Trump’s Pick For Health Wants Big Changes To Medicare, Medicaid

Millions of NJ residents could be affected if Congressman Tom Price’s plans for those programs and Obamacare become law

U.S. Rep. Tom Price, a Georgia Republican and orthopedic surgeon, is President-elect's Trump pick to head the federal Department of Health and Human Services.
Healthcare experts have been bracing for major changes given President-elect Donald Trump’s plans to overhaul the Affordable Care Act, but now they must also consider how his plans for Medicare and Medicaid — which together insure more than 120 million Americans — could impact care and coverage long-term.

On Tuesday, Trump named U.S. Rep. Tom Price, a Georgia Republican and orthopedic surgeon, to head the federal Department of Health and Human Services, which oversees these public insurance programs. Price is a longtime critic of the ACA, popularly known as Obamacare, who seeks to rollback the controversial law, empower states to run Medicaid with more flexible federal funding, and alter Medicare so that future beneficiaries would get government help to purchase select commercial policies, instead of having essentially unlimited federally funded benefits.

Trump’s pledges to repeal the ACA triggered criticism from healthcare advocates in New Jersey; New Jersey Policy Perspective issued a report on Monday that highlighted their concerns about the impact on patients, the healthcare system, and the state’s economy. On Tuesday, Sen. Joseph Vitale (D-Middlesex), who chairs the health committee, and Sen. Nia Gill (D-Essex), also called on Gov. Chris Christie to oppose any efforts to overturn the 2014 law.

US Rep. Frank Pallone (D-Long Branch), a longtime supporter of the act, which added nearly 700,000 New Jersey residents to the insurance rolls, said Tuesday he was “deeply concerned” about the direction the federal health department might take under Price’s leadership, which requires approval in the U.S. Senate.

Pallone is among those worried that Price’s preference for state control and privatization will leave America’s most vulnerable citizens without a guaranteed safety net when it comes to healthcare. Ray Castro, healthcare analyst with NJPP, agreed that while proponents of these plans claim they will improve competition and individual choice, “the real goal is to reduce federal costs and transfer them to seniors and the disabled,” he said. “Basically, the customer is left holding the bag at a time in their life when they are most vulnerable.”

Medicare covers some 57 million seniors nationwide, including 1.4 million in New Jersey. Medicaid funds care for between 72 million and 98 million Americans who are poor or disabled, some 1.7 million of whom live in the Garden State. (This includes roughly two-thirds of those newly insured under the ACA, who could sign up when the law expanded Medicaid eligibility; the rest get federal help to purchase commercial policies in a specially designed market.)

Although the new administration’s plans are not yet clear, Price has proposed his own plan to replace the ACA, which reportedly became the basis for the healthcare reform announced by House Speaker Paul Ryan (R-Wisconsin), in June. The 37-page proposal, which Price has endorsed, blames so-called Obamacare for a host of problems and underscores that any real solution must increase competition and put consumers first.

The plan, titled “A Better Way,” centers on key reforms: Repealing the ACA and instituting a different system of federal support to help those who need it purchase commercial insurance; shifting traditional Medicaid programs to the states and capping federal dollars; and transitioning, over time, to a Medicare program that enables customers to purchase commercial plans sold through a special marketplace with “premium support” dollars from government.

Other aspects aim to protect those with pre-existing conditions and complex needs, encouraging innovation and improving flexibility by allowing workers to take their health plans with them when they change jobs. The plan also seeks to empower small businesses and individuals to join together to pool their risk so they can purchase lower-cost coverage as a group. Other aspects are designed to limit medical malpractice awards and further restrict the flow of federal funds to providers who offer abortions.

Some details of the plan are as follows:

Instead of the ACA: In place of the ACA, the Better Way plan offers a new option to those without coverage. It calls for a federal tax credit that would be made available to all participants at the start of each month; the dollars would be adjusted for age, providing older Americans greater support, but wouldn’t account for income differences. Recipients could use this help to pay premiums on commercial plans and anything leftover would be deposited into a personal health savings account.

According to the authors, this fixed credit would be enough to cover the costs of a typical “pre-Obamacare” policy — something they anticipate is possible as other changes increase flexibility and competition among insurance companies and reduce the federal regulatory burdens.

Medicaid reform: The Better Way plan claims states have been stymied by federal regulations around Medicaid, which is administered and funded by both federal and state government. The proposal calls for empowering states to craft the details of their Medicaid programs to best protect the most vulnerable residents, in return for future funding limits. (State funding is currently based on Medicaid population and rates that take into account regional economic differences.)

States would have two options under the Ryan plan, a per capita allotment or a block grant. Under the per-capita option, which the authors said was favored by a number of GOP presidential contenders, including Christie, officials would calculate per-patient payment rates for each major beneficiary category — aged, blind, disabled, children, and adults — based on each state’s average spending. The dollar figure calculated for each state in 2019 would become its fixed allotment, increasing slightly each year.

The plan provides less detail on the block grant option, which would use a base year to determine a state’s funding, but the goals are largely the same — improving efficiency and increasing flexibility at the state level. States would be required to cover any cost overruns in this model, but could also keep any leftover federal funds.

“Preserving” Medicare: The Better Way plan notes that Medicare has expanded significantly in recent decades to include four parts, each with a different funding mechanism, and, as the nation’s population continues to age, spending on the program is expected to double, to $1.3 trillion, by 2026. To address what it calls an unsustainable trend, the proposal would restore some revenue and other changes tied to the ACA and start a transition so that workers who are in their 40s and 50s today will still have protection when they become eligible in the coming decades.

To reduce costs, the plan encourages greater flexibility in Medicare plan design and supports value-based care and managed care efforts. But the most significant change would come through “transforming the benefit into a fully competitive market-based model — known as premium support,” the authors said. The proposal wouldn’t change care for current beneficiaries and would allow future users some choice in their options.

The authors insist it is not a “voucher program,” since the payment would go straight from Medicare for a commercial insurance plan that meets specific conditions but is selected by the patient. Coverage would still be guaranteed and payments would be calibrated to the patient’s needs, so those with complex conditions would still be protected, the plan insists. The model is similar to the Federal Employee Health Benefit program, which pays insurers directly to cover government workers.

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