Former national advisor predicts familiar-looking revised Affordable Care Act

A former national advisor says a revised form of the Affordable Care Act could resemble a proposal from Speaker Paul Ryan.

Gail Wilensky is an economist and senior fellow at Project HOPE, an international health nonprofit, and directed the Medicare and Medicaid programs from 1990 to 1992. She said a substantially revised version of the ACA can be expected under the administration of President-elect Trump, but may take a while to come out.

She and state Medicaid Director Michael Heifetz were part of a discussion Wednesday at a UW-Madison Evidence-Based Health Policy Project event on the future of Obamacare and Medicaid.

“It seems quite clear, both from what we’ve seen from past legislation and what people are saying, that it would be an appeal with a delay in the actual implementation, and a replacement plan,” Wilensky said. “One of the big debates is whether or not you will pass both pieces of legislation together, which I would strongly favor, or whether you would do them sequentially.”

She sees this second possibility as more likely.

“If three Republicans don’t support that strategy–and at least one or two have indicated some question already, while one or two others potentially have some questions–they could force them to be done together,” she said.

Wilensky points to the House GOP agenda formed under Ryan, called “A Better Way,” as a good example of how that replacement might look.

“Rather than have the exchange subsidies we now see, you would have a refundable tax credit, and there would be a limitation placed on the unlimited tax exclusions for employer-sponsored insurance,” Wilensky said.

She said this type of plan would benefit those with continuous coverage, and enact penalties on those who delay in choosing an insurance plan.

“If you are continuously covered, and you maintain continuous coverage, you are protected from pre-existing conditions,” Wilensky said. “And for those who don’t maintain continuous coverage, they would be able to go into a funded high-risk pool.”

This strategy would “do for the under-65 what Medicare already does for its population,” forcing those who take a long time to decide if they want coverage to “pay a penalty for as many months after the first year as it takes” for them to choose.

Wilensky conceded this system may be too harsh, but emphasized the importance of having “individuals cover the cost they impose on the rest of the population because of their adverse selection.”

Wilensky says the future of Medicaid is still unclear, as “we haven’t seen the details,” but put forth several ideas for potential outcomes.

She suggested the GOP-controlled Congress could convert Medicaid to a block grant, something she said Republicans have been discussing for the last 20 years.

Block grants are federal lump-sum payments to states. Changing the current Medicaid system to block grants would free up states to run Medicaid as they see fit, but would also require them to cover costs beyond what the federal government allots for the program. This move would increase flexibility for states in exchange for higher risk, according to Wilensky.

Changing Medicaid to a block grant system is one of the seven mandates to Congress President-elect Trump makes in an online document stating his position on healthcare reform.

Heifetz said block grants will be related to future decision-making on entitlement reform.

“We don’t know where the block grant debate fits into that just yet,” said Heifetz. “That’s a dilemma that we will need to get worked out through the legislative component of this.”

Heifetz went on to say that the ACA has “a number of flaws” to correct.

“We really haven’t moved the needle on quality as much as we should have; we haven’t significantly achieved payment reform,” he said. “Those things, if we don’t succeed at them, will put us in a difficult place from a quality and cost perspective.”

Wilensky challenged state decision-makers to carefully consider the implications of different types of block grants. Per capita block grants, as opposed to flat block grants, adjust for differences in the number of individuals eligible for coverage, she said.

“You as a state need to decide where you are on this block grant issue,” she said, adding that most regulatory requirements in Medicaid will be waived with a block grant.

“It’s very important, in my view, that you insist on a per capita block grant so you are not held hostage to economic swings that you can’t control,” Wilensky said.

See “A Better Way” here: