Here’s the plan President-elect Trump’s health secretary pick doesn’t want to discuss
NEW YORK — President-elect Donald Trump’s choice for Health and Human Services secretary is one of the few Republican lawmakers with a detailed plan to replace Obamacare. And Tom Price is likely to have a major impact on the incoming administration’s efforts to overhaul the law.
But don’t be surprised if he keeps mum about his proposal — and Mr. Trump’s — at his appearance before the Senate Health Committee Wednesday.
An orthopedic surgeon who chairs the House Budget Committee, Price does not want to focus on his ideas about replacing Obamacare, which he has vowed to dismantle since it was passed in 2010. And the incoming administration wants him to be shielded from questions about Trump’s plans. Instead, they say he is preparing to emphasize his readiness to shift from a policymaker to a Cabinet official.
Still, the Georgia Republican has been very vocal until now on how to replace Obamacare, which he argues has hiked premiums and limited access to doctors. His most recent bill, The Empowering Patients First Act of 2015, bears many similarities to Trump’s vision for health care reform and to House Speaker Paul Ryan’s overhaul proposal.
Conservatives say he will put patients first and adhere to Republican ideals. Some health care experts, however, say the nominee’s plan would help the healthy and rich, while hurting those who are older, sick or poor.
Here’s what Price’s plan would do:
Help the middle class afford coverage
Like many Republican proposals, Price would give refundable tax credits to those who buy policies in the individual market.
Price actually lays out how much people would receive. The credits would be adjusted by age, ranging from $1,200 for those age 18 to 35 to $3,000 for those age 50 and up.
This provision would help enrollees who make too much to receive Obamacare’s federal subsidies. Middle class Americans have complained about the high cost of unsubsidized Obamacare premiums.
Reduce assistance for many lower-income folks
Obamacare’s subsidies, however, are much more generous for those who qualify. Lower-income enrollees receive assistance that can lower the cost of coverage to just under 10% of their annual income.
Take a 27-year-old with an income of $25,000 a year. He can receive an average of $1,920 in subsidies to pay for the benchmark Obamacare plan, which will cost an average of $3,624 in 2017, according to federal data. But under Price’s plan, he’d only receive $1,200 to offset the price.
Another way Price’s plan would hurt the poor is the elimination of Medicaid expansion that would accompany a repeal of Obamacare. Ryan and Trump have said they would maintain some protection of low-income adults, but Price doesn’t mention any substitute.
Older Americans would also likely see their premiums rise under Price’s plan. Obamacare restricts insurers from charging older enrollees more than three times what they charge the young. But Price’s plan eliminates that rule. While Americans older than 50 would receive larger tax credits than younger folks, it would likely not cover the same share of the deductible.
Bolster Health Savings Accounts
The Empowering Patients First bill is full of incentives and protections for Health Savings Accounts, a favorite Republican policy.
Health Savings Accounts allow participants with high deductible health plans to make tax deductible contributions for current and future health care expenses. Any savings they don’t use can remain invested and grow tax-free. These plans are mainly used by wealthier Americans who can afford to stash money away.
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One of the goals of HSAs is to entice more people to enroll in high-deductible plans, which are seen as a way to slow the growth of health care spending since consumers must shell out more from their own pocket.
Price would provide a $1,000 one-time refundable tax credit for contributions and would increase the amount people could sock away in these accounts. He would broaden eligibility, protect the accounts from bankruptcy proceedings and allow older Americans to transfer their required minimum distribution from their retirement accounts into their HSAs.
Cap tax advantages of employer-sponsored plans
Price would limit the tax exclusion on work-based insurance coverage to $8,000 for individuals and $20,000 for families.
Obamacare also called for reining in job-based insurance, though it planned to do so with the so-called “Cadillac Tax,” which imposed a 40% tax on the value of policies above a certain cap. The provision was despised by companies and unions alike, and its implementation was delayed to 2020.
About 150 million Americans are insured through their jobs.
The average individual policy cost $6,435 in 2016, while the family premium was $18,142, according to the 2016 Kaiser/HRET Employer Health Benefits report.
Employers will likely cut back on coverage to avoid hitting the cap. One of the simplest ways to do this is to further hike deductibles and out-of-pocket payments.
Push high-risk pools for the sick
Similar to other Republican plans, Price would require carriers to insure Americans with pre-existing conditions as long as they are continuously covered.
Under the Empowering Patients First plan, enrollees will need to maintain coverage for at least 18 months to avoid any surcharges. Those who don’t meet that criteria can be charged up to 150% of the standard rate for two years.
Price would also use high-risk pools to provide coverage for those with pre-existing conditions who couldn’t get policies on the individual market. In addition to current funding, he would provide $1 billion annually over three years. This is significantly less than Ryan’s plan, which calls for $25 billion in funding over 10 years.
High-risk pools were largely shut down after the Obamacare exchanges became operational in 2014. Prior to that, 35 states maintained high-risk pools for their sick residents. The programs varied, but generally the state created a non-profit association to contract with an insurer to administer the pool. The plans were similar to individual insurance policies, but often had waiting lists, higher premiums and large deductibles.
They also lost a lot of money: Roughly 50% of their operating costs had to be subsidized by the state, according to the National Association of State Comprehensive Health Insurance Plans, an industry group.
— CNN’s MJ Lee and Jeremy Diamond contributed to this report.
Editor’s Note: A version of this story originally ran November 29, 2016. It has been updated.