SAN FRANCISCO — Healthcare executives squeezing through hallways and cramming into presentation rooms at one of the year’s biggest industry conferences were listening carefully for any hints about Obamacare repeal efforts on the other side of the country.
Pharmaceutical, insurance and hospital CEOs at JPMorgan’s Healthcare Investor Conference this month conveyed an outward air of confidence that Congress wouldn’t just erase the Affordable Care Act without replacing it, a move that could deprive millions of people of health coverage and cause industry-wide ripple effects.
Yet there was also a sense of uncertainty at the four-day gathering. Executives were troubled by President Trump’s push to ditch the healthcare law immediately. But they were more worried that Republicans won’t abide by his promises to replace the law quickly with a plan that covers just as many people.
“I’m less concerned about Donald Trump than I am about Republicans in the House,” Mario Molina, CEO of Molina Healthcare, told the Washington Examiner in an interview at the palm-flanked Westin St. Francis, where the conference is held every year.
“They have made promises to repeal the Affordable Care Act, they don’t really have a well-thought-out replacement package, and I worry they rush to repeal without replacement and they could inadvertently do a lot of damage to the healthcare system,” he said.
Among discussions about the latest drug developments and business strategies at the conference, which celebrated its 35th year, there was more chatter than usual about policymaking in Washington as lawmakers look to repeal the biggest restructuring of health law in decades.
If Congress erases large portions of Obamacare without replacing them, insurers stand to lose millions of new customers and hospitals stand to lose millions of patients with Medicaid coverage. The entire healthcare industry would be affected, as uncompensated care costs could spike and hospitals undoubtedly would pass their higher costs on to the great majority of the public, which has employer-sponsored coverage.
About 18 million people would become uninsured in the first year following repeal, the Congressional Budget Office said in an analysis last week. Critics, including House Speaker Paul Ryan, pointed out that the study didn’t take into account any Republican plans to replace Obamacare and that some CBO studies have been wrong about coverage in the past.
By 2026, 32 million more people would be uninsured than if the law remained in place, the agency said. Most of the coverage losses would come from rolling back Medicaid to pre-Obamacare levels and ending subsidies that help people of limited means buy marketplace plans.
Making repeal even more turbulent for Republicans is Trump himself, who has made unpredictable and pointed demands that they replace the law at the same time they repeal it and ensure every person in the country gets covered, an ambitious goal to which GOP leaders refused to commit.
Recently, Trump told the Washington Post he’s planning an Obamacare replacement with the goal of “insurance for everybody,” although he later backpedaled in an interview and said the focus should be covering the poorest people. A few days earlier, he had said at a press conference that repeal and replace would be done simultaneously.
Yet Trump’s demands, while a headache for Republicans, are hopeful signs for the industry, which fears a gap between repeal and replacement.
“If the reality is this bill will be repealed, our position is at the same time it must be replaced,” said Bernard Tyson, chief executive of Kaiser Permanente. “And it is my hope the replacement is starting from where we are, not a step backwards.”
Under the Affordable Care Act, the uninsured rate dropped from about 16 percent to 9 percent. The promise of more insured patients enticed health insurers and the industry to support the law, even though they now acknowledge it has fallen short of their hopes.
“We all in the industry will come together and tell you it wasn’t perfect, and it is not perfect today, but it is a great step forward,” Tyson said.
Despite the law obliging people to buy coverage, fewer healthy young people have done so than former President Obama expected, and that has led to widespread and sharp increases in insurance premiums and prompted several big insurers to pull out of many state Obamacare markets altogether. Customers are facing increasingly high deductibles, which require them to pay more before they receive any benefits.
So even as the industry dreads Obamacare repeal, it knows the law was going to have to be fixed anyway. They see an opportunity for congressional Republicans working with Trump to address the law’s shortcomings.
“We still don’t have balanced risk, we still don’t have a mix of people signing up for coverage,” said Kristine Grow, a spokeswoman for America’s Health Insurance Plans. “That’s probably the number one issue we need to figure out as we think about reform and what comes next.”
Executives have deployed their lobbyists on Capitol Hill to ensure lawmakers hear their concerns.
“We’re deeply involved in trying to help in getting things right,” said Michael Neidorff, chief executive of Centene Corp., adding that he has a “board of people recognized as experts in the field who will be contributing” to repeal-and-replace efforts.
Centene has big stakes in Obamacare because 91 percent of its customers receive subsidies to help buy private coverage. It is among a handful of insurers that have thrived in the marketplaces, chiefly because it was already selling coverage to low-income people before Obamacare became law.
Like other executives, Neidorff said he’s relatively confident Republicans won’t suddenly strip those subsidies away, because they don’t want to be blamed for people losing coverage.
“I don’t believe Republicans want to end up owning the healthcare problem,” Neidorff said.
William Carpenter, chief executive of LifePoint Health, an extensive rural hospital network, said his lobbyists were texting him as he gave his 30-minute presentation at the conference. He’s hoping to see more lawmakers line up behind Sen. Lamar Alexander, R-Tenn., who is calling for repeal and replace to happen simultaneously.
“This is real-time stuff,” Carpenter said.
Regardless of how things play out, Carpenter said he is encouraged that GOP lawmakers don’t seem to be gloating that they can now strip Obamacare benefits away from people.
“There does seem to be some moderation in the rhetoric,” he said.
LifePoint has mostly broken even under the Affordable Care Act, according to Carpenter. That’s because its Medicaid expansion, which 19 states have rejected, is offset by cuts in extra payments to hospitals that disproportionately serve the poor. The law calls for reductions in extra “disproportionate share hospital” (DSH) payments to those hospitals from 2014 to 2020, with the idea that they would get more customers with Medicaid and private coverage in return.
One of the deepest fears for Carpenter and other hospital executives is that Congress will roll back Medicaid but keep the cuts in place.
Trevor Fetter, CEO of Tenet Healthcare, said it would be “a good day for us” if Congress were to restore all of the Medicaid payments that were cut under Obamacare but acknowledged that’s unlikely.
“Our lobbying efforts are very focused on helping Congress understand that was the arrangement and restoring some of those cuts would be appropriate,” Fetter said.
Half of the states where Tenet operates its 470 outpatient centers and nearly 100 inpatient hospitals decided against expanding their Medicaid program. Ryan has proposed gradually phasing down Medicaid expansion and cutting the program’s costs by using block grants for its federal dollars.
But Fetter is hopeful Republicans might forgo that approach under pressure from GOP governors who chose expansion and states that would stand to lose lots of federal dollars through block grants.
“Medicaid, I think, has become a lower priority in recent days as Congress struggles over the reality of what it means to repeal without a replace there,” Fetter said.
Besides the DSH cuts, new taxes were another way the healthcare industry was expected to help fund Obamacare, although the industry has been lobbying almost from day one to get them eliminated.
A push to repeal the health insurance tax, or HIT, has bipartisan backing in the House and Senate, along with another tax on medical device makers. Congress is able to ditch both taxes through the budget reconciliation bill it is using to get rid of the healthcare law.
But insurers and medical device makers are worried that those taxes might prove too tempting for lawmakers to repeal, at least immediately. Trump and Republicans might want to use them to pay for an Obamacare replacement or as a way to get centrist Democrats to support tax reform later in the year.
America’s Health Insurance Plans is warning Congress that insurers will charge more for premiums if the health insurance tax is allowed to go into effect next year.
“Repealing the HIT now will ensure that consumers and small businesses are protected from a 3 percent premium increase, and that state budgets won’t have to absorb this increase as part of their Medicaid budgets,” AHIP President Marilyn Tavenner wrote in a blog post this month.
Thoughts are mixed among industry leaders about Rep. Tom Price, Trump’s pick to lead the Department of Health and Human Services. The Georgia Republican has been one of the most active in his party on health reform, repeatedly rolling out proposals to replace the healthcare law with a system of age-based tax credits and high-risk pools.
They are more enthusiastic about Seema Verma, Trump’s pick to lead the Centers for Medicare and Medicaid Services, the agency that oversees the healthcare law’s marketplace and Medicaid expansion.
Verma has helped several GOP-led states develop alternative Medicaid expansion programs more palatable to conservatives. She was instrumental in constructing Indiana’s expansion, which requires enrollees to pay a small monthly fee.
Indiana had to get a special waiver from the federal government to include those requirements. Verma’s firm has also assisted Ohio, Iowa and Kentucky in requesting a special allowance for adding payment or work requirements to Medicaid expansion. In the view of hospitals and insurers seeking to keep Medicaid expansion, Verma may be the best CMS administrator they could expect from a Republican administration.
“When President-elect Trump was elected, I thought Medicaid expansion was done,” Carpenter said. But he said that through Verma’s appointment, there’s “positive momentum.”
Ken Burdick, chief executive of Medicaid insurer Wellcare, said that under Verma’s tenure, he expects states to gain flexibility in running Medicaid, which could entice some of the 19 holdout states that haven’t expanded.
“If in fact the states are given more autonomy, and that could take various forms of funding and reimbursement, they will take a new look,” Burdick said.
Changes are coming for the healthcare law, although probably not before the 2018 elections, said Wayne Smith, CEO of Community Health Systems, a network of 160 hospitals around the country. But he, too, said he’s encouraged by Verma and her background.
“I think because of the fact you got Price and Seema Verma at CMS — I think you see both of them together, which I think might be a good thing,” Smith said.
