President-elect Donald J. Trump has named many key Cabinet positions over the last few weeks. Two words can describe many of his picks – “anti-establishment” and “transformational.” Past Presidents, Democrats and Republicans, have largely picked individuals that seemed to toe the establishment line, but Trump’s picks seem to strike a very different chord in Washington, D.C.
This can be seen in his picks for housing and environmental protection, for example, and is especially true of his healthcare choices. Trump has nominated Georgia Republican Congressman Tom Price and consultant Seema Verna to lead health policy, the first as Department of Health and Human Services (HHS) Secretary and the second as Administrator of the Centers for Medicare and Medicaid Services (CMS). With CMS taking on the lead policy role nationwide pursuant to the Affordable Care Act (ACA), these two could fundamentally change Medicare, Medicaid and the Exchanges.
While establishment forces, especially liberal ones, seem entirely alarmist about these choices, we would argue that appointments out of the mold may finally galvanize a real debate about the future of healthcare in the nation. Up-ending the status quo is long overdue.
Let’s give credit where credit is due. CMS has fashioned a long-term strategy rooted in converting our antiquated, transaction-based healthcare system into one based on quality performance. Many of the changes undertaken thus far actually dated back as many as 10 years before the ACA when policy wonks, led by Senate Finance members Chuck Grassley and Max Baucus, began discussing and refining healthcare strategies. A positive outcome of these strategies is that they seem to have been the death knell for any real talk of introducing a single-payer system in the United States. The reforms created a government-based regulatory scheme with a delivery system rooted in the private sector. It satisfied Democrats’ penchant for regulation of the system and Republicans’ belief that the private sector would be able to innovate delivery better.
Where the public dialogue has fallen short is around lawmakers’ and policymakers’ failure to come together to make tough decisions on the various entitlements that dominate the healthcare system. As we have noted in past blogs, both Medicare and Medicaid are ticking financial time bombs. The outyear costs and projected liabilities threaten the very existence of the programs themselves. And as we have also argued, despite the merit of ensuring affordable access to healthcare for the uninsured, the Exchange is an entitlement that is too rich and the financial stability of the program seems very much in doubt.
If even reformist Republican HHS Secretaries of the past spoke of fundamental change, their tenures amounted to little more than tinkering with the system. Where these healthcare nominees differ is their clear view that the system needs radical change. Price and many of his GOP compatriots in the House advocate for a dismantling of Obamacare swiftly as well as restructuring both Medicare and Medicaid. Verma has long consulted with Republicans Governors on the need to bring reform to the Medicaid entitlement as well. Don’t get us wrong; GOP healthcare reform proposals have surfaced in the past and have been proposed or even passed. But in this case, the executive in charge (President-elect Trump), flanked by ideologically disposed reformists, are supported by a GOP Congress that is largely sympathetic to the cause.
A robust debate across the healthcare spectrum will likely ensue. It generally could take shape like this:
- Medicare: Focusing efforts on a defined contribution system as opposed to defined benefit and moving seniors and the disabled over time from a mix of Medicare Advantage and traditional fee-for-service to 100 percent private healthcare options. Interestingly, while the President Elect seemed to say Medicare changes were off the table during the election, the transition website now speaks of modernizing Medicare.
- Medicaid: A block grant scheme for Medicaid that turns policy authority over to states to craft benefits and eligibility as they see fit and lifting almost all of the current far-reaching mandates.
- Exchanges: Repealing Obamacare as we know it in favor of Health Savings Accounts and income-based tax credits (perhaps upfront and refundable in nature and going directly to health plans). Americans would choose from private health plans on their own and plans would have fewer regulatory dictates from the feds.
- Over-arching the system as a whole should be smart policy, dictated to some degree by CMS, that ensures plans stay focused on quality outcomes, care management, and prevention. In concert with a good dose of personal responsibility, it also should challenge private plans to use innovation and technology to change behaviors by breaking down the barriers to quality outcomes created by socio-economic, health-literacy and other social determinants of healthcare. We admit this last piece is more our hope. The administration seems to favor a decentralized policy structure but we see merit in a reasonable centralized policy that forces accountability and quality throughout fifty states and across lines of business.
With this impetus, the debate then can ensue. The Senate will play a cautionary role in any transformation, as will the House leadership in the background (which is perhaps bolder in public than in actual practice). The Senate is known for its moderation, both politically and behaviorally. Many moderate Senators on the Republican side have already questioned radical change and moving too quickly.
Now again, some forces view the very mention of such policies as cataclysmic. But as we stated above, it is time for the transformation debate and meaningful changes to the current construct. Without it, the United States continues to steam ahead toward spending 20 percent of its Gross Domestic Product (GDP) on healthcare, ranks at or near the bottom for outcomes, and sees its growing unfunded healthcare liabilities erode our economic growth and future prosperity.