With Donald Trump as our new President Elect, many questions have begun circulating as to what happens next with the Affordable Care Act.
It is most likely that Donald Trump embraces the health plan laid out by Paul Ryan, which takes on some crucial aspects of the ACA and adjusts others. This is not confirmed, but it has been supported by the congressional GOP. Its goals are outlined on page 13, as follows:
First and foremost, this means medically underwritten health plans, where you would be assessed on your medical history, with a guarantee of coverage, but higher premiums if in bad health. Before the ACA, you were not guaranteed, and often declined, coverage if you were not fully healthy.
With “A Better Way”, there would be a separate risk pool for the highest risk individuals, to remove the oldest, most unhealthy, or least consistently covered individuals from the overall risk pool where young, healthy people and people with continuous coverage reside. $25 billion would be allotted to premium credit for their higher-risk premiums. This would be a tax-paid benefit. Trump himself has stated that he prefers tax relief to premium credits, but this is one of the only departures from Ryan’s plan evident thus far. It is unclear at this point whether this high risk pool would be accessing Medicaid and Medicare networks or the standard health insurance market.
What this updated plan from Ryan is doing is taking some key features that made health insurance accessible to everyone and bolstering certain positive aspects of it while lessening the ease of accessibility to the older and more unhealthy afforded by the ACA and its standardized health rates based on age. Under the ACA, there is a 3-to-1 requirement for age banding, meaning that an older individual’s rate cannot be more than 3 times higher than younger, which, compounded with the health insurance carriers’ financial strain, raised rates for younger populations exponentially over the years. Under Ryan’s policy, that would be 5-to-1, so older, typically more unhealthy people are spending far more on premiums, which to some makes the most sense.
The fact of the matter is that covering the unhealthy populations that previously could not access health insurance is astronomically costly. There is a distinct need to encourage younger populations to access the health insurance marketplace for its continued success, and with better rates and better options fitting a young, healthy group, with the main risk pool more evenly distributed, it can be done.
There is also heavy encouragement for small groups to join together to access Association Health Plans, which is essentially a collection of groups under 50 (or 100, depending on the state) lives expanding the risk pool to distribute the weight of any particularly unhealthy or older members. Small groups suffer with the “every group for itself” model under the ACA, forcing the youngest employees to pay more to account for the oldest within a very narrow risk pool, which creates higher premiums than would be standard should that risk pool expand.
Under “A Better Way”, individuals would still be able to be covered under parent plans until age 26, the Medicaid gap, preventing people between the wages allowing them Medicaid and the lowest wages allowing them to access ACA subsidies from acquiring subsidized premiums, would (ostensibly) be closed in states that did not expand Medicaid, and there would (ostensibly) be better competition and consumer choice on a state by state basis. Ryan’s plan heavily encourages further use of Health Savings Accounts for individuals, to allow the consumer to have a plan for catastrophic costs on a tax-free basis, and Health Reimbursement Arrangements for employers, allowing employers to take on some of the out-of-pocket costs to employees using High Deductible Health Plans to cut costs on premiums.
There are pros and cons to both sides, should this be the health plan ultimately implemented. Here’s hoping it works out.