Why any Obamacare ‘replacement’ might look familiar

REUTERS/Eric Thayer
Problems that helped give rise to the health law — rising costs, an aging population, mediocre medical results — haven’t gone away.

This article was produced by Kaiser Health News, a national health-policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

The Affordable Care Act transformed the medical system, expanding coverage to millions, injecting billions in tax revenue, changing insurance rules and launching ambitious experiments in quality and efficiency.

Less of that might disappear under President-elect Donald Trump’s pledge to “repeal and replace Obamacare” than many believe, say policy analysts. Republicans promising change might not quickly admit it, but in some respects Obamacare’s replacement may look something like the original.

“It gets into a questions of semantics,” said Mark Rouck, an insurance analyst for Fitch Ratings. “Are they really repealing the act if they replace it with new legislation that has some of the same characteristics?”

Problems that helped give rise to the health law — rising costs, an aging population, mediocre medical results — haven’t gone away. The ACA pushed insurers, hospitals and employers to launch their own reimbursement reforms, which are largely unaffected by who runs Washington.

Even fierce health-law opponents may pause at the political risk of taking benefits from millions who gained coverage since its implementation. Subsidies for the middle class to buy insurance may remain — even if they’re not the Obamacare tax credits applied through online marketplaces, said Joseph Antos, a health economist at the American Enterprise Institute.

“The idea that they’re just going to wipe that money away is pretty unlikely,” he said. “They don’t want to be in a position of saying they’re just kicking millions of people out in the street.”

Others disagree.

“I think they go away,” said Ana Gupte, a health care analyst for Leerink Partners. “The subsidies … are at risk” along with the ACA’s requirement that everybody have health coverage, she said.

Topping the list of ACA provisions likely to survive under Trump is the requirement that employers cover workers’ children up to the age of 26, analysts said. The measure is widely popular and not especially expensive.

A health law crafted by Republicans might also retain the ACA’s protections for people with preexisting illness seeking coverage, said Glenn Melnick, a health economist at the University of Southern California.

That could include relaxing the ACA’s limit on how much insurers can charge and allowing them to adjust premiums based on an individual’s health, he said. However, that might put the price of insurance out of reach for many.

The health law’s payment reforms might also survive in some form. The ACA prompted hundreds of experiments to control costs by rewarding doctors for efficiency and fixing payments for episodes of care or treating entire populations.

“Part of what I would expect to hear from [the new administration] is we want more value out of the entire system,” said Daniel Steingart, a hospital analyst at Moody’s Investors Service. “All of that jibes pretty closely” with ACA payment experiments by the Department of Health and Human Services, he said. “I can foresee a scenario where they gradually expand all those programs.”

Republicans have criticized HHS’s innovation lab, which presides over accountable care organizations and many other payment tests. But they may find it more appealing under their own supervision, said Rodney Whitlock, a strategist and former top Republican health advisor in the Senate.

“You can really want to curtail it — until maybe you’re in charge,” he said. “Then maybe you would like it.”

In any case private insurance companies, employers and hospitals are likely to continue their own payment reforms, analysts said.

“Private industry is really taking that and running with it,” said Gupte. To be sure, health policy and financing are likely to look substantially different in a Trump administration, experts said.

The ACA’s biggest coverage expansion came through the Medicaid program for the poor and disabled, which added more than 15 million people. Trump has suggested giving states fixed federal grants for Medicaid, which could lead to a substantial reduction in coverage or benefits.

Even partial cuts in Medicaid funding and subsidies for private plans would hurt hospitals, which have benefited from the health law’s revenue infusion.

“If you’re running a health system and you now have more insured people through a Medicaid expansion or exchange customers — if even a portion of those go away, that might be your [profit] margin for the year,” said Benjamin Isgur, who heads the Health Research Institute at PwC, a consultancy.

On the other hand, hospitals and insurers represent a powerful lobby seeking to maintain something that looks like the status quo.

“There’s a bigger role [hospitals] can play, a much more cost-effective role we can play if we have a long-term strategy” as part of a consistent health reform program, said Bill Ryan, a spokesman for the Einstein Healthcare Network, a Philadelphia-based hospital system. “And stopping and starting seems to be a crazy way to do this.”

Other aspects of health care will probably stay the same in the near future no matter what Congress does, analysts said.

Health costs continue to grow faster than the economy’s ability to pay for them. Partly as a result, high deductibles — what patients pay before insurance kicks in — have become widespread in employer and individual plans alike. Neither have much to do with the health law, said Don Berwick, who was acting Medicare administrator early in the Obama administration.

Republicans “managed to make the public think Obamacare was causing all the trouble. That is absolutely wrong,” he said. “They could repeal it tomorrow and still have a broken delivery system and costs would continue to go up.”

Now Republicans face the same challenge, said Mark McClellan, who ran Medicare in the George W. Bush administration.

“It’ll be a different path, but the urgency of finding ways to transform health care — to give care that’s more personalized in prevention and less costly and more accessible, especially to people of limited means — the pressure to do that is not going to go away,” he said. “It’s going to increase.”

KHN senior correspondents Julie Appleby and Jordan Rau contributed to this story.

Comments (8)

  1. Submitted by Ray Schoch on 11/11/2016 - 04:11 pm.

    One exception

    I don’t pretend to have a magic answer to all the health care issues in the country, but it does appear to me that, with a single broad exception, health care COSTS in the U.S. are NOT driven by the government. Those costs come, almost exclusively, from the private sector, and it’s the private sector – the manufacturers and deliverers of medical care, services, devices, etc. – that determines what delivering your new baby or fixing your broken leg costs, not the government. Blaming government for rising health care costs is both futile and misplaced. Blame MedTronic, or your for-profit health insurance provider.

    The broad exception is in the area of prescription drugs. Republicans in Congress, swayed by truckloads of campaign-contribution and other forms of money from pharmaceutical firms, wrote into law that in general, the government may NOT negotiate drug prices with those pharmaceutical firms that manufacture the drugs. As a result (thank you, Republicans…) drug prices continue to rise far faster than either incomes or the rate of inflation, and those drug companies know there’s little to fear in the way of retribution. That situation seems likely to continue with the new administration.

    • Submitted by Tim Milner on 11/14/2016 - 12:01 pm.

      Government influenced costs in a major way

      by dictating the reimbursement rates for Medicare/Medicaid.

      Medicare/Medicaid payments in nearly every situation fail to cover the actual cost of delivering the medical service provided because the reimbursement rate does not accurately cover the overhead costs of the hospital/clinic. (A very simplified way of looking at it would be to say that it covers the variable costs well – the doctor’s time, the supplies used, etc – but covers almost none of the fixed costs – the exam room, the x-ray machine itself)

      So the game starts. You try to charge more to other people to make up the difference. You inflate your prices so that your percentage gets you more revenue. All kinds of crazy things to make the dollars work out.

      With Medicare/Medicaid being the biggest by far, it dictates the terms. Government plays a huge role.

  2. Submitted by Hiram Foster on 11/12/2016 - 08:58 am.

    Republicans

    The reason Republicans never propsed an alternative to Obamacare is that Obamacare itself is too close to what Republicans would propose. One thing to note going forward is to track how the criticisms Republicans made of Obamacare will addressed on the Republicans plan. Will for example, doctors be forced to keep their patients.

  3. Submitted by Andrew Kearney on 11/12/2016 - 10:40 am.

    Not so sure

    I’m not so sure that the pharma exception will survive. Donald Trump if anything is known for deal making. I think he knows a bad deal when he sees one and won’t let this stand-if he ever hears about it.

  4. Submitted by Connie Sullivan on 11/12/2016 - 03:11 pm.

    The first thing Donald Trump’s campaign staff removed from his website, post-election, was his promise to rein in high drug costs.

    So much for promises.

  5. Submitted by Joel Stegner on 11/12/2016 - 05:42 pm.

    Trumpcare

    Trump said he would repeal Obamacare. House Republicans voted 50+ times to replace. Republicans at all levels say they wanted to replace. So what is the problems, boys and girls? Going to play the “never mind” card. It is time to do your worst, or admit you were lying all along.

    Republicans named it to use the name Onamacare to deride it. As Trump likes to put his name on things, call his replacement TRUMPCARE – the all caps are everything Trump does is hugely fabulous, at least until he has milked it for all it is worth, followed by bankruptcy.

    If he doesn’t offer a replacement, then maybe it is likely Howard Hugh’s wooden airplane that never got of the ground. Bankrupt ever prior to launch. Even for Trump that is a record.

    If Republicans wanted to retain most of, but reform Obamacare, they have had several years to do so. In all that time, they don’t have a replacement plan. You made promises – TRUMPCARE is what you to deliver.

    Then if you boot 20+ million off their healthcare coverage, you can try to explain what you propose is new and improved. Good luck with that!

  6. Submitted by Andrew Kearney on 11/12/2016 - 07:55 pm.

    I was wong about reining in big pharma

    As C. Sullivan points out the pharma negotiation to lower drug costs was removed from the Trump website today. More evidence that Mike Pence will be calling the shots. Donald’s interests will lie elsewhere-continuing to run his companies and find opportunities to align the federal government with his interests. He now has appointed lobbyists to run the government after promising something different. Amazing! His campaign promises are dropping each day. But his supporters took him seriously not literally so there will be no price for him to pay until they start to hurt a year or two from now and even then they’ll probably blame Obama and Clinton.

  7. Submitted by Hiram Foster on 11/13/2016 - 07:25 am.

    Trump said he would repeal Obamacare.

    But he has also promised to retain insurance for preexisting conditions, Obamacare’s primary financially destabilizing feature. And Donald is always right, because he always takes all sides of any given controversial issue.

    Trump can always be counted on to do the popular thing, the thing that enhances his personal brand. It’s what makes him so easy to manipulate. I think in the Trump administration, things like environmental regulation are dead. We will just have to hope Soucheray got it right. But so are things like entitlement reform, something high on the Republican agenda, which no one, not even Republicans really want.

    We have elected as president a man pathologically lacking in political or moral character, a truly scary prospect, but one not without it’s upside.

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