WASHINGTON -- The Trump Administration may be slowing down its push to replace the Affordable Care Act (ACA), but several conservative groups are still pushing their own proposal.
"We keep hearing that Republicans don't have any ideas and it makes us a little crazy, because [we] worked for a year and a half to come up with a new generation of health reform," Grace-Marie Turner, president of the Galen Institute, which advocates for free-market healthcare, said at a reporter briefing on Wednesday.
The plan, first announced last summer by the Heritage Foundation, the Galen Institute, and other conservative groups, would turn over most of the federal government money now being spent on the Affordable Care Act premium subsidies and Medicaid expansion to the states. However, there would be certain guidelines for the money, Doug Badger, senior fellow at the Galen Institute, said via phone at the briefing.
To start, "50% of the block grant has to go toward supporting peoples' purchase of private health insurance coverage ... and at least 50% has to go to provide coverage for low-income people," he said. "Those two categories clearly overlap, so I would expect by and large most of this money would go into subsidies for low-income people, either through a Medicaid-like structure or through subsidies of private insurance."
In addition, "each state would have to use a portion of the block grant to offset the cost of high-risk patients; there are a variety of ways to do this," including putting these patients into high-risk pools or the use of reinsurance, said Badger. "[We can] adequately finance those expenditures and take some of the pressure off the premiums of people who are in reasonably good health."
Exemptions from Some ACA Rules
States that receive the grants would be exempt from certain ACA requirements, including the requirement to cover all 10 groups of "essential health benefits," a requirement that at least 80% of premium monies collected must be spent on patient care, and a requirement that insurers could charge their oldest enrollees no more than three times the premium for the youngest enrollees, Badger said. However, certain other ACA requirements, including guaranteed issue, a prohibition on medical underwriting, and a ban on discrimination against enrollees due to preexisting conditions would still apply, he said.
"One thing we have learned is that the federal government is out of its element overseeing and regulating something as regional and personal as healthcare," said Grace-Marie Turner, president of the Galen Institute. "States have much more understanding of their markets and their constituencies. ... They can really influence how their state moves forward. Also, people are smarter and understand more than they did before that more regulations mean higher costs."
"We absolutely want to make sure lower-income people are protected," she said. "[The proposal] will give states new incentives to say, 'How can we be partners in fixing this?'"
Turner conceded that "people are happier with the ACA, [but] there are still a lot of people who are still suffering, especially people who are not subsidized."
As to why the proposal hasn't been gaining much traction with members of Congress, "This is the first time in a very long time ... a proposal was developed on the outside and endorsed by two governors [Phil Bryant of Mississippi and Matt Bevin of Kentucky, both Republicans] -- the exact opposite of what happened in 2017 when governors were running away from [the issue]," said Marie Fishpaw, director of domestic policy studies at the Heritage Foundation.
"It's the first time people on the outside were coming to members and saying, 'We would like you to take this up.' In the absence of any interest [in Congress] to return to the issue this year, that's how it's going to unfold. We're going to keep bringing governors to Washington to talk about it and work with members who are interested."
Effect on Low-Income Patients
Critics of the proposal say it will harm low-income patients. "The plan stipulates that at least half of a state's grant funding would be used to provide coverage for low-income populations," said Rosemarie Day, a healthcare consultant in Somerville, Massachusetts, in an email. "This is far less than what the ACA's funding is for low-income people now, which is in the form of Medicaid expansion (which apply to people earning less than 138% of the federal poverty level [FPL]) the individual market subsidies (which apply to people earning less than 400% of the FPL, with the poorer receiving more subsidies), and cost-sharing subsidies (already not paid out)."
In addition, "The plan would make it easier for providers to not accept public insurance, and thus make health care services less attainable for those on Medicare and Medicaid," she said. "If more people are privately insured, providers would feel less of a need to contract with public insurers." And, she said, "The plan would also be bad for the sick in that there would be much more freedom in terms of plan design (eliminating the 10 essential health benefits and introducing other flexibilities), which means healthy people may not have the coverage they need when they do get sick. And going back to depending on high risk pools as a solution is really not a solution – most were chronically underfunded in the past and had huge wait lists."
The Center on Budget and Policy Priorities, a left-leaning think tank, faulted the proposal for its lack of specificity. "The new plan provides limited detail, failing to specify, for example, the total funding levels for the proposed block grant or how funding would be allocated across states," Aviva Aron-Dine and Matt Broaddus said in an issued last June.
Similarities to Graham-Cassidy Bill
They noted that the proposal has several elements that are similar to the Cassidy-Graham bill that failed in Congress in 2017, "which experts projected would have caused about 21 million people to lose coverage ... If anything, the new proposal -- coupled with the repeal of the individual mandate already enacted by Congress [in 2017] -- would likely result in a higher uninsured rate than the earlier bill, since it appears to provide less federal funding for coverage."
There is also a structural problem, they wrote. "States could not realistically use block grant funding to continue current coverage programs or create similar programs, because the financial risk would be too great. ... Unlike current-law federal funding for Medicaid expansion and ACA subsidies, block grant amounts would not adjust for enrollment increases due to recessions or for higher costs due to public health emergencies, new breakthrough treatments, demographic changes, or other cost pressures -- leaving states on the hook for 100% of those costs. The plan sponsors tout this cost shift to states as a benefit, noting that the plan eliminates 'open-ended subsidies.'"
Day, the healthcare consultant, did like the proposal's plan to allow states to incentivize insurers to offer discounts for continuous coverage, because "[it] would incentivize people to remain in the market, which could conceivably lead to higher coverage rates as well as more investment in long-term health from payers and providers." She also liked the proposal's support for health savings accounts, which she called "a good option for consumers (those who have the money, anyway)."