Dan

As expected, much of Presidential debate involved healthcare issues and, specifically, Trump’s wish to repeal the Affordable Care Act (ACA). But what will be the effect of repealing the ACA?

Rand Corp reports that all of Trump’s proposals decrease the number of insured and increase out-of-pocket spending for consumers enrolled in individual market plans. Repealing the ACA is also expected to raise the federal deficit compared to the ACA, as the ACA has provisions that reduce spending and generate revenue, such as changes to Medicare payment policy, taxes and fees levied on insurers, medical devices, and branded prescription drugs^(1).

The Center for Health and Economy’s estimates, however, are much different than Rand’s estimates as it estimates 18 million fewer insured in the first year, but, the federal deficit will decrease $583 billion between 2017 and 2026^(2).

It’s quite evident that the ACA won’t stay in its current form under Trump’s presidency and the Republican Congress, but the implications of repealing or even modifying the ACA are still unclear. Whatever happens, most of Trump’s wishes require an act of Congress.

For hospitals, economics firm Dobson DaVanzo report the repeal will equate to an estimated negative impact of $165.8 billion from 2018 to 2026, which is less than the ACA’s Medicare reductions to hospitals of $289.5 billion from reductions in their inflation updates⁽³⁾.

Medicaid Changes

Only 19 states opted against Medicaid expansion. Repealing the ACA will put about 20 million people to uninsured status again, but Trump has pointed to a successor plan that includes the allowance to fully deduct all health insurance premiums, allowing insurance plans to be sold across state lines, ensuring price transparency for medical procedures and other health care costs, expanding access to health savings accounts that are tax free, and turning Medicaid into block grants to states, and allowing medications to be imported in an attempt to increase competition in drug pricing⁽²⁾.

Trump’s wish for use of Medicaid block grants differs greatly from the entitlement program that currently exists. Under the block grant, the government will give states a lump sum of money to use at their own discretion. Many supporters of this idea believe block grants will entice states to reduce waste. The hope is that Republicans at the state levels use these block grants for their intended purpose. Another hope is that the block grants are enough to sustain the Medicaid program for each state, but hospitals and clinics should fear the loss of millions of dollars in revenue and resulting in staff reductions and scaling back services at hospitals.

As expected, much of Presidential debate involved healthcare issues and, specifically, Trump’s wish to repeal the Affordable Care Act (ACA). But what will be the effect of repealing the ACA?

Rand Corp reports that all of Trump’s proposals decrease the number of insured and increase out-of-pocket spending for consumers enrolled in individual market plans. Repealing the ACA is also expected to raise the federal deficit compared to the ACA, as the ACA has provisions that reduce spending and generate revenue, such as changes to Medicare payment policy, taxes and fees levied on insurers, medical devices, and branded prescription drugs^(1).

The Center for Health and Economy’s estimates, however, are much different than Rand’s estimates as it estimates 18 million fewer insured in the first year, but, the federal deficit will decrease $583 billion between 2017 and 2026^(2).

It’s quite evident that the ACA won’t stay in its current form under Trump’s presidency and the Republican Congress, but the implications of repealing or even modifying the ACA are still unclear. Whatever happens, most of Trump’s wishes require an act of Congress.

For hospitals, economics firm Dobson DaVanzo report the repeal will equate to an estimated negative impact of $165.8 billion from 2018 to 2026, which is less than the ACA’s Medicare reductions to hospitals of $289.5 billion from reductions in their inflation updates⁽³⁾.

Medicare Changes

Trump promised to leave Medicare alone during his campaign. But with his choice of Rep. Tom Price to head the Department of Health and Human Services, changes to “modernize” Medicare may be looming. Medicare has been stable for more than 50 years, but Price agrees with House Speaker Paul Ryan in his approach to replace the traditional Medicare program with a system of vouchers that beneficiaries can use to purchase coverage through private plans. While many believe Medicare is financially unsustainable, others believe a voucher system is unsustainable and much less efficient than Medicare. Price and Trump have recently favored health savings accounts to help individuals pay for health insurance, but Trump has recently been quoted to not wanting to abolish Medicare. While the affluent may stay in the traditional Medicare program, the average American may opt to accept the higher deductible plans through private insurance which creates cost shifting.

One area in which both a majority of Democrats and Republicans agree is in allowing Medicare to negotiate drug prices. Trump claims to be able to save Medicare $300 billion by negotiating the purchases of drugs from major pharmaceutical companies⁽⁴⁾.

More recently, in a December 6 letter sent to Trump and Congressional leaders, the American Hospital Association and the Federation of American Hospitals both urged Congress, under the prospective repeal, to include legislation for the restoration of the Medicare hospital inflation updates and the disproportionate share hospital payments that were cut to offset coverage gains under the ACA⁽³⁾.

If you have any questions or would like to learn more, contact:

Adam Shewmaker ashewmaker@ddafhealthcare.com
Dan Schoenbaechler dschoen@ddafhealthcare.com

 

Sources:

1. Estimating the Impacts of the trump and Clinton Health Plans; Rand
2. The Ultimate Q&A about Health Care under a Trump Presidency; Washington Post
3. Hospitals warn of job losses, billions in cuts if trump repeals ACA; Modern Healthcare
4. Trump: Make Medicare Great Again; US News