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President Trump’s First 100 Days-Policy Discussion on Health Care Reform

April 28, 2017

On Friday, April 14th, the Penn Wharton Public Policy Initiative co-sponsored a panel discussion with the American Enterprise Institute exploring the failure of the Republican-proposed AHCA and what may lie ahead for health care reform.

The panelists included Ramesh Ponnuru, senior editor for the National Review magazine, a visiting fellow at the American Enterprise Institute (AEI), a columnist for Bloomberg view, and a contributing editor to the Policy Journal of National Affairs. He is one of the most widely respected conservative commentators and in 2015 he was featured by Politico as one of their top 15 influential leaders in American politics. He was joined by Professor Jennifer Prah Ruger, a leading scholar of domestic and global health policy and public health issues. At Penn, she is the Amartya Sen Professor of Health Equity, Economics and Policy at the School of Social Policy and Practice in addition to a second appointment at Penn Med. Ruger is also the director of the Masters in Social Science and Policy program at Penn, and is the Associate Dean for Global Studies at SP2 as well as a faculty chair at Penn’s Center for High Impact Philanthropy. The moderator for the discussion was Jonathan Hartley, an economics researcher and writer with an interest in finance and macroeconomics and regular contributor to Forbes and the Huffington Post.

Hartley began the panel by reflecting on the new president, the new administration, and the broken six year gridlock where one party controls both houses of Congress and the White House, meaning a policy agenda can be put forward by one particular party. In particular, the Trump-Ryan coalition has taken it upon themselves to tackle Healthcare as the first item on their agenda.

He turned to the panelists and asked Ponnuru about the best path forward for the Trump-Ryan coalition to achieve their goal of healthcare reform given the recent failed first attempt. Ponnuru responded by first talking about the constraints that the Republicans are working under: in-fighting, public opinion, the Senate reconciliation process - a series of complex rules that all regulations must fit into before they can be submitted for a vote – and the impatience of other politicians to move past this issue and to focus on others. “Their initial plan was to have a quick, early repeal vote, and to have Obamacare on a deadline to disappear. Then, they were going to come up with a piece of legislation in the interim period,” Ponnuru noted, before saying that Republicans quickly realized “this was an unworkable scheme.” The party’s readjustment, a combination of the repeal and the replace in one bill, was put on the same timeline despite being much more difficult to achieve consensus in the legislative process over such a short timeframe.

Ponnuru then spoke on the rift between the moderates and the conservatives in the Republican party, despite their many compromises during the AHCA debate. The moderates did not believe the legislation that the House leadership came up with did enough to make sure people are covered, while the conservatives do not think the legislation does enough to lower premiums and to deregulate. “There is a way to address these issues simultaneously…If I were them, I would start over from scratch without the self-imposed deadline,” he said. “They seem to want to start with the legislation they have and try to modify it until they get enough support to pass the house.”

Hartley then asked Professor Ruger about the successes and challenges of the Affordable Care Act since it was signed into law seven years ago. Ruger noted that the ACA was a “good, but imperfect” law, and that there are still many challenges associated that remain. Some of the good things associated with it are that the “pernicious practices in the insurance market” like pre-existing conditions clauses are avoided through the exchanges, so now more people can get coverage who previously could not. She added that discriminatory pricing based on gender and health conditions has been eliminated, community based pricing is in effect, and all insurance companies selling insurance on the market must sell an essential benefits package that is regulated across the exchanges. There has also been a significant reduction in the number of people who are uninsured in the United States, due to the exchanges and due to the Medicaid expansion program – an opportunity for states to provide health insurance to poor families covered by the Federal Government by up to 100%.

On the flip side, there are some limitations and areas of improvement. “The way that the affordable care act was rolled out was not ethical,” Ruger said, adding that it was a “real debacle in terms of communication, organization and structure. It didn’t make the government look very good in terms of facilitating a national and state based insurance program.” This had a lasting effect, she noted. “I agree that premiums are high,” Ruger continued, noting that the ACA doesn’t have all of the provisions embedded in the plan to reduce cost. Many of these costs are a result of the healthcare industry and the system by which we pay for it, too, so the challenge of reducing costs applies to both the Affordable Care Act and the way America delivers healthcare.

When asked on his thoughts on the Congressional Budget Office’s model estimating that 24 million people would lose healthcare coverage by 2026 under Trump’s plan, Ponnuru said that the CBO doing its best to provide an accurate assumption about the future, but said that “the model they worked with had some structural biases that dramatically overestimated” the negative effects of the American Health Care Act. Ponnuru pointed to the CBOs estimation of 23 million people being insured under the ACA, whereas the current number of enrolled individuals is closer to 9 million. He suggested taking their recommendations with “a heap of salt”, before noting that the CBO’s approach still offers some ways to improve legislation. Ponnuru then offered some amendments to the Republican healthcare act that could expand insurance coverage moving forward, touching on tax credits, state legislation and required enrollment.

 

Hartley then asked Ruger about her thoughts on the danger of a “death spiral” and the dangers of adverse selection were the individual and employer mandates of the ACA to be repealed. She responded by noting that “adverse selection is very problematic in the health insurance market.” Because there is a community rating aspect of the exchanges. Ruger said that now companies cannot “cherry pick” the best patients to reduce the amount they have to pay. An effort called risk adjustment can reduce this adverse selection problem, but she emphasized the importance of the mandates.

When asked about the reduced cost of coverage under the ACA, Ponnuru had some skepticism. He said that “if you look at long term trends in healthcare inflation…it’s pretty hard to see [the effect].” He added that “I don’t think the evidence is very strong that it has bent the cost curve.” On the other hand, predictions that the ACA will increase the cost of healthcare have not come to pass, either. Ponnuru attributes this to the law having a smaller footprint today than anyone anticipated in 2009 and 2010, in part because the Supreme Court changed the way that Medicaid expansion occurred and because the exchanges did not attract people the way that it was thought they would.  

“I think there’s some common ground here,” Ruger said. “We want the best outcomes for the lowest cost. So how do we get there? What do we do? What kind of method, what kind of incentives are we providing as part of our policies to get us to that sweet spot?”

Hartley concluded by thanking both Ruger and Ponnuru, as well as the Penn Wharton Public Policy Initiative for their time and effort in organizing this event.

 

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

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