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Business-backed group says ditch insurance mandates, give everyone credits

Posted On: Apr. 24, 2015 12:00 AM CST

Congress should overhaul the Affordable Care Act’s insurance subsidies and scrap the individual and employer mandates, the Conference Board’s Committee for Economic Development said in a report.

“We conclude that the ACA does both too little and too much,” the business-backed policy organization says in the report issued Thursday. “It leaves the deficient core of coverage under employer-based insurance, and even Medicare, substantially unchanged, and it also imposes what we believe is excessive government control of health care.”

The effort was led by Raymond Gilmartin, former CEO of the pharmaceutical company Merck, and Ronald Williams, former CEO of the insurer Aetna. The report calls for income-based subsidies to be scrapped. In their place would be tax credits available to everyone for coverage through insurance exchanges. The size of the credits would be tied to the cost of the lowest-priced available coverage in a market.

The Conference Board report also calls for collapsing and broadening the insurance exchanges established under the health care law so that more customers will use them. That would include eliminating separate exchanges for individuals and small businesses established under the Affordable Care Act.

The individual mandate is designed to induce most Americans to get coverage so that there will be balanced risk pools. Otherwise, the fear is that only sick, high-cost customers will sign up for coverage and the markets will be financially unsustainable.

The Conference Board report argues that by expanding coverage choices and bringing more customers into the markets it would render both the employer and individual mandates — arguably the most unpopular provisions of the law — unnecessary.

In addition, the report calls for more aggressively eliminating the traditional fee-for-service mode of paying providers. That vision is in line with the CMS’ recent announcement that it wants to have 50% of Medicare payments outside of managed care tied to contracts with incentives to manage quality and costs by 2018. It also dovetails with the recent repeal of Medicare’s sustainable growth-rate formula, which establishes a new two-tiered payment system designed to entice doctors to push more patients into risk-based models.

Despite all of this momentum, some people, including Mr. Gilmartin, remain skeptical that the rhetoric will translate into substantive change. “I think that conceptually a lot of people agree with that approach,” he said. “It’s a question about why would people engage and basically implement that idea.”

The Conference Board’s report also calls for overhauling the Independent Payment Advisory Board, which was established under the Affordable Care Act but has yet to be triggered thanks to a significant slowdown in Medicare spending growth. Spending would need to exceed the overall consumer price index for the IPAB to be called into action.

Instead of having the authority to make changes to Medicare in order to control costs, the Conference Board says, the IPAB should be a clearinghouse for information for patients, providers and insurers.

“We see the IPAB as a facilitator of the market, helping the market function better because of the free flow of information,” Mr. Gilmartin said.

Healthcare stakeholders, policy experts, lawmakers and even President Barack Obama believe there are ways the health care law could be improved. But any efforts to do so have been stillborn because of the partisan standoff over health care issues on Capitol Hill. The recent bipartisan passage of the SGR repeal package could presage a less toxic atmosphere moving forward.

Mr. Gilmartin argues that the “fundamental basis” of the conflict has been between those that see a need for vigorous government regulation of the healthcare system and others who want free-market forces to be the dominant force. He hopes that their report could help to bridge those opposing stances.

“Our report could be the basis on which we could reach some agreement on this,” Mr. Gilmartin said.

Paul Demko writes for Modern Healthcare, a sister publication of Business Insurance.