Following the Trail of the Affordable Care Act Debate: Part 3

By Zach Cahill and David White

Congress is out of session this week, and we are taking advantage of the slowdown in Washington to give you a thirty thousand foot view of a few healthcare reform ideas that are common to many Republican plans. Will these policies actually become law?  There is no certainty, but you should know how these reforms might work, and how they might impact you and your patients.

What to do with pre-existing conditions?

A significant change that the ACA enacted was outlawing discrimination based on pre-existing conditions. Republican healthcare proposals desire to achieve the same goal by different means. The broadest protection offered for patients with preexisting conditions involves continuous coverage provisions, meaning that if you maintain insurance coverage you cannot be denied coverage because of a preexisting condition.

In addition to that, for patients who might be priced out of the individual market because of pre-existing conditions, Republicans propose state-based, high-risk pools. These pools would be subsidized by the federal government to a specific amount, with the rest funded by states. Like most proposals, the amount of federal funding will determine success. That number has varied significantly in recent proposals.

More control to patients.

Health savings accounts (HSAs) have a prominent place in this debate. These tax advantaged savings accounts are typically attached to a high deductible health plan. Patients make tax free contributions to an HSA to apply against future medical expenses. Most GOP replacement plans advocate for expanding the group of people eligible to use HSAs, increasing the maximum contributions to the account and broadening the scope of health expenses eligible for payment through HSAs. The premise behind this approach is that they HSAs more power in the hands of consumers to direct their health spending and can reduce individual health care spending.  Critics contend that HSAs may be advantageous for financially stable households, but inaccessible to low-income households with limited disposable income to invest.

Everyone likes tax credits.

An important question any replacement plan must answer is how to make insurance accessible to customers in the individual market. The ACA’s answer to this was insurance subsidies. Republicans are proposing tax credits as an offset to insurance premiums.

Unlike the ACA’s subsidies, the credit would be based on age rather than income and be attached to a fixed growth rate. This is the critical difference. The argument for an age-based approach is that older patients generally face higher premiums. However, an income based approach can provide access to care for those who have trouble affording insurance in the first place. Additionally, what the growth rate would be attached to is a critical missing piece and will determine how sustainable this approach is.  Like many details at this stage of the debate, the amount of the tax credit is unknown.

Next week Congress is in session and we hope to see more details about what could be in store for the American healthcare system. House leadership has indicated that a plan is forthcoming. We can be fairly confident that the ideas we outlined above will find some place in the first draft of repeal/replace legislation. Stay tuned next week as we continue to follow the trail of the ACA debate.

Read the earlier posts in this series:

Following the Trail of the Affordable Care Act Debate: Part 1 and Part 2

 

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Congress is out of session this week, and we are taking advantage of the slowdown in Washington to give you a thirty thousand foot view of a few healthcare reform ideas that are common to many Republican plans. Will these policies actually become law?  There is no certainty, but you should know how these reforms might work, and how they might impact you and your patients.

What to do with pre-existing conditions?

A significant change that the ACA enacted was outlawing discrimination based on pre-existing conditions. Republican healthcare proposals desire to achieve the same goal by different means. The broadest protection offered for patients with preexisting conditions involves continuous coverage provisions, meaning that if you maintain insurance coverage you cannot be denied coverage because of a preexisting condition.

In addition to that, for patients who might be priced out of the individual market because of pre-existing conditions, Republicans propose state-based, high-risk pools. These pools would be subsidized by the federal government to a specific amount, with the rest funded by states. Like most proposals, the amount of federal funding will determine success. That number has varied significantly in recent proposals.

More control to patients.

Health savings accounts (HSAs) have a prominent place in this debate. These tax advantaged savings accounts are typically attached to a high deductible health plan. Patients make tax free contributions to an HSA to apply against future medical expenses. Most GOP replacement plans advocate for expanding the group of people eligible to use HSAs, increasing the maximum contributions to the account and broadening the scope of health expenses eligible for payment through HSAs. The premise behind this approach is that they HSAs more power in the hands of consumers to direct their health spending and can reduce individual health care spending.  Critics contend that HSAs may be advantageous for financially stable households, but inaccessible to low-income households with limited disposable income to invest.

Everyone likes tax credits.

An important question any replacement plan must answer is how to make insurance accessible to customers in the individual market. The ACA’s answer to this was insurance subsidies. Republicans are proposing tax credits as an offset to insurance premiums.

Unlike the ACA’s subsidies, the credit would be based on age rather than income and be attached to a fixed growth rate. This is the critical difference. The argument for an age-based approach is that older patients generally face higher premiums. However, an income based approach can provide access to care for those who have trouble affording insurance in the first place. Additionally, what the growth rate would be attached to is a critical missing piece and will determine how sustainable this approach is.  Like many details at this stage of the debate, the amount of the tax credit is unknown.

Next week Congress is in session and we hope to see more details about what could be in store for the American healthcare system. House leadership has indicated that a plan is forthcoming. We can be fairly confident that the ideas we outlined above will find some place in the first draft of repeal/replace legislation. Stay tuned next week as we continue to follow the trail of the ACA debate.

Read the earlier posts in this series:

Following the Trail of the Affordable Care Act Debate: Part 1 and Part 2