First of all, Happy World AIDS Day! I hope you’ll stay tuned for future posts on how the Trump presidency will affect HIV/AIDS, PEPFAR, and other HIV-related issues.
Today I’ll be talking about how Trump’s administration will affect Medicaid and Medicare, as a follow-up to my long post from Monday on how Trump would affect the ACA. It’s a good time to be talking about this, because this week Trump just chose Representative Tom Price for Health and Human Services Secretary and Seema Verma to run Medicare and Medicaid Services, which gives us further clues to how this administration will affect health care.
Representative Tom Price has been a member of the House of Representatives since 2005, and I talked about his ACA plan in my last post, called the Empowering Patients First Act. Price will oversee ACA repeal and replacement, the NIH, the CDC, the Children’s Health Insurance Program, and most importantly for this post: Medicare and Medicaid.
Seema Verma, now in charge of Medicare and Medicaid Services, has worked on redesigning Medicaid programs in states that chose to expand the program, and is most known for her health care reform in Indiana under Pence.
Quick refresher on Medicaid and Medicare:
Medicare is a federal program that provides health coverage if you are 65 or older or have a severe disability, no matter your income.
There are four parts to Medicare:
Part A is hospital coverage
Part B is medical coverage
Part C combines Part A and B, so it’s like an advanced plan.
Part D is prescription drug coverage—this can be a stand-alone plan or it may be combined with a Medicare Advantage Plan, also called a Medicare Advantage Prescription Drug (MA-PD) Plan. Run by Medicare-approved private insurance companies, this can help decrease the cost of prescription drugs.
Medicaid is a state and federal program that provides health coverage if you have a very low income. The specific eligibility requirements vary by state, where in some states pregnant women, those under 19, and/or those adults without dependent children.
If you are eligible for both Medicare and Medicaid (dual eligible), you can have both.
Okay, let’s talk about public opinion regarding reform to Medicare and Medicaid.
According to the Kaiser Health Foundation’s most recent polling (November 2016), here are some percentages of people who have a FAVORABLE opinion on different provisions of health care. Most notably:
1) Close the Medicare prescription drug “doughnut hole” so people on Medicare will no longer be required to pay the full cost of their medications; total: 81%, Democrats: 86%, Independents: 89%, Republicans: 69%
2) Give states the option of expanding their existing Medicaid program to cover more low-income, uninsured adults: total: 80%, Democrats: 90%, Independents: 79%, Republicans: 67%
The entire list is copied below.
It appears that the public is looking for some sort of reform to Medicare and Medicaid to cover lower-income people and to reduce the cost of drugs.
So, with that said, let’s talk about how Trump’s appointments of Price and Verma will affect Medicare and Medicaid reform.
The idea of making Medicaid into block grants instead of a federal program—to limit the federal government’s fiscal responsibility—has been a Republican idea since the 1980s. The latest version of the proposal offered by House Republicans (In Ryan’s A Better Way and Price’s Empowering Patients First Act) calls for block grants to the states to be based on a per capita funding model, which I briefly touched on in my ACA post from Monday. A lot of Republican governors support the idea because that would mean less strict rules on who to cover in exchange for less money. But, of course, critics say this would mean less people would be covered. The good news about a per capita income is that the grants would change as more people are added to the program, which is better than a flat amount of money every year. The money set aside, though, looks like it will be less than it has been, according to Price’s Empowering Patients First Act.
The new head of the Centers for Medicare and Medicaid, Verma, who consults through her company SVC Inc, has worked closely on Medicaid expansion in her home state of Indiana, as well as on expansion in Ohio, Iowa, and Kentucky (New York Times). Verma herself designed Pence’s Obamacare Medicaid Expansion model that is now known as Healthy Indiana Plan 2.0 and has helped states add Health Savings Accounts (HSAs, something Trump is pulling for every state to have) and employment requirements for ACA coverage.
Speaking about her Medicaid expansion program, Verma wrote in a 2008 Health Affairs blog post: “This structure melds two themes of American society that typically collide in our health-care system, rugged individualism and the Judeo-Christian ethic. HIP combines these diametrically opposed themes by promoting personal responsibility while providing subsidized health protection to those who can least afford it (Politico).”
The plan was supported by Republicans and Democrats in the Indiana legislature and was implemented in January 2008 (IndyStar).
Let’s look at Verma’s measures specifically in a few key states.
In Indiana, Verma created a system where those wanting Medicaid must pay a monthly fee, up to $4, for the care, to encourage people to value the care. In most states, people do not have to pay fees. Many see the Indiana program as a success, though, as over 400,000 signed up for health care benefits.
In Kentucky, Verma instituted a similar mechanism. People who want Medicaid must either pay a monthly premium, have a job or volunteer for a charity to remain eligible. Pence says this ensures that people on Medicaid are “taking personal responsibility and have skin in the game.”
Republican Indiana state Representative Ed Clere, former chairman of a health care committee in the state’s General Assembly, said that nominal fees do not do enough, and that ideally measures like requiring people to quit smoking or to take certain measures to improve their overall health would be more effective and beneficial in the long run. She expressed frustration that it seemed that Verma was not on board with this idea.
“In my experience there was an unwillingness to expand the conversation beyond financial participation,” Clere said (Fortune). Though I agree with Clere’s comment, it’s much harder, politically, to institute lifestyle change stipulations than just a fee because many more stakeholders become involved, ones that have significant lobbying ability (like the tobacco industry). It is to be noted that Indiana and Kentucky got federal waivers for such addendums to Medicaid expansion, so it’s not like this idea was wildly unpopular.
Many see Verma’s consulting in Republican states as the necessary work behind convincing Republican states to expand Medicaid. Susan Jo Thomas, who heads the Indiana insurance advocacy group Covering Kids and Families, says Verma “understood that in order to get expansion in this state, it’s more about what is palatable, what can get approved,” she says (NPR).
This suggests that Medicaid may have such stipulations for every state with Verma in charge of Medicaid.
Policy analyst Joan Alker, with the Georgetown Center for Children and Families says, “It is a good thing that she has experience with Medicaid and it is a positive that Gov. Pence worked with Ms. Verma to advance a version of Medicaid expansion. But I think if you look at the totality of the Trump administration’s picks today — Congressman Price as well as Ms. Verma — this represents potentially a very damaging and chaotic restructuring of the Medicaid program. The Healthy Indiana Plan has occurred in the context of generous federal funding, and I think some of that is on deck to go away,” she says.
Indiana Representative Charlie Brown, the ranking Democrat in the state’s public health committee, said that Verma is “a smooth operator, and very, very persuasive,” he says, going on to say that she was effective cross party lines. “She’s very resourceful and intelligent,” he said (NPR).
The Healthy Indiana Program created savings accounts for recipients, which works in a similar fashion to commercial insurance plans, by requiring them to make premium-like payments and more carefully budget their use of health services. This is exactly what Trump is envisioning, so it’s likely that such Health Savings Accounts (HSAs) will be part of Medicaid in the years to come (SVC). Health care providers in Indiana supported the program because it included raises from Medicaid — an average of 20 percent for hospitals and 25 percent for doctors. The state’s hospital association released a statement applauding Verma’s “truly transformational vision for health care. She also deeply understands the critical importance of coverage to those served by programs like Medicare and Medicaid, and is a superb choice,” the statement said.
What is less clear is where Verma stands on how hospitals are rated and reimbursed for their care, punishments for hospitals who do not meet federal quality benchmarks, and what Verma will do about MACRA—the law that ties doctor compensation to the quality of patient outcomes (Stat).
The proposals on Trump’s campaign website do not mention Medicare. But he said in January that Medicare could “save $300 billion” annually by negotiating drug prices with major pharmaceutical companies (The Washington Post), alluding to the idea that he might look at Part D—prescription drugs—of Medicare.
- Price, the new Health and Human Services Secretary, will oversee all aspects of health care. To begin, let’s look at how he’s voted:
- Voted YES on the Ryan Budget: Medicare choice, tax & spending cuts. (Apr 2011)
- Voted YES on overriding veto on expansion of Medicare. (Jul 2008)
- Voted YES on denying non-emergency treatment for lack of Medicare co-pay. (Feb 2006)
- Voted NO on requiring negotiated Rx prices for Medicare part D. (Jan 2007)
We know these to be true since his Empowering Patients First Act, which I talked about in my first post, calls for reforming Medicare, Medicaid, and the ACA in general.
It’s important to note, though, that on November 17th, Talking Points Memo asked Price about his timeline for phasing out Medicare and Price replied, “I think that is probably in the second phase of reconciliation, which would have to be in the FY ’18 budget resolution in the first 6-8 months.” That means he does not think phasing out Medicare will be a first priority for the administration (New York Times).
Whereas Verma does not say much about MACRA, Price does.
MACRA ties doctor Medicare payments to quality and outcomes and has had the support of influential doctor groups including the American Medical Association.
But after MACRA’s final rule was released last month, Price said he was “deeply concerned about how this rule could affect the patient-doctor relationship.”
Price has other concerns about Medicare, too.
Under the Obama administration, Medicare moved from a system where doctors and hospitals were paid based on the volume of their care to an outcomes model where Medicare payments would be based on the quality of the care. This new value-based system is known as the Comprehensive Care for Joint Replacement model. Around 800 hospitals must keep their costs under $25,565 per 90-day “episode,” as the law calls it, (from the day someone begins surgery until 90 days after discharge from the hospital) or the hospital will face a massive financial penalty.
Before the Obama administration, states could adopt such a system if they felt necessary, but were not obliged (Washington Times). Price explains it himself:
“Until recently, the tests and models developed by CMMI [Center for Medicare and Medicaid Innovation] were implemented as intended, on a voluntary, limited-scale basis where no state, health care providers, or health insurer had any obligation to participate,” Price and two other Republican Congressmen wrote to administrators Andy Slavitt and Dr. Patrick Conway at the Centers for Medicare & Medicaid Services. “These CMMI models were developed absent input from impacted stakeholders” (Washington Times).
Republican House members, specifically Price, said CMMI exceeded its authority by requiring doctors and hospitals to participate in this new model, saying this value model “overhauls major payment systems, commandeers clinical decision-making and dramatically alters the delivery of care.”
It seems obvious that Price will call for Medicare reform by repealing this value-based episode model. With Price and Verma, we will likely see major changes to Medicare and Medicaid in the next year.
On Monday, I’ll be posting on Trump’s tax plan. Be sure to check back then! You can always SUBSCRIBE to my blog on the homepage if you’d rather get my updates by email instead of having to check back manually.