Medicare’s Future Under President Trump

While the loudest promises of President Donald Trump’s campaign centered around the repeal and replacement of the Affordable Care Act, another area of health care could be up for reshaping — Medicare.

U.S. Rep. Tom Price (R-GA), Trump’s nominee to run the Department of Health and Human Services, has the power to redesign the health insurance program for seniors. But will he?

Shift Toward VBID

Rep. Price, an orthopedic surgeon, was a major contributor to “A Better Way,” the GOP’s health-care reform policy paper published last summer. The proposal advocates for a shift toward value-based insurance design (VBID), which incentivizes cost-efficient health care services and consumer choices.

“Benefit design flexibility would allow insurers to design their plans to push providers and beneficiaries to make decisions together while participating in high-value quality services and benefits, and curtailing low-value or unnecessary services,” the proposal states. “When we give plans this flexibility to serve our most vulnerable seniors … MA will result in personalized and high-quality care.”

The Obama administration has already set forth initiatives using this model, including a five-year program that started in seven states on January 1, 2017. While the GOP will continue pushing for getting more out of every health care dollar spent, their methods of getting there might vary.

In a September 2016 letter, [Rep. Price attacked the Centers for Medicare and Medicaid Innovation (CMMI)]( 29%2C 2016 CMMI Letter.pdf) for making a bundled payment initiative mandatory for hospitals in certain geographic regions. In Rep. Price’s letter condemning CMMI’s trial, he stated the models were “developed absent input from impacted stakeholders.”

In their proposal, the GOP claims “the CMMI could ultimately result in seniors receiving different standards of care based solely on where they live in the country,” and calls for elimination of the program.

Premium Support Model

A larger change to the Medicare program might come in the form of a transformation to a funding system referred to as “premium support.” Both Rep. Price and Republicans favor this shift as a means to expand competition and choice for seniors.

The GOP’s policy paper explains that newly enrolled beneficiaries would receive a uniform subsidy to enroll in government-approved plans in a Medicare marketplace beginning in 2024.

If it sounds like an expansion of the Medicare Advantage (MA) model to you, we wouldn’t blame you. But KFF think tank defines a key difference: payments for services provided to beneficiaries in traditional Medicare would be capitated (per person) rather than tied to the services that they use.

Direction for the Future

Rep. Price has not yet been confirmed by congress to join Trump’s cabinet, so we’ll have to wait and see how he puts his stamp on Medicare.

A repeal of the Affordable Care Act is already underway, which will lead to minor changes to the current MA program. These changes could include incentivizing 5-star plans and lifting restrictions on switching MA plans during the Medicare Advantage Disenrollment Period, which would run for the first three months of every year. KFF looks at other implications of repealing the ACA for Medicare spending and beneficiaries in this report.

“A Better Way” also proposes combining Medicare Part A, which primarily covers hospital services, with Part B, which covers outpatient services, and simplifying both with a single deductible and cap on out-of-pocket expenses.

Assuming Rep. Price’s nomination, we’ll continue to watch the direction he decides to take Medicare with respect to value-based versus fee-for-service payments and how much MA and private plans might expand under his tenure.

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