This post is part of a series on the possible impacts of Trump’s election on a variety of social justice issues. Click here to read more.
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by Thomas Bodenheimer*
The nomination of Tom Price to be Secretary of Health and Human Services and of Seema Verma to run the Medicare and Medicaid programs ensures a major attack on health services for the people of the United States. On health care, there is agreement between the Steve Bannon/Tea Party faction of the Trump pre-administration and the Paul Ryan/traditional Republican faction: they both want to repeal the Affordable Care Act (ACA). This agreement will affect both the individual mandate and the Medicaid expansion portions of the ACA. On the other major healthcare issue, the future of Medicare, the Trump factions disagree. The Paul Ryan faction and Tom Price hope to convert Medicaid into a privatized voucher system, whereas Trump’s pre-election statements—supported by much of his base—suggest that Trump wants to leave Medicare alone.
This review of Trump’s health care agenda looks at the ACA’s individual mandate, the ACA’s Medicaid expansion, and the future of Medicare.
The Individual Mandate
Inspired by the work of the Heritage Foundation in the 1980s, the ACA required people without health insurance to purchase insurance from a federal or state insurance exchange or to pay a fine. This is called an individual mandate because it mandates people to buy individual insurance if they lack employer-based private insurance, Medicare, or Medicaid. However, the Heritage Foundation has reversed itself and is now a leader in the movement to repeal Obamacare.
By 2016, the ACA had insured about 20 million previously uninsured people, about 10 million through the individual mandate and 10 million through Medicaid expansion. People buying insurance through the federal or state exchanges could purchase a bronze, silver, gold, or platinum policy, with the bronze plan having the lowest premiums but highest deductibles and the platinum plan having the highest premiums and lowest deductibles. About three-quarters purchased the silver plan, which pays for 70 percent of average healthcare costs leaving 30 percent for the patient/family to pay out of pocket. In 2016, premiums for the silver plan varied widely by patient’s age and health status and by location; for example, the silver plan monthly premiums for a 40-year-old nonsmoker were $186 in Albuquerque and $719 in Anchorage, Alaska. However, 85 percent of people insured through an exchange received a federal subsidy that reduced their premium by an average of 73 percent. Even with the subsidy allowing families to purchase a silver plan, the average silver plan deductible in 2016 was $3,000 per person.
Tom Price, HHS secretary-designate, has been a leader in the multiyear Republican effort to repeal Obamacare. He has introduced a replacement that eliminates the individual mandate and proposes tax credits (far smaller than the ACA’s subsidies) to help people purchase individual insurance policies. Analyses of these voluntary tax-credits have estimated that only a few people would choose to buy insurance under such a program, thereby leaving most of the 10 million individual enrollees in Obamacare without coverage. Trump’s campaign promise that he would not allow insurers to exclude people with pre-existing conditions is an empty promise, because the insurers could raise their premiums for people with such conditions to unaffordable levels.
The strength of a popular backlash against the Obamacare repeal is difficult to judge. In a post-election poll, 52 percent of Republicans wanted Obamacare repealed, down from 69 percent in October. Trump, Tom Price, and Paul Ryan may have their hands full.
The expansion of Medicaid, the program for low-income individuals and families, has been the most successful portion of the ACA, adding 10 million Medicaid beneficiaries in 31 states plus the District of Columbia. (Most Republican governors refused to expand Medicaid in their states.) Medicaid is now the country’s largest health insurance program, covering 73 million people. In Medicaid expansion states, everyone (except the undocumented) with incomes below 138 percent of the federal poverty line ($33,500 for a family of four) is eligible for Medicaid. In most expansion states, Medicaid beneficiaries have no premiums or deductibles and no or minimal copayments. Most states enroll Medicaid beneficiaries in managed care plans that have been quite successful in reducing the growth of Medicaid costs.
For years, Paul Ryan and the House Republicans have pushed to transform the entire Medicaid program into block grants. Currently, each state government pays managed care plans a certain amount per Medicaid beneficiary or it pays hospitals, doctors, and pharmacies when Medicaid beneficiaries receive care; then the federal government pays the states a certain percentage of those costs—50 percent for higher-income states like California, 90 percent for poorer states like Mississippi. For states that have expanded Medicaid under the ACA, the federal government has paid almost all of the costs. How would block grants change this payment model?
Under block grant legislation, the federal government would send each state a lump sum each year, which would be considerably less than what states currently receive from the federal government. States could then decide how to address the severe funding reductions. Some states could cut Medicaid beneficiaries from the program; others could reduce the services provided under Medicaid (such as eliminating dental care); others could pay hospitals and doctors and nursing homes less, which would cause those providers to stop caring for Medicaid beneficiaries.
The preferred model for state policy under a block grant program is currently underway in Vice President-elect Mike Pence’s Indiana, and it was devised by Seema Verma, who Trump has nominated to run Medicare and Medicaid. Indiana’s Medicaid program requires enrollees to pay a monthly premium of $1 to $27 depending on income. Enrollees below the poverty line who choose not to pay the premium are charged copays for physician visits and prescriptions. If the premium is not paid, beneficiaries above the poverty line lose Medicaid coverage for six months, whereas those below the poverty line must make copayments for services. About one-third of individuals who apply for Medicaid and are found eligible are not enrolled because they do not make a premium payment.
A large body of research shows that premiums and cost-sharing are barriers to care for individuals with low incomes and significant health care needs. State savings from cost-sharing and premiums accrue more because of declines in coverage and utilization than due to increases in revenues. In its 2003 redesign, Oregon Medicaid created a “standard plan” with premiums of $6 to $20 per month; people who missed a premium payment lost their Medicaid for six months. In addition, copays were instituted. Due to these patient cost-sharing requirements, 77 percent of Medicaid standard plan beneficiaries dropped their coverage. Many reported increased medical debt and financial strain related to healthcare costs. Fewer people went to the doctor. Many who lost coverage remained uninsured and experienced major unmet healthcare needs. Florida, Kentucky, New Hampshire, and Wisconsin saw similar declines in enrollment when they raised the premiums in children’s health programs. Other states have abandoned enrollee cost-sharing (premiums and/or copayments) because it was too expensive to administer.
The combination of block grants and patient cost-sharing requirements will make Medicaid —the program for the most vulnerable populations—the most damaged health care program in the country.
For years, Republicans have tried to privatize Medicare. Rather than automatically receiving a Medicare card upon turning 65, elderly people would be given a voucher to be used in buying a private insurance plan. However, the voucher would be worth far less than the cost of the insurance plan, forcing Medicare beneficiaries to pay far more for their coverage and their care. Medicare administrative costs, now about 3 percent, would jump to 15 or 20 percent.
Medicare is not exactly cheap for seniors now; it currently pays for only 58 percent of the average beneficiary’s health care costs, requiring the majority of beneficiaries to buy private plans to fill in the gaps. But under the Obama administration, some of these private plans—the Medicare Advantage plans—have actually offered good deals for seniors while saving money for the government. Trump’s campaign promise to reduce Medicare drug prices has already been placed on the back burner, likely never to surface again.
Prior to the election, Trump promised to leave Medicare alone. But his HHS Secretary pick, Tom Price, agrees with Paul Ryan that Medicare should be privatized. Pressure from the grassroots will determine what happens, but Medicare is not safe.
About half the population is covered by employer-sponsored health insurance and will be less affected by Trump’s health policy; but the other half—those on Medicare, Medicaid, and individual private insurance—will find their health care coverage on the chopping block unless the public resists with a massive voice. Most vulnerable is Medicaid, which, as a program for low-income people with less political clout, could be destroyed beyond recognition.
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*Thomas Bodenheimer is a medical doctor who has practiced in San Francisco. He is the co-author with Kevin Grumbach of Understanding Health Policy: A Clinical Approach (2012).