Key Takeaways


Killing ACA: Easier Said Than Done Part 1

Recognize that the GOP has two approaches: Expand Medicaid or replace the exchanges with a more market-oriented alternative. 

The GOP is finally positioned to repeal the ACA. But this might not be so simple. Any option to repeal without replacement would be a PR disaster. Now that the GOP is committed to repealing and replacing the ACA simultaneously, the real question remains: How will they do it? There are two approaches. The first emphasizes Medicaid expansion. The second institutes a stripped-down replacement for the ACA market exchanges. Most likely, Congress would hand out block grants allowing states to mix and match the two approaches.

Look out for hybrid health care solutions on the state level. 

A handful of red states have put a hybrid twist on Medicaid expansion. Ohio and Michigan—which played a key role in electing Trump—have relied on the ACA to expand their respective Medicaid programs. Indiana requires eligible participants to contribute to Health Savings Accounts. If they fail to make a payment, they lose their health insurance and are locked-out from reapplying for coverage for six months. Kentucky has followed Indiana’s lead—imposing low monthly premiums based on income, giving beneficiaries a state-funded $1,000 deductible, and requiring participants to work or volunteer 20 hours a month to receive coverage.

Killing ACA: Easier Said Than Done Part 2

Don’t forget about the Democrats. 

Throughout the repeal and replace debate, Democrats in Congress will do all they can to highlight to vast increase in the number of uncovered Americans—and the accompanying suffering—that would accompany repeal. Their goal will be to shame GOP leaders into preserving or replacing most of the ACA. They may already be succeeding: The reform proposed by Republican Senators Bill Cassidy and Susan Collins is essentially an olive branch to blue states that want to keep the ACA. Failing that, they want to make sure the GOP pays dearly in public approval ratings come the 2018 midterms.

Understand that each party has their own way to control costs. 

Democrats want to control cost through top-down administrative capitation—giving states $X per person and telling them to do their best. This approach puts the cost burden on the provider (as with Medicaid). Republicans want to control cost through competitive markets—subsidizing individuals to select their plan based on their means and needs (like Paul Ryan’s “A Better Way” lump-sum strategy). This approach puts the cost burden on the individual (as with high-deductible exchange plans). Top-down has a better global track record. But even marketplace options can use the top-down approach, through competition among “bundled” treatment packages or fixed-price HMOs.