Non-Profit Leaders Discuss the Future of Health Care Reform

Republicans in Congress may not yet have a plan for replacing the Affordable Care Act (ACA), but they are sure about the conservative values they want reflected in any replacement: market-based solutions; less government regulations; more state control and less federal government involvement; and more personal responsibility.

That was the message from David Sandman, president of the New York State Health Foundation, and James Tallon, President of the United Hospital Fund, at a panel discussion on January 24, Defending the ACA and Making Progress at the Same Time. Is Philanthropy Ready?, hosted by Philanthropy New York. The discussion was moderated by Sherry Glied, dean of New York University's Wagner Graduate School of Public Service. Attendees were from a number of non-profits and health care institutions.

(From left) Sherry Glied, David Sandman, and Jim Tallon.
The Democrats and Republicans are currently talking past each other, the two health care insiders said, because they have different philosophies and goals for health care reform. In 2009-2010, the Democrats were trying to build a solution that would expand coverage, control costs, and make the health care delivery and payment systems more efficient. The Republicans are more ideologically-driven – their objectives are borne out of bedrock conservative principles about lower federal spending and less federal control.

Mr. Tallon explained that the ACA's complex two-part structure reflects an approach designed to expand coverage to people across the income spectrum who were not insured through their employers. He noted that low income people are traditionally not a preferred market for commercial insurers because they are less able to afford the premium payment, and are often older and sicker than the general population. To cover this group, the ACA expanded eligibility for the federal Medicaid program to 138 percent of the federal poverty level (up to $35,000 for a family of four).

For people with incomes above the Medicaid limit, insurers were required to offer policies with comprehensive, mandated benefits (similar to most employer-based policies), many of them sold on federal or state exchanges. Federal subsidies were provided to those who couldn't afford the premiums, on a sliding scale up to 400 percent of the poverty level. Meanwhile, everyone was mandated to buy insurance or pay a penalty, to make sure that not just the sick would seek coverage. This two-part structure got the ACA close to the Democratic goal of increasing coverage dramatically – the uninsured rate in the U.S. dropped to 11 percent in 2016 from 17.1 percent in 2013, just before the law went into effect.

Republicans, however, are focused primarily on cutting the nation's deficit rather than coverage for all, said Tallon. To get there, they will likely seek to cut Medicaid funding, and reduce the entitlements guaranteed by the program. The Republicans want to instill more federal budgetary control over Medicaid, most likely by offering block grants to the states. The states will receive a lower level of funding but more freedom to structure state Medicaid programs the way they choose. “There is nothing indicating that there will be more Medicaid money available to states in the future,” he said.

For people who earn too much to qualify for Medicaid, Mr. Tallon expects that Congress will propose eliminating many of the benefits mandated by the ACA, which requires all policies to cover a range of preventive measures and chronic care. The replacement will be high-deductible insurance plans, backed up with a tax deduction or credit that will encourage people to set up health savings accounts. People with pre-existing conditions will probably be assigned to a high-risk insurance pool, which a number of states offered prior to the ACA. “But all our experience with high risk pools in the states is that they simply don't work because they can't keep up with the costs of that population,” he said.

Mr. Sandman warned that these changes could lead to high rates of uninsured people who will almost certainly also lose access to quality health care, particularly preventive care. “Tax deductions and health savings accounts are a joke for lower income folks who are living paycheck to paycheck,” he said. And that means more sick people. He warned. “There is a mountain of evidence that you have worse health outcomes without insurance.”