What Repeal and Replace Should Look Like

Donald J. Trump is the next President of these United States and his pledge to “repeal and replace OBAMACARE” looms large for businesses, individuals and health care markets.

With a Republican Congress and US Senate, Trump will have ample opportunity to make wholesale changes to the “Affordable Care Act” healthcare law that was passed in 2010 under then complete Democrat control. But what will those changes be and will they further upset the availability of healthcare and its pricing to most Americans.

Republicans will be expected to act and act quickly to make reforms. With the closeness of numbers in the US Senate there will be some difficulty with making wholesale changes but some Democrats that face re-election in the next cycle may partner with Republicans to give them the votes they need for reform passage. So what can we expect and what can we hope for…

Keep the parts of the ACA that work

Americans and even healthcare insurers embraced some of the initial reforms included in the ACA such as allowing dependent children to be covered until age 26, the elimination of lifetime and even annual maximums for health plans and guaranteed insurability. Reformers would be wise to keep these provisions as they are not big cost drivers. The dependent age increase alleviated coverage problems for college students and the caps on plan maximums affected few individuals. Many states (including Oklahoma) and insurers already had only a 12 month wait for pre-existing conditions prior to the ACA and waived this if the individual applying for a plan had prior coverage.

Expect a move to repeal the mandates

Despite the opinions of Supreme Court Justice John Roberts, most Americans feel that being forced to buy a product such as healthcare is unconstitutional. Expect Republicans to include the repeal of the employer and individual mandate in their package of reforms. Encouraging healthcare purchase through tax credits seems a more likely path they will pursue.

Allow the states to implement their own reforms

One of the little known parts of the ACA is the Section 1332 Waiver that allows states to change or waive any provision of the Act including the employer and employee mandates. Under the Obama Administration the reform potential of this provision was diminished by the requirement that any changes by using these waivers could not reduce the population eligible for subsidies. If states were given broader authority to make changes then true reform could take place.

Steady the Health Care Market by separating those with exchange coverage into a different pool

Even though President Obama promised that “If you like your health care plan, you can keep it”, he didn’t say what the price would be.

Healthcare markets and insurers were promised new enrollees but the safeguards put in place to provide funding for new potential claims were removed or ignored. The dangers of continual open enrollment also led to exchange individuals enrolling, getting big ticket claims paid for and then lapsing their coverage. This provided little reimbursement to the insurance carriers which led to increased costs that were passed on to those who had prior health plans.

These problems could be solved by either separating the exchange individuals into a separate pool or by block granting funds to the states to cover these individuals. This would right the ship for health care insurers that have been saddled with billions in losses that they were forced to pass on to their other plans to stay solvent.

Use Block Grants to the states with limited federal oversight for reform efforts

Lower income individuals and employees could be given opportunities for coverage through encouraging state coverage reforms. Oklahoma’s Insure-Oklahoma program has been a huge success and could be a model for reforms in other states. The program succeeds because it leverages employer and employee money to provide major medical coverage to lower income populations. Unlike Obamacare, it doesn’t use a mandate but rather an incentive to encourage the purchase of health care coverage. If federal government block grants are successful this program could be expanded and its availability to other populations pursued.

These are the initial items that I see being immediately addressed but there could be others. The one thing certain is that there will be change and it will come quickly.