With President-elect Trump’s inauguration weeks away, we sat down with EmblemHealth President and CEO Karen Ignagni and Cindy Goff, Vice President of Policy, to discuss what’s in store for 2017. Have a question or idea for our next roundtable blog post? Share your thoughts in the comments section or tweet at @EmblemHealth.
Many are predicting that the new administration will act quickly in 2017 to repeal portions of the Affordable Care Act (ACA), including the individual and employer mandate and Medicaid expansion. What are the biggest risks of “repeal,” and what do you think “replace” will look like?
Ignagni: One of the biggest risks of repeal involves continuity of coverage for people who are currently in the market, and there are two components of that. First, there is continuity of coverage for people who are buying through the state and federal exchanges. Second, there are people who, for the first time, are getting coverage through Medicaid expansion. The real risk of repeal is for individuals who rely on the care that they’re currently receiving, many of whom have chronic conditions and co-morbidities.
Goff: We’re hearing that Republicans would like to repeal the individual mandate but keep in place guaranteed-issue, which prevents insurers from denying coverage to individuals. What we’ve learned from experience in the states is that, without a mandate, healthier people tend to opt out of coverage. That then creates a market comprised of sick people. There are no healthier individuals with whom to balance the pool. We will be working with policymakers to suggest incentives that could encourage healthier people to enroll.
Ignagni: A cautionary tale is what happened in New York during the 1990s, when they went forward with the type of reforms that Cindy is talking about; namely, guaranteed-issue without a required participation provision. The result was a preponderance of older and sicker individuals, with people waiting until they knew they were sick to get coverage. New York started with three-quarters of a million people in its market, and on the eve of health care reform being passed, it had dwindled to approximately 20,000. No one wants that past experience to be prologue.
Goff: The scenario in New York was tried in seven different states, to various degrees, and in all seven the same thing happened: it failed. We’re encouraged by the fact that, so far, policymakers are analyzing the state aid experience and looking for solutions. And we’ve got a lot of ideas.
Based on your experience on Capitol Hill, how long do you think “repeal and replace” will take?
Goff: We believe that Republicans are going to use a process called reconciliation to repeal the ACA. Many are predicting that Republicans will move very quickly on a reconciliation bill, but that they also are expected to embed a transition or delayed effective date of at least two years to give them time to consider how to construct their replacement plan.
What do President-elect Trump’s choices of Tom Price for Secretary of Health and Human Services and Seema Verma to head the Centers for Medicare & Medicaid Services (CMS) suggest about the new administration’s priorities?
Ignagni: Dr. Price is both chairman of the House Budget Committee and a physician with a very distinguished career in private practice. This combination of talents suggests he is going to be extremely involved in policy decisions. Seema Verma not only has operational experience, but significant experience contemplating Medicaid waivers and alternatives, which will be important as the new administration advances priorities for Medicaid reform.
Goff: That brings us to another important topic, which is what potential Medicaid changes are going to mean for New York. The concept of block grants has me very worried for New York and Connecticut, because they’re both states where the Medicaid per capita costs are very high.
Ignagni: There’s inherent discontinuity in the formula for Medicaid. In some of the southern states, the federal government is spending far more as a percentage of contributions than they are in New York, which has higher costs. If Congress begins to consider block grants, it will be difficult to avoid confronting this imbalance. Second, the traditional Medicaid formula is counter-cyclical; Medicaid has always been a safety net for when people lose their jobs or need special assistance. Block grant proposals don’t work like that. With overall economic uncertainty, it will be very difficult not to give states some type of flexibility to address unanticipated needs. But that runs counter to the concept of block grants. It’s going to be a difficult formula fight for the states.
How will EmblemHealth be working with state and federal policymakers on issues like this?
Ignagni: Our job is to contribute to the discussion and offer solutions to policy challenges. Cindy is already well on her way with doing that. That’s our obligation as an important player in this market, but also as a contributor to the national policy dialogue.
President-elect Trump has said that he plans to lower drug prices through various tactics, including importing prescription drugs from other countries and allowing Medicare to negotiate prices. How can insurers take an active role?
Ignagni: I think President-elect Trump has diagnosed one of the most important issues in health policy. He’s right to focus on it, and I hope his team will make it a priority. Too often high pharmaceutical costs are justified as an investment in research and development (R&D). We need to have a dose of transparency about how those costs disaggregate. Given the data that is emerging, it is clear that high prices are going to high profits. There needs to be more transparency into how much is going into R&D and how much is going into profits. Then it’s a different discussion. Americans want to support R&D, but they also want fair pricing.
Goff: There’s been an evolution towards greater transparency in health care. It started with insurance companies and it’s turned now to providers, with a lot of discussion around understanding rate-setting, profit margins and clinical decision-making. Drugs and medical devices are the only area of the health care system where there’s no scrutiny at all, and it’s time.
What are the greatest opportunities for EmblemHealth in 2017?
Ignagni: We have a number of exciting opportunities. The first is our partnership with AdvantageCare Physicians and the role that it’s playing in improving the health of the populations it serves. Secondly, as EmblemHealth moves through its transformation, we have an opportunity to be very competitive in the market because of our ability to understand the individuals we’re serving and provide high value to them. Third, we have an opportunity to contribute to the important policy discussion that is about to occur around the ACA. We have a significant amount of data and experience to contribute to the discussion, as well as knowledge of what has happened in New York and the other states that can be used to help members of Congress provide value to their constituents.
Goff: The thing I’m most excited about is our emphasis on value-based purchasing. It’s one area in which the previous and new administration can agree. Because EmblemHealth is ahead of the curve, it will distinguish us not only in New York, but on a national level.
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