A real opportunity for change in health care system
Ways to fix the Affordable Care Act, short of repeal.
With a Trump administration at the helm, Republicans may be inclined to jump in headfirst and repeal the Affordable Care Act. After all, the simple majority in the Senate allows for repeal through the reconciliation process, without the need for Democrat support. This would be a mistake for a number of reasons.
For starters, the Republican majority in congress will resemble what it was during the last major bipartisan health care reform in 2003, which gave Medicare beneficiaries prescription drug coverage. This coverage, as opposed to the Affordable Care Act, has been widely popular and successful. This alone should be a lesson for reformers on the advantages of bipartisanship.
Moreover, repealing the law will be seen as a purely partisan move, and will throw millions off of their insurance plans — not only in blue states, but in red states like Ohio that have expanded their Medicaid programs. Not only would millions lose coverage, but it would be a waste of political capital. Most conservative “replace” plans will have elements resembling those of the current law: some combination of tax credits to purchase insurance and some basic “rules of the road” for how insurance gets sold to consumers. Wholesale repeal is entirely unnecessary.
Instead, reformers should focus on making smart changes to the law, while expanding opportunities for states to go their own way experimenting in the great “laboratories of democracy.” As it turns out, the Affordable Care Act already has built-in escape hatches — so-called “state innovation waivers” — designed precisely to foster these experiments. Innovation waivers permit states to waive various regulations including the individual mandate and subsidy structures.
Unfortunately, guidance issued last year makes implementing these waivers much more onerous and less attractive to states, as the Government Accountability Office recently noted. Yet there are “day one” changes that the Trump administration could make unilaterally and legislative changes that Republicans can pursue to unchain these innovation waivers.
A strategy that focuses on unchaining the laboratories of democracy is likely to pay dividends. Pulling the rug out from under millions of people with no backup plan is not.
For instance, while the waivers require deficit neutrality (any changes can’t increase the federal deficit), the guidance last year noted that savings in one program can’t be used to offset increased costs in another. This means that a waiver that increased spending on the Medicaid population, but reduced spending elsewhere would be verboten.
This, of course, makes no sense. But just as the executive branch giveth, so can the executive branch taketh away. A very simple fix that the Trump administration can administer immediately will be to undo this requirement. The effects to the federal deficit should be considered holistically, not just within individual programs.
In the medium term, the Department of Health and Human Services, which is responsible for approving waivers, should develop templates for waivers that states can build off of for “fast track” approval. For instance, a “private option” Medicaid expansion, which would require a separate Medicaid waiver, may seek to offset some of its added costs by changing benefits or subsidy structures for those buying coverage on the exchange. Rather than spending months negotiating back and forth with the administration, the new HHS should establish parameters for such applications that will help ensure rapid approval.
More longer term, but perhaps most important, will be legislative changes to the waivers. State-based waivers for health care programs are an excellent idea. But because health is so complex, many things that affect a person’s well-being are entirely unrelated to the health care system. Stable housing or access to food and a steady job, for instance, may help much more than an insurance card. Legislators should focus on expanding these waivers to encompass more social programs and providing the funding as block grants to states for experimentation. Appropriate safeguards to ensure adequate funding distribution and to hold vulnerable populations harmless is critical, of course. But it’s likely that investing in addressing social determinants of health could have significant payoffs for the most vulnerable populations as well.
Republicans now have an opportunity to make their mark once again on social policy. A strategy that focuses on unchaining the laboratories of democracy is likely to pay dividends. Pulling the rug out from under millions of people with no backup plan is not.
Yevgeniy Feyman is an adjunct fellow in health policy at the Manhattan Institute. A version of this piece originally appeared on US News & World Report.
