How Tom Price's Obamacare Replacement Plan Might Look

President-elect Donald Trump’s reported selection of U.S. Representative Tom Price (R- Ga.) for Health and Human Services Secretary may indicate how the president-elect plans to fulfill his campaign promise of dismantling the Affordable Care Act. A leading critic of “Obamacare,” Rep. Price has introduced legislation during every Congress since 2009 to repeal the President Obama’s sweeping healthcare reform law.

The following are some key provisions of Rep. Price’s Empowering Patients First Act, the latest of his Obamacare replacement plans:

1)  Coverage Mandates. By its express terms, Empowering Patients does not “provide a mandate for guaranteed issue or community rating in the private insurance market.” Therefore, two of the ACA’s strongest controls on insurers’ actuarial behaviors would revert to their pre-ACA state of deregulation.

However, Empowering Patients would maintain a form of prohibition on preexisting condition exclusions. The law would prevent denials of coverage to certain individuals based on preexisting conditions so long as those individuals have maintained “continuous coverage” for at least 18 months prior to the date of enrollment. If a person has a lapse in insurance coverage, insurers may be allowed to deny coverage or charge up to 150 percent of the standard premium for two years under the continuous-coverage provision.

As for consumer mandates, Empowering Patients would remove the so-called “individual mandate” requiring patients to obtain insurance or else pay a tax penalty.

2)  Essential Health Benefits. Empowering Patients eliminates the essential health benefits package mandated by Obamacare, which required insurers to cover a set of 10 different types of care under all insurance plans. Empowering Patients would allow insurers to cut whatever benefits they no longer wish to cover.

3)  Tax Credits. Like Obamacare, Empowering Patients would extend annual tax credits to individuals purchasing private health insurance. However, how tax credits are structured under Empowering Patients is very different than under Obamacare. Obamacare’s tax credits are based upon income, with individuals who earn less getting more assistance. Empowering Patients bases annual tax credits only upon age, providing greater help to individuals who are older. The annual tax credits proposed by Empowering Patients are as follows:

a.   $900 for children under 18

b.   $1,200 for those between 18 and 35

c.   $2,100 for those between 36 and 50

d.   $3,000 for those 51 and older

4)  Medicaid Expansion. Simply put, Empowering Patients promises to undo the Medicaid expansion initiated by Obamacare. Unlike other alternatives to Obamacare, such as Rep. Paul Ryan’s ‘Better Way Plan,’ which allow states to continue operating currently expanded programs albeit with quickly diminishing federal support, Empowering Patients does not offer an alternative to the Medicaid expansion. People previously covered by the Medicaid expansion, if removed from their states’ Medicaid rolls, would be eligible for the age-based tax credits listed above if electing to purchase coverage through the private marketplace under Empowering Patients. 

5)    Employer-Based Insurance Limits. Empowering Patients would also impact employer-sponsored insurance. Empowering Patients proposes limiting employer-tax exclusions for insurance to $20,000 for a family and $8,000 for an individual. Any additional funds above those amounts would be treated as taxable dollars.

6)    New Provisions. Among Rep. Price’s proposals not directly tied to Obamacare are an emphasis on health savings accounts to allow for tax-deductible contributions to special accounts reserved for healthcare expenses; new laws aimed at allowing insurers to sell their products across state lines; medical malpractice reform aimed at changing the burden of proof in malpractice cases; and various provisions allowing beneficiaries under public programs (Medicare, VA, etc.) to seek coverage in the private marketplace.

Empowering Patients contains scant mention of the ACA’s innovation models that have steered federal reimbursement away from fee-from-service and toward quality-based care. However, in September 2016, Rep. Price co-authored a letter to CMS challenging the agency’s authority to enact certain mandatory programs under its Center for Innovation.

As HHS Secretary, Price can impact health reform through the regulatory process, but legislation is ultimately required to replace Obamacare. Price’s detailed Empowering Patients proposal will likely provide a framework for Congressional Republicans as they draft an alternative to Obamacare in the coming months.

Disclaimer: The foregoing materials are provided for informational purposes only, and are not to be construed as legal advice. The information relies on limited authority and has not been screened or approved by any governmental agency. Please consult an attorney before applying this guidance to any particular facts or circumstances. 

Task Force Unveils Proposals for Georgia’s Uninsured

The Georgia Chamber of Commerce’s Healthcare Access Task Force released a proposal Wednesday to combat Georgia’s high uninsured population. 

The plan provides three different tracks for Georgia legislators to consider, none of which expand Medicaid to the full extent provided by the Affordable Care Act. However, each proposal would substantially reduce Georgia’s uninsured rate, which hovers around 6 percentage points higher than the national average — 48th-ranked in the U.S. 

The three proposed plans are as follows:

1) Close the Coverage Gap. One of the great absurdities of the mangled ACA is that states declining to expand Medicaid cannot even promise low-income citizens subsidies in the private insurance market because some are too poor to qualify. The subsidies originally were intended for non-Medicaid recipients, so they the federal government cuts them off at 100 percent of the poverty line. This leaves a “coverage gap” in non-expansion states, where a person’s income could be too high for Medicaid but too low for subsidies. The task force’s first proposal would close this gap by expanding Medicaid to childless adults up to 100 percent of the federal poverty level (“FPL”) ($11,880 for an individual in 2016). 

2) Medicaid Expansion Reworked. The task force’s second option uses Georgia’s Medicaid CMOs to expand eligibility up to 138 percent of the FPL — the income threshold called for under the ACA. However, because this model would contain elements unlike the traditional Medicaid expansion, such as cost-sharing by beneficiaries, Georgia would still have to petition the federal government for approval of the model as a “waiver.” 

3) Public/Private Hybrid. The third option would use Medicaid CMOs to insure those up to 100 percent of the FPL, but would use private qualified health plans, paid for by Medicaid with some cost-sharing, to cover the population between 100 and 138 percent of the FPL. 

Georgia Health News reports that the task force will release enrollment estimates or savings projections tied to each plan later this year. 

Georgia Medicaid Waiver Program Hits Snag

Georgia Health News reported today that the proposed Medicaid waiver program to insure low-income Georgians is facing significant pushback from the Department of Community Health. Grady Health System has led the charge on the program, known as a Section 1115 Waiver, that would serve as alternative to expanding Medicaid under the Affordable Care Act. 

According to the GHN report, the state health agency has taken issue with the proposed program's costs. Grady officials are studying the response and exploring possible adjustments. 

Medicaid waivers have become a popular alternative to the Medicaid expansion, expanding access to health insurance through premium assistance rather than state-administered coverage. The federal government has approved a handful of such waiver programs already and will match funds for qualifying programs as it would under the Medicaid expansion. 

Florida hospitals get relief — but will still face deficit

The standoff between the state of Florida and the Obama administration was settled Thursday when Governor Rick Scott announced a dismissal of his suit against the administration in exchange for certain hospital funds that had been withheld. 

The lawsuit arose after CMS announced it would not renew Florida’s “Low-Income Pool” (LIP) funding, which aids safety net hospitals through a Section 1115 waiver and was set to expire on June 30. Florida had received about $1.3 billion annually through the waiver. 

Florida alleged the federal government was coercing the state into expanding Medicaid by withholding the funds. 

Under Thursday’s settlement, Florida will receive $1 billion in LIP funds for the 2015-16 budget year, slightly less than the state has received in the past. But, in 2016-17 CMS will reduce the funding to $600 million. No promises were to made as to subsequent years. 

While the settlement is a near-term victory for Florida, shortfalls await both providers and patients if the state does not expand Medicaid or take other action to offset the impending cuts. 

More Than a 'Doc Fix': a Look Inside MACRA for Hospitals, CHCs

As news outlets have widely reported, the U.S. Senate has followed the House in passing a measure to repeal Medicare’s payment formula, known as the Sustainable Growth Rate (SGR). The bill would replace the SGR formula with a new model tied to quality and value. This is another significant development in healthcare’s increasingly rapid shift toward alternative payment models. 

But the “doc fix” bill, titled the Medicare Access and CHIP Reauthorization Act (MACRA), contains numerous other items impacting health providers. Namely, the legislation offers much-needed (albeit short-term) breaks to hospitals and community health centers. These provisions include: 

• Two-Midnight Rule delayed six months: MACRA seeks to stall enforcement of CMS’s “two-midnight” rule until September 30. This rule changes the way Medicare pays hospital by limiting inpatient payments to hospital stays expected to last at least two nights. This extension will allow CMS to “assess provider understanding and compliance with the ‘two-midnight’ rule.” 

• Medicaid DSH cuts postponed: The Affordable Care Act’s cuts to Medicaid disproportionate share (DSH) payments would be further delayed under the bill. These cuts were to reduce federal subsidies to certain hospital serving a disproportionate number of uninsured patients. Perhaps due to many states’ declining to expand Medicaid under the ACA, the reductions have been postponed multiple times, and are now scheduled to begin in fiscal year 2018. 

• Community Health Centers receive extension: Unlike its cuts to DSH payments, the ACA offered a bonus to designated Community Health Centers. This federal funding was slated to expire this year, but MACRA would extend it through fiscal year 2017. The nation's 1,302 CHCs would share a fund of $3.6 billion annually under the law. 

President Obama is expected to pass the bill, which received bipartisan support.