“We don’t know what will emerge as President Trump’s plan to replace Obamacare, which he has promised to unveil immediately after the 2020 elections. But he has recently endorsed several proposals, and they could provide clues.
Over the last two weeks, he has sought to re-emphasize health care as an issue, after a set of bruising legislative defeats in 2017. He directed the Justice Department not to defend the Affordable Care Act against a legal challenge. And he issued statements and tweets calling for Republicans to become “the party of health care,” at a moment when many of his party’s leaders had hoped to focus on different issues.
He also began reprising various promises about what a future plan to repeal and replace parts of the Affordable Care Act might achieve. The plan, short on specifics, will come with “far lower premiums (costs) & deductibles,” he said this week in a series of tweets. He promised that any Republican health plan would protect Americans with pre-existing health conditions, a major concern of voters that Democrats effectively exploited in the 2018 midterm elections.
After his election, President Trump made similar promises, saying that the Republican proposal would be “far less expensive and far better” than Obamacare. The legislation that came later, and earned his endorsement, would have made insurance less expensive, but only for certain groups of young, high-income, healthy Americans. The bills would have also eliminated coverage for millions of people by scaling back Medicaid, and would have made it harder for those with pre-existing illnesses — and those who are older with low incomes — to find meaningful affordable options if they didn’t get insurance from work.
The three senators he has chosen to lead the effort — Bill Cassidy of Louisiana, John Barrasso of Wyoming and Rick Scott of Florida — have so far also declined to point to many specifics. When asked about an Obamacare replacement this week, they mentioned their more modest bills to reduce health care costs in the emergency room and at the drugstore. (A fourth senator the president has mentioned, the majority leader, Mitch McConnell of Kentucky, has been even more clear that he has little interest in pursuing comprehensive health care legislation.)
One clue to Mr. Trump’s thinking is the choice of Mr. Cassidy. Along with Senator Lindsey Graham of South Carolina, he was the author of a legislative plan that received some scrutiny in 2017 but never came up for a vote. Another hint can be found in the president’s own budget, released just before his reinvigorated health care push. A third is a draft proposal developed by a group of conservative Washington policy groups.
The Graham-Cassidy bill
The president has spoken fondly several times about this proposal, which did not have enough support in Congress to advance to a vote. It would eliminate current programs funding Obamacare’s Medicaid expansion, which covers the working poor, and insurance subsidies helping low- and middle-income Americans buy their insurance. Instead, that money would be grouped together, then parceled out to states to use in the service of health care programs they favor.
The legislation attaches some rules to how the money can be used — it must go toward health care, for example — but its main goal is to provide states with maximum flexibility to develop local and innovative solutions. (Some experts worry that states could struggleto develop such plans on the bill’s abbreviated timetable.)
That flexibility would allow states, if they so chose, to waive Obamacare’s rules that plans must cover a standard set of medical benefits, and that insurers must charge the same prices to customers with different health histories. It would be easy for states to circumvent current protections for Americans with pre-existing conditions. That ability would be at odds with the president’s recent promises to protect such rules.
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The bill would also restructure the Medicaid program, even for populations that were enrolled in the program before Obamacare.
The bill’s formula for allocating money among the states would also lead to big redistributions, generally taking money away from states that have expanded Medicaid, toward those that have not. It would also restrict the growth of the block grants over time. Those funding formulas, while technical, make a big difference in the impact of the program. It would result in substantial funding shortfalls for several large states nearly immediately, and leave nearly every state in a funding crunch over the long term.
The budget
Because the 2020 White House budget was developed and published by the White House itself, it is perhaps the most useful clue about how the president imagines a world without Obamacare.
Like the Graham-Cassidy proposal, it includes block grants to the states to replace the Obamacare coverage expansion, and it replaces the remainder of Medicaid with a set of fixed payments to states.
But the rate at which the different grants would grow over time would be even smaller than under the legislation, “to make the system more efficient.”
The budget is vague about what sorts of insurance regulations would be allowed, but it does note that a tenth of funds would need to be set aside for people with pre-existing conditions, a sign that states would be allowed to exclude such people from the mainstream insurance markets.
The conservative coalition proposal
A group of conservative health policy experts, including the Heritage Foundation, has developed a health care proposal that shares a basic structure with the two systems described above: It would hand states blocks of money and a few rules, and encourage them to develop their own health care systems.
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The rules in the conservative plan differ a bit from those in Graham-Cassidy. The plan would require that government-subsidized systems offer every American a choice of a private health plan, a requirement that would probably foreclose a liberal state from enacting a single-payer program and that might require restructuring of some state-run Medicaid programs.
The plan shies away from specifying funding formulas. It doesn’t say how the block of money should be divvied up among the states, though it says that states with more low-income residents should get a bigger share. It also doesn’t specify precisely how quickly the pot of money should grow over time.
Like the budget proposal, it nods to concerns about Americans with pre-existing conditions by encouraging states to develop special programs, like high-risk pools, to insure people with expensive health needs. But it also encourages insurance strategies, like discounts for young customers, or stripped-down benefit plans, that would tend to make mainstream insurance less useful for people with serious health needs.
The proposal also leaves the legacy Medicaid program as is. That choice neutralizes one possible political line of attack. But it also substantially diminishes the program’s possible cost savings.
The court case over the Affordable Care Act will be decided on the judiciary’s timetable, so it’s not clear how long the White House may have to develop a replacement plan. But, since it certainly has at least months, there is time to develop some new proposal more aligned with the president’s recent promises.
Doing so will not be easy, however. Health care in the United States is expensive, which means that health plans that cover everyone with low deductibles are likely to be costly. The block grant plans the president has admired reduce rather than increase current federal spending on health care. Looser rules on health insurance are likely to increase costs on customers unfortunate enough to need care. That makes the block-grant approach a troublesome fit with the president’s stated desire for a system that Americans find “far less expensive & much more usable than Obamacare.”