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 “Better Way” health plan laid out by Paul Ryan, or one like it, which takes on some crucial aspects of the ACA and does away with others. This is not confirmed, but it has been supported by the congressional GOP. The goals of A Better Way are outlined on page 13 of the policy, as follows:
First and foremost, this means medically underwritten health plans, where you would be assessed on your medical history. You would have a guarantee of coverage, but higher premiums if you are found to be 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. This is formed to remove the oldest, most unhealthy, or inconsistently covered (and hence of unclear medical history) 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 an updated standard health insurance market.
This updated policy takes 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. 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 the policy’s supporters 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.
Further, under A Better Way, individuals would still be able to be covered under parent plans until age 26. This popular feature of the ACA would continue as-is.
Ryan’s plan also 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.
Should this type of policy be implemented, it would be yet another massive overhaul to our broken insurance model. We’ll keep you posted as it plays out.