Crafting the ObamaCare Replacement Strategy

 

I said last post that repealing ObamaCare would be easy but replacement was another matter. That becomes increasingly clear as more and more healthcare analysts opine on the Republican strategy.

This may seem very complicated – and it is. But I’m confident that the Republicans in leadership positions, House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and incoming HHS Secretary /Congressman Tom Price understand these problems and will deal responsibly with them. “Once Obamacare is repealed, we will make sure there is a stable transition period so that people don’t have the rug pulled out from under them,” Ryan’s office said this week in a statement, one in a series of Obamacare-themed releases this month.

Republican Strategy

Avik Roy, writing in Forbes, believes the Republicans must craft a strategy that maximizes the Congressional Budget Office (CBO) measurement of the number of people covered by the new law. To achieve that it’s useful to understand how the CBO measures coverage.

According to a CBO blog posted by staffers Jared Maeda and Susan Yeh Beyer, there are two criteria for considering coverage. First, the coverage must meet the conventional definition of “major medical” health insurance that “at a minimum, covers high-cost medical events and various services, including those provided by physicians and hospitals.” This definition should cover the catastrophic coverage plans favored by many conservatives.

Second, so long as the ACA’s regulations are in effect, for a plan to count as coverage, it must conform to the ACA’s requirements. That’s an entirely reasonable approach by the CBO; after all, if a health insurance plan is illegal under federal law, it’s unclear why the CBO should count it as coverage.

Some believe the CBO is insisting on coverage as comprehensive as ObamaCare. But their blog posts really says the opposite. “If the provisions of the ACA governing the definition of private insurance coverage were repealed,” Maeda and Beyer write, “CBO would revert to the broader definition of private insurance coverage” encompassing its first set of criteria. Therefore, if the ACA is repealed, the first criteria will apply.

The Republican Congress already passed a repeal bill that was vetoed by President Obama. That bill, H.R. 3762 could be easily passed again but signed into law this time by new president Trump. But Roy believes that would be a mistake because H.R. 3762 leaves Obamacare’s regulations in place, the ones that place onerous and costly requirements on the delivery of health insurance across America.

He advocates what he calls his “enhanced plan” instead of H.R. 3762. He says that three regulations must be in place in the new bill:

  • Repealing the law’s requirement – that insurers charge their youngest customers no less than one-third what they charge their oldest ones, a provision that dramatically increases premiums for the young.
  • Repealing the law’s requirement – that plans have a minimum actuarial value of 60 percent (actuarial value is a measure of a plan’s expected payout of medical claims relative to a patient’s contributions in the form of co-pays, deductibles, and coinsurance; a higher AV percentage means less patient cost-sharing but higher premiums, all things being equal);
  • Repealing the law’s costliest insurance benefit mandates, most critically, its requirement that all plans cover maternity expenses (according to numerous actuaries I’ve spoken with, mandated maternity coverage is a key factor in rising premiums for younger enrollees).

 

Roy also believes it is necessary to preserve the funding mechanisms of ObamaCare (taxes) until the replacement plan is passed. Otherwise the law will implode, people will lose their coverage, and there will be no alternative. That means they’ll need to keep a majority of Obamacare’s tax hikes on the books—especially the Cadillac tax, the medical device tax, and the pharma tax—in order to fund a competitive coverage expansion.

What no one is mentioning is the obvious – this repeal and replacement process would go much smoother if Democrats would acknowledge that ObamaCare has been a huge failure and replacing it with something better benefits all Americans. Sadly, they continue to deny the reality of their failed healthcare legislation and therefore continue to obstruct an orderly and speedy replacement. Senate Minority Leader Chuck Schumer recently said, “If they repeal without a replacement, they will own it. Democrats will not then step up to the plate and come up with a half-baked solution that we will partially own. It’s all theirs.”

Clearly Senator Schumer is more interested in scoring political points than working with Republicans to craft a better healthcare system than ObamaCare. The American people deserve better.

 

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