Tom Price and the Republican vision for replacing Obamacare

Donald Trump is indeed serious about repealing and replacing the Affordable Care Act. And to show just how serious he is, on Tuesday he chose conservative Rep. Tom Price to lead the Department of Health and Human Services.

Representative Price, a Republican doctor from Georgia, stridently opposes Obamacare. He has also put forward legislation to replace it in every Congress since the bill was passed in 2010.

If putting Price in charge of HHS is like “asking the fox to guard the hen house,” as Sen. Chuck Schumer (D) of New York puts it, that’s fine with Republicans.

At last, under unified GOP control in Washington, Republicans have an opportunity to act on their vision of healthcare for America – a vision that greatly reduces the role of the federal government in health decisions.

“The Republican approach is designed to focus on the individual, the patient – not on a government program,” says G. William Hoagland, senior vice president of the Bipartisan Policy Center.  “It’s a very private-sector oriented approach to healthcare.”

If the Senate confirms Price as secretary of HHS, he will oversee a $1 trillion budget, about 80,000 employees, and nearly a dozen divisions – from Medicare and Medicaid to the Food and Drug Administration.

Price firmly supports House Speaker Paul Ryan’s effort to partly privatize Medicare, healthcare for seniors. He also wants to strip Planned Parenthood of federal funding.

"There is much work to be done to ensure we have a health care system that works for patients, families, and doctors; that leads the world in the cure and prevention of illness; and that is based on sensible rules to protect the well-being of the country while embracing its innovative spirit," said Price in a statement about his appointment.

As an orthopedic surgeon with more than 20 years of experience and the chairman of the House Budget Committee since 2015, he will bring a high level of practical knowledge – both medical and fiscal – to his new post in the executive branch.

“This is the absolute perfect choice,” said Speaker Ryan in a statement.

Key changes 

Republicans are expected to attempt to repeal the ACA early next year, through a budgetary process that requires only a majority vote in both houses for approval. They used the same process in 2015, gutting much of the law. President Obama vetoed it.

But the bigger challenge has always been to agree on a replacement. Republicans have circulated various proposals for replacing the ACA over the years, but they have not come to a consensus.

In the House, at least, they now seem to have generally settled on a series of points outlined in a document called “A Better Way,” which Price supports.

In the document, Republicans would keep popular provisions of the ACA, such as having pre-existing conditions covered and allowing young people to stay on their parents’ insurance.

But they would drop the federal and state “marketplace exchanges” set up under the ACA. As individuals and families begin 2018 enrollment in the exchanges, many of them are facing skyrocketing premiums and far less choice among plans – though they do get federal subsidies to help bear the cost increases.

The Better Way outline would instead help people purchase insurance on the open market with the help of refundable tax credits. Price, Ryan, and President-elect Trump also all favor health insurance that is available across state lines. And they would provide greater incentives for people to put away pre-tax dollars in health savings accounts.

For those who are priced out of these policies, the House Republican plan calls for federally subsidized “high-risk pools” and for Medicaid (healthcare for the poor) to be devolved to the states in the form of block grants or based on a state’s population.

Here, President-elect Trump’s other healthcare nominee, Seema Verma, would play a particularly important role. Ms. Verma was nominated Tuesday to head the Centers for Medicare and Medicaid Services, a division of HHS. 

Increasing the income threshold to qualify for Medicaid has been the ACA’s main tool to get more poor people health coverage. The Supreme Court made that expansion of Medicaid optional for states, and many red states have decided against Medicaid expansion.

But some went ahead, on their own terms. Verma worked with Vice President-elect Mike Pence when he was governor of Indiana to design a Medicaid expansion in keeping with his Republican principles. To some, her appointment signaled pragmatism.

“To me, the Verma announcement was reassuring. It’s not just ‘let’s throw a couple hundred thousand people off Medicaid rolls and let them fend for themselves,’ ” says Daniel Derksen, director of the Center for Rural Health at the University of Arizona in Tucson.

Dr. Derksen, who once practiced medicine as a family physician, says that Medicaid expansion has greatly helped to cover more people and directly eased the bottom line of hospitals that treat uninsured patients – “charity” cases. States have been able to somewhat customize the expansion and that has helped it gain acceptance in some Republican states such as his own.

He says he appreciates the “personal responsibility” aspect of Indiana’s program, where residents have to contribute to the cost of their coverage. Those above a certain income level who fail to make their payments are dropped and not allowed back for six months.

Repeal first, then find a replacement

Critics – and not just Democrats – point to weaknesses in the Better Way plan. Medicaid grants to the states run the risk of failing as a safety net during times of recession, for instance. States are required to balance their budgets, yet the number of poor people who would need Medicaid increases during hard times.

Also, high-risk pools were tried before the ACA fully took effect, and didn’t work particularly well, says Derksen, who is a Republican. “It’s hard to make insurance work when you’re only covering sick people,” he says.

He also worries about insurers and Big Pharma having too much sway if the marketplace exchanges are eliminated. He prefers to see the exchanges modeled along the lines of Tricare, the military plan that goes out to bid among insurers.

Then there's the question of whether the GOP promise to retain the popular aspects of the ACA is doable without the various mandates to purchase or offer insurance, a point that Senator Schumer raises.

Such criticisms will make it far more difficult to replace the ACA than to repeal it.

That’s why House Republican majority leader Kevin McCarthy of California told reporters on Tuesday that the plan is to repeal first, then set a transition period in which the law would still be in effect while lawmakers would hash out a replacement.

The replacement would have to be bipartisan if it is to get past the 60-vote threshold in the Senate that’s now required for most legislation, Rep. McCarthy said. A slew of Democratic senators from red states who face reelection in 2018 may well feel pressure to compromise with the GOP on a replacement.

At the same time, not all Republicans in the Senate may agree with their House colleagues.

Bigger fight: Medicare

Based on Democrat reactions on Tuesday, the bigger fight is likely to be over changes to Medicare – which Price sees as a cost-cutting priority for the next Congress. He and Ryan want to raise the eligibility age to 67 and transition it to a “premium support” program where seniors are provided vouchers to help them buy health insurance.

On the campaign trail, Donald Trump promised not to touch Medicare. Now his transition website says it will “modernize Medicare” to preserve it for future generations.

“We are going to fight tooth and nail any attempt to privatize, voucherize, or any other ‘ize’ you can think of when it comes to Medicare,” said Senator Schumer, in remarks to reporters on Tuesday.

In 2012, when Ryan was Mitt Romney’s vice presidential running mate, Democrats ran a memorable ad based on Ryan’s plan to turn Medicare into a partial voucher system. The “granny” ad, which depicted a Ryan look-alike pushing an elderly woman in a wheelchair over a cliff, was politically devastating for Republicans.

“Voters are largely insured. So talking about the ACA is one thing. But messing with Medicare is another,” says Democratic pollster Celinda Lake in an email.

There is a reason Trump had to say otherwise on the campaign trail, says Ms. Lake. “Medicare's favorability is 65-66 percent – significantly higher than most of the politicians who want to cut or do away with it.”