA repealed, 28% want a vote on repeal to be delayed until a replacement plan is announced, and 20% want the law repealed immediately and to work out a replacement plan later.

President Donald Trump doubled down on concerns about repealing the health law without a replacement at his recent news conference, saying: “It will be essentially simultaneously. It will be various segments, you understand, but will most likely be on the same day or the same week, but probably the same day. Could be the same hour.” He continued that he would submit a plan “almost simultaneously, shortly thereafter” Rep Tom Price (R, Georgia), an orthopedic surgeon now serving as Chair of the House Budget Committee, is confirmed as Secretary of Health and Human Services.

Price has authored one of the most detailed plans for replacing the ACA, and it is one of the few that has been drafted in legislative form. In light of Trump’s comments, and the similarity of Price’s plan to elements of a white paper from House Speaker Paul Ryan (R, Wisconsin), it’s instructive to review what this proposed legislation would do, which includes:

  • Repeal of the ACA in its entirety. This would eliminate the individual and employer mandates, guaranteed access to insurance for people with preexisting conditions, insurance subsidies for low- and middle-income people, the expansion of Medicaid, required benefits, guaranteed preventive services with no cost-sharing, annual or lifetime caps, the option for young adults up to age 26 years to stay on their parents’ policies, and all tax increases related to the law. The repeal would also eliminate Medicare preventive benefits, the closing of the prescription drug “donut hole” for Medicare beneficiaries, and all changes to Medicare payment and delivery system made by the ACA.

  • Guaranteed access to coverage in the individual insurance market, including for people with preexisting conditions. Access could be limited to open enrollment periods of 30 days every 2 years and special enrollment periods (such as when losing employer-based coverage). Insurers could offer coverage to people who meet medical underwriting criteria between open enrollment periods.

  • Exclusions of covered services for preexisting conditions for up to 18 months, except for people with no gaps in insurance. Insurers would be permitted to charge 50% higher premiums to people with a gap in coverage.

  • Federal grants to states of $1 billion per year for 3 years for support of high-risk pools for people with preexisting conditions.

  • Refundable tax credits of $900 to $3000 per person to help buy individual insurance, varying by age, with the same amount available regardless of income (including for low-income people currently eligible for expanded Medicaid coverage under the ACA).

  • Increases in the contribution limits for health savings accounts (HSAs) and a one-time refundable tax credit of $1000 to deposit into an HSA.

  • The sale of insurance across state lines.

  • Caps on malpractice awards, along with the creation of state tribunals to review cases.

In a recent interview with The Washington Post, Trump said he was close to finishing an ACA replacement plan that would “have insurance for everybody.” He said the insurance would be “much less expensive and much better,” and that it would have “much lower deductibles.” He also reiterated that he is waiting for Price to be confirmed before releasing his plan.

It’s hard to reconcile Trump’s description of what his ACA replacement proposal will do with the legislation proposed previously by Price. Based on the outline above, Representative Price’s proposal would likely result in more people uninsured, less comprehensive benefits, and fewer protections for people with preexisting conditions.

We’ll just have to wait and see whether the President’s description is somewhat embellished, or if he has a completely different health care proposal in the works. We may find out soon, since in one of his first official acts, President Trump issued an executive order calling on federal agencies to “waive, defer, grant exemptions from or delay” ACA requirements.

About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance. 
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