Trump's HHS secretary: Good for providers, bad for consumers

by Daniel R. Hoffman, PhD

Published Nov. 29, 2016, 5:58 p.m. ET

Early this week the Trump transition team announced that Republican Congressman Tom Price of suburban Atlanta would become the country's new secretary of Health and Human Services. Price is an orthopedic surgeon who currently chairs the House Budget Committee and serves as a member of the Subcommittee on Health under the House Ways and Means Committee. He took over the Budget Committee chairmanship from Paul Ryan and the two remain closely allied.

Among Republicans Price has been the leading spokesman for repealing and replacing Obamacare. Last year he introduced an updated version of his 2009 plan for accomplishing that. A brief review of Price's proposal indicates why Trumpcare may well turn America's bad health care system into disaster.

Price's proposal, termed the "Empowering Patients First Act," is based on the same bedrock as Obamacare – private health care insurance. Instead of expanding Medicare and private subsidies to buy insurance, the way Obamacare did, Price would provide individuals with refundable tax credits. His latest version differs from the 2009 model by basing the credits on an individual's age instead of income level.

Price would also give everyone a one-time tax credit of $1,000 to open a health savings account (HSA) that could pay for routine medical expenses not covered by the rising deductibles of insurance. Another feature of Price's plan would increase the contribution limits of HSAs to match limits on Individual Retirement Accounts.

Price cites two reasons for basing subsidies on age, rather than the Obamacare approach of using income. First, an age approach makes it easier to administer because the government doesn't have to worry about estimating income. Second, he believes an age basis is fairer because young people can always buy cheaper insurance, while subsidies skewed toward older people will permit broader coverage.

Price's proposal caps the tax exclusion on employer-sponsored plans at $20,000 for family coverage. This represents a step at dismantling employer-sponsored health care, something that movement conservatives in the Republican party strongly oppose. They believe it permits employees less control over their health coverage, inhibits them from acting as smart, health care shoppers and limits their willingness to move from job to job.

Some other features of the Price plan include:

Allowing insurers to sell coverage across state lines
Covering individuals with costly, pre-existing conditions by pushing states to create high-risk pools
Further restricting the use of federal funds to pay for abortions

Someone reading to this point may consider Tom Price as a boilerplate Republican with party-line proposals for health care that are based on tax incentives, less regulation and trusting corporate initiatives to provide better health care at more affordable prices. That would gravely underestimate the perniciousness of Dr. Price.

The obvious objection to boilerplate Republicanism, whether Price, Ryan or any of the others, is that tax credits do little or nothing to provide health care for people with incomes too low to benefit from such breaks.

A second malevolent flaw in Republican proposals: Health care costs keep rising, yet the GOP won't hear of raising federal subsidies to match higher costs.

That means whatever the disparities of coverage that initially exist in a Republican plan, they will get worse over time.

Another shortcoming that Republican plans share with Obamacare is a refusal to rein in the price gouging and market protectionism that providers, manufacturers such as pharma, and insurers see as their entitlement.

Consider how Price treats physicians and other providers. This sector consumes double the amount of health care dollars taken by pharmaceuticals. Yet last October Price described the plan he formulated together with Paul Ryan as "a better way to put patients, families, and doctors back in charge of medical decisions." He seeks to accomplish that by treating physicians and organized medicine as a protected class.

The proposals of his legislation contain the following provisions.

Authorizing federal "best practice" guidelines written by medical societies that will give physicians extra protections from malpractice lawsuits. Never mind that the power to regulate civil litigation is designated to states under the federal system.
Exempt physicians from federal antitrust laws, thereby permitting them to negotiate collectively against private insurance companies; this will allow physicians in any region to extort insurers.
Physicians will also gain the authority under Secretary-designate Price to charge more than Medicare allows. States and HHS will be barred from limiting such physician overcharges.
Under Dr. Price, medical specialty societies will gain a central role and veto power over the federal government's performance-based quality measures. This will shield physicians from Medicare payment cuts.

But Dr. Price is no boilerplate Republican. He's worse.

He also favors overhauling entitlements such as Medicare by using the Senate's budget reconciliation process to approve proposals. That would enable his Republican colleagues in the upper house to make changes with a simple majority instead of 60 votes.

The result of Price's approach to health care would make Medicare participants foot more of the bill.

You may scoff and claim that any attempt to make Medicare beneficiaries pay more would spark a public outcry to quash the proposal.

But look at what Price's erstwhile House colleague, Vice President-elect Mike Pence did after he became Indiana's governor. Pence allowed Medicaid expansion in Indiana under Obamacare. He even offered participants the option of limited dental and vision benefits, but in return, they were required to make monthly contributions of 2% of their annual household income. Also they now face co-pays for every doctor visit and hospital stay.

So under Republican health care policy, people in Medicaid, defined as individuals with limited means, are forced to choose between health care, rent and food.

Although the incoming Trump administration deserves a chance to see what its drain-the-swamp initiatives can produce, some people are seeing signs of disappointment for its millions of supporters. In health care, those sign are already flashing in bright red.