Surprise-surprise, the Senate failed to pass anything for Repeal and Replace. Now, What? Here’s an idea for the White House to consider.

You have read it here before that I think creating a real solution for reforming healthcare is simple and straight forward.  I know that sounds naïve given the complexity of healthcare financing and delivery as well as the influence of political correctness and our politician’s drive for self-preservation.

But for the Trump Administration, now would be a perfect time to submit to Congress a complete package of reform to replace the ACA with a reform package created from real world workable solutions.

I’ll outline the ideas below but to set the table we suggest that the title and first line of the bill should be, in legislative speak, “The following repeals entirely the Patient Protection and Affordable Care Act including all of its subsequent regulations, etc, etc, etc. & so forth”.

That title does not mean that we will not implement or retain certain portions or aspects of the ACA such as kids to 26, guarantee acceptance, and so on. But, we will abandon all of the taxes, the mandates, the public exchanges, restrictive rating rules such as 3:1 premium ratio and the Minimum Loss Ratio.
But, we begin with a framework that will meet the intent of all good Americans.

After you read the Basic 12 we’ll talk about the folks included under the Medicaid Expansion.
Here are 12 basic ideas that frame a bill to replace the ACA:

  1. Make health insurance premium 100% tax-deductible for anyone who pays it.
  2. Make all fully insured plans for individuals and families guaranteed issue but with a reasonable Pre-existing period for no coverage for prior 63 days.
    * Pre-ex period: 6/12 months, which means no coverage for that specific condition    for 12 months if treated within previous 6 months.
  3. Group plans of 2+ employees remain guaranteed issue with No Loss-No Gain Take over. This would follow the Pre-ex explained in #2.
  4. Allow carriers a reasonable corridor for Risk Adjustment Factors (+or- 15%). Also let insurers determine their area rating factors based on their data and statistics.
  5. Tort reform: Loser Pays and/or Fixed Attorneys at 15%.
  6. Eliminate mandated benefits such as the Metallic Plans
  7. Allow carriers and plans to sell across state lines. (Expand ERISA preemption)
  8. Re-insurance Pools designed to help insurers price their plans without the detriment of people “gaming” the system or to others in the system.
  9. Make HRAs and MERPs permissible and available to implement on all plans.
  10. All insurers must publish and release statistics and experience data.
  11. Health plan commission set at level 7%, does not increase as premium does and use universal enrollment forms for all group plans and all individual/family plans.
  12. Providers must post their rates per service. Hospitals must post their outcome statistics as well as infections, error rates, and other outcome data.

You see that I did not include the Medicaid Expansion coverage above.
I would leave the current Medicaid Expansion with Federal subsidy in place for two years following enactment. Then, starting January 2020 for example, reduce the Federal match for the Expanded coverage by 15% per year until it equals the Federal match standard for each state’s traditional Medicaid population: the disabled, the poor, and pregnant woman.

Each state then has a few years to determine for its own citizens if or how it chooses to provide subsidies for the able bodied working age folks that sought coverage on Medicaid under the ACA. States may even decide to let their folks use the state’s subsidy to pay for the plan the citizen chooses instead of forced enrollment on a crappy Medicaid plan. Folks on Medicaid would appreciate that freedom.

We also need to allow employers to build incentives to support wellness plans. If we want to bend the cost curve downward we must address behavior and expectations through real wellness and benefit structure.

So, that can be the Trump Administration’s starting point.  It would eliminate mandated benefits and dopey pricing rules that automatically increase premiums. It would eliminate mandates, taxes, and guidelines that choke off competition.

It would retain the perks implemented the first 3 years of the ACA such as kids staying on parent’s plans, guarantee issue and no penalties for pre-existing conditions. Plus, it would encourage competition by giving insurers an incentive to participate and compete which will bring down premiums and keep the benefits we all know we want.

So that you don’t think I’ve gone completely crazy I should say that I don’t think any of the above will happen. To be sure, there will be lots of hand-wringing and belly-aching about the failure of the ACA but no real action will be taken.
Remember, I’ve previously confessed that  I’m an optimist trapped in a cynic’s body.

And sorry for that opening in the title “Surprise-surprise”. I was not trying to imitate Gomer Pyle. (Maybe that’s too dated for you younger readers). It was my attempt at sarcasm for having any hope that Congress could get anything meaningful accomplished.

Well, that’s it. Let me know what you think and what you would add to make it work.
After all, we are all in this together!

Next week we’ll have a suggestion for Congress in lieu of repeal and replace.
Until next week,

Mark Reynolds, RHU

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3 Responses to “Surprise-surprise, the Senate failed to pass anything for Repeal and Replace. Now, What? Here’s an idea for the White House to consider.”


    Hey Mark,

    Great post. The only thing I would change is to add to # 1 “…premiums and Healthcare expenses 100% tax-deductible for…”

    My family has enjoyed this because beginning in 1996 we took advantage of HSA plans. Back then, of course it was called MSA and it was better in one respect that it was also State tax deductible.

    I’m not sure how much revenue would be “lost” to the government but it’s more the principal. I’m sure that they can figure out how to replace the “lost” revenue.

  2. trowbee Says:

    Hi Mark, I read your blog with much interest as I have felt for a long time that “partial self funding” would have to play a part in any national solution to the escalation of heal care costs. I like your plan here, but am thinking if we made all health insurance deductible that would reduce a large source of revenue to the government that would have to be made up elsewhere. While it sounds fair, what do you think the financial implications would be to government revenues? How would they be able to replace that lost revenue? It may not be as simple as this? Best, Corrin Trowbridge


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