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Future of free-market health reforms uncertain, experts say

Analysts differ on role of states, along with Washington's willingness to step aside if Congress cannot repeal Obamacare

DURHAM — Republicans’ failure to repeal and replace Obamacare leaves the fate of free-market health reforms unclear.

Some analysts maintain faith the states have enough leeway to deregulate insurance markets even if Washington fails to act. Others are more skeptical, saying federal bureaucrats must make a priority of state-level flexibility. And in states like North Carolina with divided government, it’s not clear how aggressively a gridlocked capital would pursue conservative reforms.

Naomi Lopez-Bauman, director of health care policy at the Arizona-based Goldwater Institute, said large national bureaucracies with little accountability would tend to shore up Obamacare’s leaky insurance exchanges, throwing good taxpayer money after bad. States have a number of tools to start moving away from the Obamacare mess, she said.

Ken Lewis, executive director of the North Carolina Association of Health Plans, instead says the action’s likely to come from the federal Centers for Medicare and Medicaid Services. CMS can issue waivers to states, letting local officials design health plans suited to local residents.

Moreover, Lewis says partisan politics could stymie Tar Heel State reforms.

“I don’t think there will be big changes because we have a split legislature and governor’s office. I think they’ll be looked at, I don’t know how quickly,” Lewis said.

Gov. Roy Cooper, a Democrat, defends Obamacare and tried to expand Medicaid without legislative approval. The Republican-led General Assembly filed a lawsuit against the governor and the state’s expansion plan still has not been reviewed by D.C. bureaucrats.

With gridlock in effect, Lewis has more faith that technological advances such as telemedicine ultimately will provide greater access while driving down costs.

Many Obamacare opponents hailed President Donald Trump for signing an executive order on Oct. 12 rolling back some Obamacare provisions.

Two weeks later, a federal court upheld Trump’s order for the federal government to stop issuing cost-sharing subsidy payments to bail out insurers suffering losses under Obamacare. The subsidies helped low-income people buy Obamacare insurance, but were unconstitutional because Congress never authorized them.

North Carolina was among 18 states and the District of Columbia on the losing side of a lawsuit trying to force Trump to continue the payments.

Lopez-Bauman supported Trump’s executive order, but thinks it will have little effect.

It allows small businesses to band together to leverage cheaper health insurance coverage. But Lopez-Bauman said the Employee Retirement Income Security Act already allows such arrangements. Expanding the provision to let voluntary associations such as churches, civic groups, and clubs purchase joint insurance plans would have had a bigger impact.

Lopez-Bauman said the executive order’s most promising feature directs federal agencies to expand employer-paid health reimbursement arrangements. Employees pay coinsurance, deductibles, co-pays, and other health care expenses through those programs. She said the order should have allowed employees to use those funds to purchase insurance premiums in the individual market.

Lopez-Bauman outlined a number of state-level recommendations:

  • Identify all state-based health programs to eliminate duplicative services and redirect those funds to the poor and vulnerable.
  • Draft legislation returning control of the health insurance market from the federal government to the state if Obamacare were repealed.
  • Implement a Medicaid verification system to weed out ineligible enrollees.
  • Get permission from the U.S. Department of Health and Human Services to freeze Medicaid enrollment for the expansion population, or roll back eligibility to pre-ACA levels.
  • Eliminate state certificate of need laws that limit competition, and scope of practice laws that prevent health care professionals from providing less expensive care that they are trained to perform.
  • Do away with laws limiting or barring telemedicine, which can offset some of Obamacare’s higher premiums, deductibles, and co-pays.
  • Remove state barriers to expanded charitable, volunteer health care for the poor.
  • Bring state-paid health plans for public employees more in line with average taxpayers’ plans, switch to defined contribution plans, and expand health savings accounts for state employees.
  • Pass legislation shifting responsibility to pay Obamacare’s “Cadillac tax” on high-dollar employer-provided health insurance from the state to the employee.

But free-market reformers face strong pushback. Obamacare supporters distrust conservatives and for-profit insurance companies, and say Trump’s executive orders target the poor and vulnerable.

“Withholding health care from those in need is murder,” Wilma Liverpool of Durham said during an Oct. 19 student-led “Healthcare in America: Unfinished Business” forum at North Carolina Central University.  

Historically, American politicians have discriminated against minorities “to make us have to cry, and dig, and beg for health care,” she said.

“We need Medicare for all. It’s the only fair thing,” Theresa El-Amin, founder and regional director of the Southern Anti-Racism Network, said in backing a single-payer system akin to what U.S. Sen. Bernie Sanders, I-Vermont, is pushing.

Brendan Riley, a policy analyst with the liberal N.C. Justice Center, said the Trump administration doesn’t seem to care who would be hurt by rolling back Obamacare. “The point is to depress enrollment, make the risk pool sicker … and make premiums more expensive.”

Riley also criticized state Republican lawmakers for refusing to expand Medicaid to poor, working age, able-bodied adults. He said further cuts to Medicaid will help Republicans in Washington “pay for tax cuts for wealthy people.”

Katherine Restrepo, director of health care policy at the John Locke Foundation, says Trump’s executive order could allow states more flexibility. She said Medicaid expansion fails to address the health care system’s chronic issue: lack of price transparency.

“When there’s no price transparency, patients are not empowered to keep health care suppliers and providers honest about the actual cost of health care supplies, [and] medications,” Restrepo said. If consumers knew how much health care cost they would spend money more wisely, and fewer would need to rely on government programs like Medicaid.

Instead of Medicaid expansion, the state could expand access with innovative health care delivery models including North Carolina’s free and charitable clinics — which get only 20 percent of their funding from government sources — and direct primary care.

Those models have low overhead and do not accept insurance. Time and money not used to comply with insurance paperwork gives providers freedom to lower costs and spend more time with patients.

“While insurance is important, it does not equate to accessible health care” because too often Obamacare plans’ premiums, co-pays, and deductibles cost too much to use, Restrepo said.

Lopez-Bauman said the Medicare for All concept would be a fiscal disaster for taxpayers unless patients had to pay much more out of pocket and more services were rationed.

“There is already rationing under Medicare … because the program is facing insolvency,” Lopez-Bauman said. Participants will have to pay more out of pocket for Medicare. Or, just to keep Medicare afloat, the federal government may have to limit how much taxpayers provide per person each year to cover health costs.