Election day is rapidly approaching bringing to a close one of the most unique Presidential elections in history. As we get closer to November 8th, many are looking at what either a Clinton or Trump Presidency might look like relative to its impact on the Healthcare Industry.
The Republican Party mantra of “Repeal and Replace” has been loud and clear for many years. But the truth is - repeal is not an option. It plays well among a core group of voters but the reality is that the Affordable Care Act (ACA) has touched far too many Americans to simply repeal it without significant disruption to the more than 26 million people that have benefited so far. The ACA has resulted in a single digit uninsured rate while the number of people with employer based coverage remains stable.
The Republican Plan
With more than 60 House repeal votes over the past few years (but with no real replacement solution) the Republican Party finally introduced a comprehensive plan that they titled “A Better Way”. It was heralded as “a real plan, in black and white” to “make healthcare actually affordable.”
This “affordable” plan would:
- Be age-based, not income based like the current plan.
- Eliminate the individual mandate currently required of all Americans while creating government-subsidized high risk pools for the uninsured and people with pre-existing conditions.
- Provide the ability for people to purchase less generous coverage than what is currently required under the ACA while also expanding Consumer-Directed Health Care Options.
- Preserve employee wellness programs, employer-sponsored insurance and self-insured plans.
- Allow the purchase of health care across state lines.
But the Republican plan is not Donald Trump’s plan. Yes, there are a number of similarities but nothing about the Trump candidacy to date has been predictable.
Trump has promised that on day one of his administration, he will ask Congress to immediately deliver a full repeal of Obamacare and stated that he would work with Congress to make sure there are a series of reforms ready for implementation that follow free market principles that will restore economic freedom and certainty to everyone in this country. Simple – right?
His plan - when you look at it more closely, shows many parallels with “A Better Way” – and of course, a few differences. Trump’s plan adds a provision that allows individuals to fully deduct health insurance premium payments from their tax returns and fully supports providing Medicaid block grants to states.
But the plan itself has no new ideas. Both plans cobble together a collection of “tired” proposals that have been floating around for years such as high-risk pools for consumers with pre-existing conditions, the purchase of insurance across state lines, Medicaid block grants, the expansion of HSAs and tax credits being exchanged for tax deductibility.
Nevertheless, both plans have a number of reforms that are good for Americans despite their lack of details at this point. But there might be some downsides to their plans. The Trump plan is silent with no mention of consumers with pre-existing conditions. The immediate fate of up to 26 million Americans is unknown among those that have found coverage through state and public exchanges or Medicaid expansion creating a potentially disruptive situation for many.
The Democratic Plan
From the very beginning of her campaign, Hillary Clinton stated that she fully supported the ACA and would bring to her administration recommendations that would only improve on the current legislation. When the Democratic Party adopted their 2016 platform, there were only a few policy positions related to health care – most of these were ideas proposed by the Bernie Sanders campaign as a way to secure his endorsement in advance of their convention.
The most progressive of their ideas is support of a public option in ACA exchanges and calls for those Americans who are 55 or older to be able to opt into Medicare. While they state that securing Universal Health Care is a right and not a privilege, it stops short of calling for a single-payor system since the Democratic platform committee rejected such a proposal by a vote of 92 to 62. If this is such a controversial issue among Democrats, it would never be embraced by the full Congress. Instead, the focus turned to a public option and Medicare expansion as way to appease the single-payor proponents.
In agreement with Republicans, the Democratic platform calls for ending surprise billing and other practices that lead to out-of-control medical debt, the repeal of the excise (Cadillac) tax on high-cost health insurance, addressing the high cost of prescription drugs, making premiums more affordable and reducing out-of-pocket expenses.
Despite these many similarities, the parties still differ greatly on Medicaid. While Republicans call for block-grants, Democrats will continue to push Medicaid expansion until the final 19 states adopt it.
Should Brokers and Agents Worry?
We believe that group insurance will remain robust with only an upside for both brokers and agents. Individual coverage will continue to be challenged by escalating premiums but access should not be at risk. Broker commissions will most likely never return to pre-ACA levels and as long as carriers continue to steer away from exchanges, any commissions among these higher risk groups will remain elusive.
The biggest threat of all is affordability. Health insurance is expensive because healthcare is expensive and small risk pools among dwindling exchanges are exacerbating the issue. We know that the ACA has had a contributory inflation effect on premiums with little opportunity to reduce the overall cost of insurance.
Among the most probable near-term solutions to reducing costs are the industry’s drive towards wellness solutions and having Republicans explicitly make this part of their plan is encouraging. Cost containment can no longer be relegated to increased deductibles and cost sharing; there has to be increased personal accountability through individual wellness commitments to drive real results.
We need to find new and innovative solutions that don’t incentivize overtreatment. We need mechanisms for pricing drugs and procedures according to how well they work. Based on these needs, Republican ideas are most welcome and nothing that the Democrats are proposing will hurt. Regardless of which party occupies the White House come January – the worst is behind us and future opportunities – while challenging, has great potential.
Stay tuned as we continue to monitor these and other issues that impact consumers, brokers and agents.
The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.