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Could Tom Price’s Bill Be The  ACA’s Successor?

By Grant Huang, CPC, CPMA, Director of Content at DoctorsManagement

Tom Price, a former orthopaedic surgeon and now a former Congressman, has been confirmed as HHS Secretary, a role that gives him tremendous power over how a replacement to the Affordable Care Act (ACA) is implemented. Secretary Price will also shape the future of Medicare and Medicaid, and the extent to which HHS and CMS will support ongoing transitions ranging from electronic health records (EHRs) to the ICD-10 diagnosis code set.

In 2015, then-Congressman Price introduced the Empowering Patients First Act, which is now seen as a likely blueprint for the eventual Republican replacement for the ACA. While there is no consensus around any replacement legislation, President Donald J. Trump has stated that the push for repealing and replacing the ACA will begin in earnest after Price’s confirmation, says Bradley Coffey, government affairs manager for the AAOE in Indianapolis. “He’s always said he would wait to push on the ACA until after Price gets in, and that could mean Price’s plan is where they want to start from.”

Though it seems clear that Republicans will want to tweak Price’s plan, starting with measures to ease the transition away from the current ACA, and by adding a possible implementation delay, much of the Price plan follows longstanding conservative policy prescriptions.

The Price plan analyzed

The Empowering Patients First Act is 242 pages long and is one of the most thorough replacement bills authored by Republicans. Here’s a breakdown of its key provisions:

  • Weakens the preexisting conditions clause which prevents insurers from charging higher premiums to cover patients with preexisting conditions. Price’s plan maintains this requirement, but it does allow higher premiums for individuals who have not maintained continuous coverage (defined as 18 months of continuous insurance).
  •  Completely eliminates the Medicaid expansion that has played a significant role in reducing the number of uninsured Americans. Price’s plan offers no replacement for this expansion.
  • Reduces employer-tax exclusion for insurance. This is a significant move, because the ACA currently does not tax health benefits, which causes the federal government to miss out on an estimated $260 billion in tax revenue. Price’s plan limits the employer-tax exclusion to $8,000 for individual plans and $20,000 for family plans, which is likely to be highly unpopular with Americans who currently obtain coverage through their employer. This measure will make such plans significantly more expensive, though some employers may decide to be more generous and simply absorb the cost.
  • Eliminates the ACA’s individual mandate that all Americans must be insured or pay a tax penalty.
  • Funds a high-risk pool, but offers little cash for it. The Price plan would assign $3 billion to a high-risk pool for patients with significant preexisting conditions to help them afford coverage. This amount is far less than other Republican proposals, such as Speaker Ryan’s Better Way plan, which would put $25 billion toward high-risk pools (adding $2.5 billion per year to reach $25 billion over 10 years).
  • Replaces the ACA’s income-based subsidies to help Americans obtain plans with an age-adjusted tax credit to mitigate the cost of premiums. Those ages 18-35 would get $1,200 in credits while those ages 51 and up would get the highest amount, $3,000 in credits. Thus wealthy Americans would receive the same amount of help that poor Americans do if they are the same age.
  • Eliminates required benefits for all plans. The ACA includes an “essential health benefits” list that all plans must meet at a minimum, including items such as preventive care, mental health services, pediatric care, and maternity services. The Price plan eliminates any such requirement, which would allow insurers to offer bare-bones plans with much lower premiums.

A cheaper plan, but certain to see changes

Price’s plan is far less costly than the ACA, but offers far fewer benefits. Price’s fellow Republicans in Congress are particularly unlikely to stomach a complete elimination of the ACA’s Medicaid expansion. In fact, Vice-President Mike Pence, in his previous role as governor of Indiana, took advantage of federal Medicaid expansion dollars to fund a conservative reform of Medicaid that emphasized health savings accounts to expand coverage. Pence chose Seema Verma, a healthcare consultant who is now Trump’s nominee for CMS Administrator, to lead that Medicaid reform effort.

Thus some version of the Medicaid expansion is likely to be tacked on to Price’s plan and be a part of the legislation that Republicans ultimately attempt to pass.

Price’s provision to limit the employer-tax exclusion may be even more controversial with Republicans, who could see it as a tax on businesses. The provision makes the Price plan much less costly, and will please deficit hawks in Congress, but it is unlikely to be popular with most Americans who get their health insurance through their employer.

The Business of Medicine will continue to analyze Republican legislative efforts to replace the ACA as more information becomes available over the coming months.

— Grant Huang, CPC, CPMA (ghuang@drsmgmt.com). The author is Director of Content at DoctorsManagement.