How Healthcare Coverage Could Change Under a Trump Administration

As a result of the November 2016 elections, Republicans will control the White House and both Houses of Congress.  This gives them power to pass and implement major policy changes, and at the top of their agenda is healthcare reform.  Significant shifts could occur in three areas: the Affordable Care Act, Medicaid and Medicare.

The Affordable Care Act

President-elect Trump said on his first day in the White House he will ask Congress to repeal the Affordable Care Act (ACA).  However, is not yet clear what specific parts of the law would be repealed, exactly what a replacement would look like or when the replacement would take effect.

Mechanisms for repeal

Congress could repeal the ACA in part or in full, although a full repeal is probably unlikely, especially in the short term.  Any full repeal bill would be subject to a filibuster in the Senate.  However, a special process called budget reconciliation could be used to repeal parts of the law related to federal spending.  Under budget reconciliation, bills only need a simple majority to pass and they are not subject to a filibuster.

In 2015, the House and Senate passed budget reconciliation legislation, which President Obama vetoed.  The bill provides a model that Republicans could use again.  If passed, it would have repealed several core ACA provisions, including these:

• the individual mandate to purchase healthcare insurance
• the employer mandate that businesses with 50 or more employees provide coverage to their full-time employees
• premium tax credits for individuals to purchase insurance through the marketplaces
• small business tax credits to purchase insurance for employees
• Medicaid expansion

Replacement options

The 2015 budget reconciliation bill, as well as proposals put forth by Representative Tom Price (R-GA), Trump’s pick to run the U.S. Department of Health and Human Services, provide some ideas for how Republicans may go about replacing the ACA.  Core elements of Price’s plan directly affecting consumers include:

• providing tax credits for people to buy insurance on the private market. The tax credit would be age, but not income, adjusted.  The credit would max out at $3,000.
• promoting the use of health savings accounts so that people can put away pre-tax dollars to pay for healthcare.
• creating high-risk pools, which are plans specifically set up for people who can’t get affordable coverage on the private market due to a pre-existing condition.
• restricting, but not eliminating, the ability of insurers to deny coverage due to pre-existing conditions. Under Price’s plan, people with a pre-existing conditions could be denied coverage for that condition for up to 18 months after buying a new plan, if they didn’t have continuous coverage for 18 months before selecting the plan.

Potential impacts of a repeal and/or replacement

A recent Urban Institute brief estimated what healthcare coverage and government healthcare spending would look like if a reconciliation bill similar to the one passed into 2015 passed now.  It found that:

• the number of people without insurance would increase by about 30 million people
• eighty-two percent of those who would become uninsured would be part of working families
• nearly 13 million fewer people would have coverage through Medicaid or the Children’s Health Insurance Program (CHIP) in 2019
• Federal and state spending on healthcare, especially Medicaid and CHIP, would be reduced, leading to increased financial pressures on local governments and healthcare providers. The newly uninsured would seek an additional $1.1 trillion in uncompensated care between 2019 and

In addition, Families USA estimated that 105 million people, including people with employer coverage, could face the risk of going broke due to healthcare costs and 129 million people with pre-existing conditions could be denied coverage or charged more for coverage.

Medicaid

Medicaid is the joint federal/state program that provides insurance coverage to people who have low incomes.  Republicans have indicated they intend to permanently change the way Medicaid is administered by either implementing a per capita cap system or turning the program into a block grant for states. Speaker of the House Paul Ryan’s (R-WI) 2016 blueprint for healthcare reform calls for such measures.

Per capita caps

Per capita caps is a funding policy that would limit, or cap, the amount of money the federal government would pay for each person covered by Medicaid.  The cap amount would be set for each of four groups: seniors, persons with disabilities, other adults and children.  Further, caps would differ by state, based on the state’s spending per enrollee in 2016.  The cap would be adjusted annually to account for inflation.

Under per capita caps, states would have to cover the cost of any Medicaid expenses above the cap.  It is very likely states would find themselves in this position.  Healthcare costs in the United States have tended to rise faster than inflation.  Assuming this trend continues, states would be left to pay additional Medicaid costs, and the federal government would save money.

Block grant

A block grant is a funding policy under which the federal government would allocate a set amount of funding to each state for its Medicaid program.  The amount of the grant would be set and adjusted for inflation and population growth.  It would not change based on the number of enrollees in the state’s program.  States would be responsible for paying for any Medicaid costs above the amount of the grant.  As with a per capita cap system, a block grant would save the federal government money, but leave states stuck with any costs incurred due to increasing healthcare costs or increased numbers of people enrolled in Medicaid (such as a recession or a natural disaster).

Potential impacts of per capita caps or a block grant

Implementing either of these policies would likely lead to these challenges:

• Increasing costs for states by reducing the amount of federal funds available, and preventing funding adjustments to account for rising healthcare costs
• States limiting the number of people who have Medicaid by reducing the income eligibility for the program or simply limiting the number of people who can be enrolled in Medicaid at a given time
• States scaling back benefits by getting rid of categories of covered services, such as Early Periodic Screening Diagnosis and Treatment (EPSDT) services for children, or dental benefits

Medicare

Medicare is the federal program that provides insurance coverage for seniors.  It could be changed in several ways if the Affordable Care Act is repealed, or if Republicans pursue Ryan’s proposed blueprint for healthcare reform, which includes a plan to change Medicare into a system that provides vouchers for coverage.

A full ACA repeal would likely affect Medicare consumers in several ways, including increasing Medicare spending by over $800 billion from 2016 to 20125 by restoring payments to healthcare providers and Medicare Advantage plans.  This would likely result in increased deductibles for enrollees who have coverage under Parts A and B, increased copays under Part A, and increased premiums under Part B.  In addition, some beneficiaries could see increased drug cost sharing by reinstating the Medicare “doughnut hole.”

Separately, Ryan has proposed instituting a premium support system where the federal government would provide each Medicare enrollee a payment to use towards purchasing a health insurance plan.  Plans could be purchased from a private company or a form of traditional fee-for-service Medicare.  Ryan’s plan also would raise the age of Medicare eligibility from 65 to 67.

It is not clear what impact a premium support system could have on Medicare beneficiaries – it would depend on several questions like whether guaranteed benefits would remain part of Medicare and how, if at all, traditional Medicare would continue to provide coverage.  Still, there is evidence to suggest that beneficiaries could face higher premiums and reduced benefits.

Overall, while it is not yet clear exactly what reforms will take place beginning in 2017, it is likely that core mechanisms for providing insurance coverage may change in a way that could threaten access to care.  It will be essential for policymakers to ensure that any reforms include measures to protect our most vulnerable, so that they can receive the healthcare services they depend on.