With the election of GOP candidate Donald Trump to the presidency, every long-stalled Republican healthcare proposal has vaulted into the realm of possibility.
As a whole, Medicare felt milder effects from the Affordable Care Act than other market segments. Most proposed changes were targeted, such as closing the Part D doughnut hole, boosting quality initiatives like Star Ratings and adding new payment models like accountable care organizations (ACOs).
But the pieces of the reform law will be ripe for repeal and/or replacement. Medicare Advantage has continued to grow throughout the Obama administration, and the new administration is likely to speed up that migration. The ACA cut some subsidies for Medicare Advantage plans, so expect any Republican replacement to restore those subsidies.
The big kahuna for Medicare remains a long-gestating Republican reform to the program, which would largely end Medicare as we know it. Speaker of the House Paul Ryan already plans to push for a complete overhaul of Medicare. The Ryan plan would convert the program from a defined benefit to a defined contribution model. Medicare has always split costs (70 percent for the government, 30 percent for the beneficiary) that could be capped under the Ryan proposal. Beneficiaries would receive a set amount of money (supporters eschew the term “voucher” but that’s how vouchers work), which they could then use to buy a policy. There are concerns that the rapid increase in cost-sharing could leave low-income seniors out in the cold and unable to afford the comprehensive coverage.
Despite Republicans controlling the presidency and both houses of Congress, passing systemic changes to Medicare is an uphill climb. The Republicans only command a 52-48 majority in the Senate, which could add difficulty to passing as monumental a change as premium assistance. Given the explosion of opposition for plans to privatize Social Security a decade ago in the Bush administration, don’t be surprised if widespread opposition sands the roughest edges off any Medicare privatization push - if opposition doesn’t kill it entirely.
One way the Ryan proposal could circumvent Congress would be to pilot or add a premium support program under the authority of the Center for Medicare & Medicaid Innovation (CMMI), CMS’s testbed for new payment and program models.
However, Republicans have targeted CMMI for elimination given its close ties to the ACA and lack of Congressional oversight. Even if Republicans kill CMMI in an ACA repeal, don’t expect its payment initiatives to go away. Accountable care organizations, bundled payments and other reforms have been championed by conservatives and are unlikely to be swept away with the rest of the law. There is one exception – the controversial Part B oncology drug program set to start in 2017 is a dead demonstration walking due to fierce opposition from Republicans, physicians and the drug industry.
Some proposals thrown out on the campaign trail are already remote possibilities. Despite rhetoric about allowing the government to negotiate drug prices, that is the ultimate non-starter for the pharmacy industry and any move from the Trump administration to even discuss that option would face a swift response from the pharmaceutical industry.
While the industry calls it a non-starter, survey after survey shows overwhelming public support for addressing drug costs. One Kaiser Family Foundation survey found that registered Republicans considered drug prices a higher priority than repealing the ACA. Chances for such action remain slim, but public pressure means they cannot be ruled out entirely.
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