Top 3 things to know: GOP ACA replacement plan

The Affordable Care Act (ACA) “replacement” proposal that Republicans in Congress have been working on was presented by Speaker Ryan recently.

Here, experts break down the top three things to know about the GOP plan.

1.   Expansion of the use of health saving accounts (HSAs) coupled with high-deductible health plans (HSA-HDHP) is a top priority.

Policies the plan calls for include:

• Increasing the maximum HSA contribution limit;

• Allowiong both spouses to make catch-up contributions to the same HAS; and

• Establishing an administrative fix for expenses incurred prior to establishment of HAS.

Fendrick“While HSAs are a popular tool to engage patients to be better healthcare consumers, existing HDHPs provide pre-deductible coverage for a few preventive care services, limiting their attractiveness,” says A. Mark Fendrick, MD, professor of internal medicine in the School of Medicine and a professor of health management and policy in the School of Public Health at the University of Michigan. “Policymakers should consider proposals that increase the flexibility of HSA-HDHPs, such as allowing plans to exempt certain services from the HDHP deductible-such as prescription drugs to prevent the onset of a chronic condition-and increasing the annual HSA contribution limits.”

Managed Healthcare Executive editorial advisor Don Hall, principal, Delta Sigma LLC, says that there are two problems with HSAs and HDHPs. “First, few people will actually fund them appropriately and second, results of the use of this type of plan design is that needed care is delayed worsening outcomes and increasing costs,” Hall says. “This has been demonstrated in the high-deductible plans offered through exchanges.”

Next: Takeaway #2

2.   It lacks cost-related details that make it possible to compare it with the current coverage provisions of the ACA.

One example is the tax credits the plan calls for, according to Rosemarie Day, president of Day Health Strategies.

DayThe plan would provide all Americans access to a portable, monthly tax credit that they can use to buy a health insurance plan. The proposal is based on age, so as individuals’ health needs evolve over time, so will their monthly, portable tax credit.

The dollar value of the proposed tax credits is unclear, says Day. She believes, however, that they are unlikely to be as “generous” as the ACA subsidies, given other aspects of the proposal.

“And the structure of the proposed tax credits-being based on age rather than income-will have the effect of redistributing healthcare subsidies from lower to higher income people, increasing the likelihood that lower income people will drop their insurance coverage,” Day says.

Next: Takeaway #3

3.   The Medicaid expansion would be repealed in its current form.

The GOP plan would put the program on a budget with a per capita allottment, leaving states to decide how to continue funding their Medicaid expansion (if they opted to expand the program).

“This proposal is politically controversial, including in states with Republican governors, due to the cuts that states would have to make to their Medicaid programs,” Day says.

“An interesting unintended consequence of block granting Medicaid is that it could create the opportunity for states to basically construct their own systems of care and move from contracting with MCOs on a capitation basis to paying for hospitals, clinics and staff directly,” Hall says.

Final takeaway

GrantThere are more than 22 million Americans whose coverage will be in jeopardy if ACA is repealed, says Michael Grant, executive managing director at Crystal & Company.

“Given such, it is going to take some time to implement change, coupled with the fact that this is a tax and spend issue for the government and we have seen how that has been handled through the Cadillac tax,” says Grant.

So while this is a very hot topic and Republicans have vowed to address the ACA in the first 100 days, it is going to take some time to sort through repeal and replace. Stay tuned.