Repealing And Replacing The ACA

The Main Content Of This Page Was Last Revised 9/26/17

Introduction

Since stemming the tide of financial collapse of the Affordable Care Act [ACA] is so critical to the success of the Trump administration, I have decided to include the main content of Parts 2 [Transition] and 3 [Replace] of my December 2016 four-part blog post series A Realistic View of the ACA [← Link is to Part 2] in this new section of pages at this website that will focus on the future [Healthcare being only one of those areas of focus].

Judging by his cabinet appointments and his actions in his first three months in office, it is clear that President Trump is focused on doing the things he said he’d do, getting those things done expeditiously, and [as usual for him] not letting himself get sidetracked by political correctness, criticism, and fear of opposition. One of the most visible “to do” items is “repealing and replacing” the Affordable Care Act [ACA, aka “Obamacare”] — one of the major themes of his campaign, and part of the Republican mantra practically since passage of the Act in 2009 through some political “shenanigans” [i.e., loopholes designed by Democrats, who narrowly controlled both houses of Congress at the time, to enable “reconciliation” rules to be used, which assured passage since no Republicans supported the bill].

I was a “C-Suite” Healthcare executive for most of three decades, and after that I was a Healthcare consultant for about seven years. Among my executive oversight responsibilities for several of the “C-Suite” years was a centralized business office for a ten-hospital, seventy-clinic integrated healthcare delivery system that also included an insurance subsidiary. I say that to say that I have direct knowledge and experience that I believe enable me to write with at least some degree of authority on this subject.

Keep This In Mind …

To be meaningful and useful, outlining the essential elements that would need to be included in a system to permanently replace the ACA must be done in context with the Some Basics First section at the beginning of Part 2 of my 4-part blog series A Realistic View of the ACA [← Link is to Part 2] . Since just about everything on this page is underlaid by those basic concepts, I am repeating that section of the aforementioned blog post here. …

Some Basics First

In the process leading to proposed law being voted on in both houses of the Legislature, there is an unfortunate reality we have to face — that bills get to this point only after huge amounts of political bargaining among Representatives and Senators whose primary focus is not on what is best for America, but on what most likely leads to their reelection. For that reason, the most important part of the process is bypassed — determining first what guiding principles can be agreed upon up front before hashing out of the details even begins. In the case of coming up with what became the ACA, or of coming up with a law to replace all or parts of it after its repeal, that would mean addressing fundamental questions like the following:

    • Is every American citizen entitled to insurance to cover their healthcare needs, or is it simply a product/service that some people can afford and others can’t?
    • If healthcare insurance is an entitlement, which products/services are considered entitlements, and should the government provide them directly through government-run facilities or pay private providers for their costs and reasonable profits to provide them [and in the latter case, how will guaranteed access and affordability be ensured for people private insurers deem unprofitable to cover]?
    • If healthcare insurance is not an entitlement, should there be regulations that require access to healthcare services under certain conditions by people who cannot afford to pay for those services [and if so, what are those conditions, and is government required to either pay for that access (through tax revenues) or require providers to absorb the unreimbursed costs they incur in providing them (a form of indirect taxation)]?
    • In either case, for any financial assistance that may be available under certain conditions, do people who do not manage their own health well [eating habits, exercise, etc.] receive the same assistance as those who do [and if not, on what basis is the granting of assistance made, and who makes that decision]?

Although most legislators would probably say they did address or are addressing fundamental questions like these, they haven’t done so in the way and to the depth I’m saying they should have.

This outline reflects my philosophy on the guiding principles mentioned above. In a nutshell, I don’t believe that all Americans are entitled to some kind of “standard” level of health insurance [any more than I believe that all Americans are entitled to own a home, or to have a job they want, or to have an automobile, a telephone, …]. I do believe, however, that some government-mandated elements of a national healthcare system need to be in place, the main purposes of which would be: a) to ensure that all citizens are protected from financial ruin brought about by health problems; and b) to minimize the overall cost of providing all healthcare services, whether through government facilities and employees or through private sector providers. Under that basic philosophy, I will now list what I believe are the essential elements of an effective system that will not be the financial train wreck that the ACA is.

Transition Plan

Any idiot knows that we can’t just take away insurance obtained through the ACA by people who would not have been able to obtain that insurance except through the ACA. Nonetheless, those digging in and fighting repeal tooth and nail [aka all Democrats] are claiming that is exactly what will happen to “20 million people”, and of course, that phraseology is constantly replicated not only by the largely liberal media but even by RINOs [Republicans In Name Only — moderate/”mainstream” Republicans].

This isn’t rocket science — a lot of what is needed is simply common sense.  Politicians have a tendency to get bogged down in peripheral arguments, particularly when they perceive that a decision they are about to make will affect large numbers of people and/or when they recognize the risks involved and the possibility that they and/or their party will be blamed [and punished in the next election] if things don’t go well.  I call this the Mesmerization Syndrome.  A good example is what has already become a headline item — “Repealing the ACA will kick 20 million people off their health plans”.  Something I said in Part 1 of the above-mentioned 4-part Blog series is worth repeating in this context. … Although there are, in fact, about 20 million people now enrolled through the exchanges set up under the ACA, nobody knows how many of these people have coverage through the ACA because they could not have obtained coverage without the ACA.  It would not surprise me if it turns out that only half, maybe even less, would not be able to obtain more or less comparable coverage — i.e., many enrollees probably bought through the exchanges for other reasons [e.g., they found it easier to navigate through their options once the initial glitches were ironed out]. Whatever the actual number of people affected turns out to be, all that is needed initially to avoid this “kicking off” is a simple set of transition rules built around a common-sense “grandfather clause” something like the following:

“Grandfather Clause“  Any existing policy obtained under provisions of the ACA cannot be terminated by the insurer, nor can its renewal be refused until the replacement law is in effect, except for 1) non-payment of premiums; or 2) non-payment of co-pays, deductibles, etc. within “x” days of due dates [unless disputed — with a defined process for resolving disputes].

According to www.healthcare.gov [the site where people can “shop” for and sign up for plans under the ACA], the average 2017 cost of a “gold” plan [the best plans available] will be $9,167. Even if all 20 million enrollees were grandfathered in for all of 2017 and all 20 million qualified for 100% government-subsidized coverage [an extremely exaggerated, almost facetious assumption], the cost of this transition would only be 183.34 billion [in the general range of what would be spent under an unmodified ACA] .  Realistically, the cost would be less than that because based on the highest estimate I’ve seen, only about 83% of people enrolled under the ACA qualify for government subsidies [the average amount of individual subsidies is a difficult number to find, but it is certainly nowhere near 100%]. Also, as mentioned above, it is only people who otherwise would not be able to obtain coverage [i.e., not the whole 20 million] who would need to be included in this calculation. It would not surprise me at all if the actual cost of this “grandfather clause” transition turned out to be considerably less than $100 billion.

Essential Elements Of An Effective Replacement Plan

NOTE. I am not asserting here that this simple outline fully defines the entire replacement system that would be needed. However, I do believe that it summarizes a conceptual approach that will work.

→ Click on this link: The Plan [the plan will display in a separate window].

Program Administration

On the administrative side, the massive organization put in place under the ACA would be dismantled as soon as possible, leaving a much-reduced, very streamlined management structure and a much smaller staff consisting of current employees having skills most applicable to administration of the new law, plus any new hires required to ensure an appropriately skilled workforce.

Ongoing Refinement

Certain elements of this program would require an ongoing effort to adjust various parameters each year to ensure that they remain current. One example would be computation of the “outlier” definition mentioned in #6 in the Essential Elements section above.  In the first year, the information in the ACA database for the 2017 enrollment period would be used to establish a baseline database for the new law [see #2 in the Essential Elements section above for a description of the kinds of information that database would contain].

Another area that needs more focused research right now as well as ongoing refinement over time is identification of more viable measures of quality and development of ways to incorporate use of these measures into insurance policy comparisons. Despite much time and effort along these lines over many years, the truth is that current measures simply do not adequately account for variations in patient conditions and other factors that can grossly skew current measures like mortality rates, unexpected returns to surgery, patient satisfaction scores, etc.

Why This ACA Replacement Approach?

The main advantages in taking this general approach are not that difficult to figure out:

  • Rather than micromanaging every citizen’s healthcare coverage, it focuses the government’s attention [and expenditures] on problem situations [a) all citizens who cannot obtain any coverage, and b) all citizens whose coverage options are financially out of their reach and who qualify — based on all applicable criteria, not just those associated with healthcare — for government assistance].
  • It allows for mandated coverage items that will probably be required to get the law passed in both houses of the Legislature, particularly the Senate, and it keeps the direct costs of those mandates visible every year.
  • It keeps cost outlier criteria current every year, providing a) a more efficient and more expeditious method of adjusting them to changing conditions and b) better information for identifying the actual cost to the program of egregious pricing for certain items like “blockbuster” drugs, “exotic” prostheses, etc. [currently, these situations become visible through media coverage of specific situations, and the resulting politicization (politicians continuously engaged in “issue-hunting”)].
  • It promotes progress in two areas which would, if more effective than they are now, dramatically reduce overall healthcare costs: 1) improved case management across multiple unaffiliated providers; and 2) improved capacity for, and effectiveness in providing, home-based care options.
  • The overall cost, the administrative complexity, and the size of the bureaucracy required to administer the program, would be dramatically lower [largely because of the previous items in this list].
  • No need for direct links between IRS and DHHS computer systems [less “Big Brother” potential (re: George Orwell’s “1984”)].

There are probably other advantages, but those listed above are enough to warrant taking this approach.

Potential Roadblocks

To repeal, and to replace, the ACA will require “lock-step” solidarity among almost all Republicans in the House and at least 50 of the 52 in the Senate [just as initial passage of the ACA required that of all Democrats at that time]. Assuming that all Democrats will be in solidarity with their opposition, this may be tougher than some legislators think at this time.  Also, there may be certain provisions that may raise the specter of a presidential veto even with a Republican in the White House. This may turn out to be a textbook example of Mr. Trump’s deal-making ability — or an example of lack thereof as it could potentially apply to this situation.

On the prospect of filibusters as a blocking mechanism … Minority-party threats of filibusters have become so commonplace over the past two years that many people probably think that a less-than-60-seat majority in the Senate enables the minority party to block forever [by threatening filibusters] any bill they oppose, rendering the majority party completely powerless to drive its agenda. That is not the case, however, and the first two years of the Trump administration could produce a major breakthrough in the gridlock of recent years if Republicans are as unified in their agenda as Democrats have been in blocking it. The decision by a majority leader to bow to the threat of a minority-party filibuster is a simple practical matter — avoiding an actual filibuster, which can consume many days, perhaps longer, before the majority leader can bring “cloture” about [cloture is the last step that results in the bill being brought before the full Senate for a vote], frees up time for passage of other more bipartisan bills which have greater prospects of being passed.  With a minority-party President who would likely veto narrowly-passed controversial bills, that decision is probably a wise one.   If there has ever been a time when the majority needs to stand up to filibuster threats and do whatever it takes to drive key pieces of its agenda through, this is it!  If a bill is particularly important to the Senate majority and its legislative agenda [and/or the president’s agenda], then going through a filibuster would be worth it and would expose very publicly that it’s the minority that’s causing the logjam.

Actually, I believe Mitch McConnell should go ahead and extend the “nuclear option” to include legislation, which is the only Senatorial function not already under that option since [Democrat] Harry Reid’s 2013 rule change to “grease the skids” for Federal judgeship confirmations was expanded by [Republican] McConnell in 2017 to also apply to Supreme Court confirmations. For a more in-depth view into my logic on this, see this link to one of my blog posts: “Going Nuclear” On Gorsuch — And?.

Note. For anyone interested in gaining a more in-depth understanding of Senate rules and operations as they relate to filibusters and cloture, the document at this link would be a good start: Filibuster and Cloture Rules – US Senate.

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