Healthcare - Plan B

In December, 2019 a Texas judge struck down the Affordable Care Act (ACA). President Trump immediately indicated that his Administration would not defend the Law in court. Therefore, the appeal and the defense of the ACA will fall to a group of State Attorneys General. The appeals are expected to eventually go to the Supreme Court with a decision expected about a year from now.

Assuming the Texas ruling stands, we would revert back to the pre-ACA days. Millions would lose their health insurance. Insurance companies could reinstate their policies on pre-existing conditions. Also, Medicaid expansion would be eliminated in 37 States. Given these dire consequences, the big question is: Does the Administration have a plan to avert such a crisis? Critics say no because there is no plan B currently in place. Administration officials disagree stating they are working on alternatives, and there are clues that a Plan B is being developed. Let’s examine whether a Plan B replacement exists, and what it might look like.

After the Texas ruling, the President laid down his plan for a replacement for the ACA. He stated that the Republican Party will be “the Party of healthcare.” The plan was short on specifics but would have “lower premiums and deductibles [than the ACA]”. The plan would also “protect Americans with pre-existing conditions, and be far less expensive and far better than Obamacare”.

The President choose three Senators to lead the replacement effort – Bill Cassidy (R-La), Rick Scott (R-Fl), and John Barrasso (R-Wy). The President also asked the Senate Majority Leader, Mitch McConnell (R- Ky), to join the group, but he declined stating that he had little interest in taking up healthcare legislation. This latter point is an ominous sign because any plan would need to be passed by the House and the Senate.

The choice of Senator Cassidy does offer one clue to the Administration’s thinking. The President always liked the idea of allocating block grants to States. The Graham-Cassidy bill introduced in 2017 would do just that. It would group Medicaid and ACA healthcare dollars for low and middle income individuals and parcel them out to States. The Bill would eliminate Medicaid expansion dollars now administered by 37 States. Because of this reduction, most States would experience a funding shortfall over the short and long term.

Under the Graham-Cassidy bill, the block grants must be used for healthcare, but the grants would allow for maximum flexibility so States can design their systems without the required services found in the ACA. It is not clear if the States could circumvent the pre-existing conditions requirement. Also, while the 37 States that expanded Medicaid would lose millions in funding, they supposedly could make up the difference with increased flexibility.

A second clue is the President’s yearly budget request. The 2020 budget request bundles Medicaid and the ACA into block grants to States. The idea is the States will develop efficient systems without the rules and regulations associated w/ the ACA. However, the budget is vague about what kinds of services would be required. States would be required to set aside 10% of their total funds for those individuals with pre-existing conditions. This implies that some with such conditions might be excluded from the market once States met the 10% requirement.

The legal case over the ACA will continue to wind its way through the courts. Presumably it will take months before a final settlement is reached. It appears that Senators Scott, Barrasso, and Cassidy will need every second of that time to design their plan according to the President’s guidelines. So far they have done little other than propose some changes around emergency room services and reducing drug costs.

If the courts strike down the ACA, we will probably revert back to the pre-ACA days. Republicans have not proved adept at designing healthcare programs that meet minimum standards desired by the public at large. They have been strong on repeal, but short on replacement. Also, designing a plan that meets the President’s guidelines will be difficult. Healthcare is expensive, but the President’s budget proposal significantly reduces funding to States. The Graham-Cassidy bill proposes even greater reductions. Also, getting any plan through Congress will prove challenging.

Here’s hoping cooler heads prevail in the courts. The present healthcare system, including the ACA, may not be perfect, but right now a viable Plan B only exists in the President’s head.

Tom Deloe is a member of Democracy for America.