President Trump and Republicans in Congress have started laying the groundwork for the repeal of the Affordable Care Act – a move that raises questions about the future of health care and the fate of 20 million Americans who gained coverage through the law. Although there is no one Republican plan to replace President Obama’s signature achievement, some GOP proposals include high-risk pools, health savings accounts and allowing consumers to shop for insurance across state lines. Rutgers Today spoke with Joel Cantor, a Distinguished Professor of Public Policy and the founding director of Rutgers’ Center for State Health Policy, about the feasibility of GOP plans for meeting the country’s health care needs.
What are the arguments for keeping and fixing the law? What changes are the law’s supporters and critics advocating for?Cantor: The Affordable Care Act made the biggest changes to the U.S. health care system in over 50 years so there is no question that anything that big is going to be imperfect. Even most supporters of the law would agree that the level of subsidies offered didn’t break the affordability barrier for as many people as it should have. The market ended up attracting a sicker pool of people than hoped, and because insurance costs are driven by the risk pool (the people who purchased insurance), premiums were higher than hoped.
Those advocating to fix the glitches would argue for increasing the income- targeted subsidies. Among the GOP goals are to reduce government regulation of health insurance markets and slow federal spending on healthcare. The kinds of solutions they are talking about would reduce the scope of benefits health insurers are required to cover, and perhaps allow health insurers to charge more, or in some instances, delay coverage for of people with pre-existing conditions. That would certainly bring down costs for healthier people, but would shift the burden of paying for care to people with the greatest needs.
President Trump and other Republicans have talked about allowing people to purchase insurance across state lines as a way of providing access to affordable coverage. How would this work and what are the pros and cons?
Cantor: Before the Affordable Care Act, health insurance was mainly regulated by the states. States like New Jersey had pretty strict regulations and other states had pretty loose regulations. One of the proposals in House Speaker Paul Ryan’s plan is to allow people to buy insurance from other states without many of the federal consumer protection regulations of the ACA. That would essentially create a market where the state that regulates the least will be the state that sets the rules for health insurance across the country.
Say New Jersey has a regulation that says you can’t exclude people with pre-existing conditions and you can’t charge older people more than three or four times what you are charging younger people. If I am a young, healthy person in New Jersey I am going to buy my policy in another state that allows higher premiums for older people and much cheaper premiums for younger people or that allows insurance companies to exclude sick people (which lowers the premiums). Who would be left in New Jersey to buy insurance but older sick people? The market would collapse in New Jersey.
What are health savings accounts included in some Republican proposals and how do they work?
Cantor: Health savings accounts are an alternative to traditional health plans where you put your own money away, possibly matched by an employer if you have one willing to do that, and you pay out of your account for your health care needs. There could be some kind of catastrophic insurance overlay, so if you have really high expenses insurance would kick in. That would certainly lower premiums and lower health care spending overall, but it has a number of issues and problems with it, including the fact that health care costs are really high and the ability to put away enough money to have a nest egg to be able to cover your health care is a real stretch for a lot of people There is also evidence that when people face more out-of-pocket health care costs, they cut back on medically essential services as well as unnecessary care, which can lead to worse health outcomes.
What about high-risk pools? Why are they part of Republican proposals and how do they work?Cantor: If the ACA is repealed, and subsidies and the requirement to buy coverage go away, the only way to make insurance affordable for people without job-based coverage is to allow companies to deny people with pre-existing conditions. To deal with this problem, some of the ACA replacement plans advanced by Republicans would encourage states to create high-risk pools for people who can’t get regular coverage. Of course, the premiums in a high-risk pool would be stratospheric, so there would have to be a very large subsidy from the government. This has been tried before and government subsidies were almost never high enough to make high-risk pools viable. So far the proposals being discussed don’t appear to put enough money on the table to make mechanisms like that work.
Medicaid enrollment has grown by about 18 million people, including about 500,000 in New Jersey since the Affordable Care Act went into effect. What are block grants included in some GOP plans, and would it be possible to maintain the number of people covered?
Cantor: Republican proposals would cap the amount going to states for Medicaid through block grants. There is virtually no question that over time federal Medicaid allotments would not keep up with rising medical costs. This would force states to reduce the number of people enrolled or the services covered, or both. The first population to lose coverage would most likely people who were made eligible for the program under the ACA - folks without dependent children who are not classified as disabled. Many would become the uninsured, with major downstream uncompensated care costs for hospitals and health centers.
Some GOP leaders have started talking about repairing problems in the Affordable Care Act before moving forward with any repeal. Do you think this signals a shift for Republicans? Is there hope that Democrats and Republicans can find common ground?
Cantor: I think this reflects a realistic understanding of the challenges repealing the unpopular parts of the ACA without reaping havoc in insurance markets. Without the requirement to buy coverage and substantial federal subsidies for people who can’t afford premiums, health insurance markets could collapse. The alternative policy reforms on the table so far are not sufficient to keep the market viable if the coverage mandate and subsidies were repealed. There is also the political reality that under Senate rules, Republicans cannot pass a comprehensive reform without at least some votes from Democrats. The daunting technical challenges of finding viable replacement policies combined with the political reality make me hopeful that compromise will be possible. Necessity is the mother of invention.
– Andrea Alexander
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