Expected Program Cuts to Affordable Care Act and Federal Budget Impact

Orthopedic surgeon, Dr. Tom Price is now in charge of Health
& Human Services and here is an analysis of the laws he may try to dismantle,
programs which could lose government support, and the ensuing federal budget
implications. This article is based on actual facts, not “alternate facts”
which are popular with the Trump Administration.

Budget Implications

The Patient Protection and Affordable Care Act has been a
revenue generator, while also providing medical insurance for 20 million low
income people and has helped to reduce the federal deficit. (ObamaCareFacts.com,

According to the Office of Management and Budget (OMB) and the Joint Committee
on Taxation (JCT), repeal of the Affordable Care Act would cause the federal
deficit to grow by $137,000,000,000 by 2025. (Congressional Budget Office,

That’s right, a repeal of the ACA would increase the deficit by 137 billion
dollars.  Here are some of the provisions
which have generated money for the government, which are likely to be repealed
by the Republican Congress under the Trump Administration.

Pay or Play-Taxes
generated from income tax filers who did not have an exemption to the requirement for
obtaining medical insurance and are required to pay a tax penalty.

Luxury Plan Tax-This
tax is applied to health insurance plans which cost more than twice the national
average for an enrollee.

Insurance Company Tax-Insurance
companies pay a premium tax which goes into the fund to pay for medical
insurance for low-income residents and the provisions of the Affordable Care

Medical Device Tax-Orthopedic
and cardiac device manufacturers have been required to pay a 2.9% tax on the
cost of the device, which funds provisions under the ACA including healthcare
for low-income people.

Estate and Trust Tax-This
tax applied to undistributed net income, which affects larger trusts, and is
3.8% of that income.  Again, the money
goes toward health insurance subsidies for low income persons.

Employer Tax-Failure
to offer minimum essential benefits in a health insurance plan will generate a
tax, up to $3,000 per effected employee.

Medicare Payroll Tax
-The payroll tax used to fund Medicare, was increased by .90% (less
than 1% not 90%, if Sec. of Education DeVos is quoting this). This tax is paid
equally by the employee and employer and is used to pay for Medicare programs.
Don’t kid yourself, Congress will never reduce your payroll tax as this is
necessary to shore up Medicare.

Medicare Changes from
the Affordable Care Act

Most of the Centers for Medicare and Medicaid(CMS) changes
under the ACA involve improving health quality (clinical quality based on
patient results) and transparency (in terms of payment and performance). Will
these programs also be terminated under HHS Cabinet Secretary Price?

Subsidies for Medicare Advantage (HMO) payments
based on counties with a higher density of low income residents-This benefits
rural areas as well as the urban poor.

Health care quality rankings impact how much the
facilities receive, as well as the Medicare Advantage enrollment population.
This is a pay-for-performance initiative.

Insurance companies selling Medicare Advantage
Plans must use 85% of annual collected premiums to pay for enrollee claims and plan
services, which caps opportunistic accounting charges which contribute to
inflated premiums. Insurance companies should be able to administer their plans
for 15% as Medicare does it for 6%.

Designating medical homes for patients, is a
patient management tool, and has been shown effective in care management,
especially for diabetes and other chronic diseases.

Mandatory 90-day review period before the
government will pay for durable medical equipment, which is frequently marketed
to senior citizens without regard to efficacy or best fit analysis.

Fraud Detection-A special commission in Health
and Human Services was established to compare tax records to aid in
identification of criminals who are stealing money from our government through
fraudulent claims, etc.

Medicaid Changes from
the Affordable Care Act

Under the Trump Administration many programs impacting
low-income Americans are likely to be modified, reduced or cut and here is the

Expansion of Medicaid to include all low-income
people, not just children. This was modified through a court order and now
applies to 33 states which opted to expand their Medicaid coverage, thus
reducing stress on state health systems. Will these states lose the federal
matching money they are currently receiving for providing this coverage for low
income residents with incomes within 138% of the federal poverty range?

State employees became eligible to enroll their
children on the Children’s Health Plan (CHIP) because of the Affordable Care
Act, will this be repealed?

Free standing birth centers, such as midwifery
and other women’s health facilities, such as Planned Parenthood, became
eligible to receive Medicaid funding for additional services under the ACA. Congress
has already indicated a desire to defund Planned Parenthood, but what about the
other facilities under this provision? This means program cuts for preventive
care for women. I guess Trump expects women to build a wall around the uterus, just like Mexico.

Creation of Medical Home designations for
patients with at least two chronic conditions, which provides funding for better
care management. Participating medical facilities received additional
compensation to assume enhanced care coordination through the medical home
provisions. Will community health organizations lose this funding?

5.       Hospital
Safety-net Demonstration Project-This is an initiative involving several
hospitals to identify vulnerabilities in hospital systems across the nation,
which are primarily urban trauma centers, to prevent hospital closures. Tom Price has said he does not favor the
Centers for Medicare and Medicaid Demonstration Projects. (Pear, 2016)

Greater mental health treatment funding for
hospitals with a significant population of indigent patients (urban trauma
centers) was part of the ACA. Will there be funding cuts for vulnerable
populations and will the mental health parity insurance mandate be repealed?

Medicaid Waiver or Section 1115 Programs have
been around a long time and they are primarily a vehicle to increase cost
sharing for recipients and reduce expenses for the states which fund them. The
standardization of this process will probably not go away as states continue to
seek relief from spiraling Medicaid costs.

Improvement of funding for state Medicaid
matching for noninstitutionalized care programs-will this be torpedoed?

Improving Health
Quality and Paying for Performance

Accountable Care

The Accountable Care Organization Act became effective in
2012 and is administered by the Centers for Medicare and Medicaid. This program
saved CMS over 700 million in the first five years, through better monitoring
of preventable health events. (David Blumenthal, 2015) At present, 15% of
all Medicare enrollees are served through Accountable Care Organizations. The
ACO program identifies high cost health care events, such as hospital re-admissions
and links improved clinical outcomes to performance, by paying health systems
more money for achieving these targets. Health systems voluntarily participate
in the program. There are 480 participating health care organizations within
the U.S. and nine million people benefit from accountable care provisions. (Centers for Medicare Services, 2017)The Centers for
Medicare and Medicaid have indicated this program saved the government 466
million in 2015. (Centers for Medicare and
Medicaid, n.d.)

Financial and
Clinical Efficacy

The Accountable Care Act created the Federal Coordinated
Health Care Office whose purpose is to study health programs, gauge results,
and seek ways to optimize the government expenditures with patient care. Will
this agency be terminated because Dr. Price, who is a member of the Tea Party
coalition, thinks doctors and hospitals should have less oversight? Hospitals are
now huge corporations, often controlling entire regions, dictating prices, and
are not typically subject to anti-trust laws. Shouldn’t some independent
government agency be reviewing their programs, the costs, and the impacts on

Effectiveness and Research

The Institute for Clinical Effectiveness, known as the
Patient Centered Outcomes Research Institute (PCORI), was created to identify
and promote best healthcare practices for patient safety and clinical health,
based on the following criteria:

Assessment of preventative, diagnostic, and
health care treatment options

Improving health systems

Improving health care decision making and
patient communications

Addressing health disparities (why patients in
different demographic groups have different health outcomes/services)

Accelerating patient centered research to
identify ways to economically and clinically improve health

Funding for the PCORI agency was provided through the
American Recovery and Rehabilitation Act in 2009, which taxes insurance
companies $1 to $2 per enrollee. PCORI is taxed with identifying ways to cut
waste, reduce unnecessary procedures, and improve disease surveillance to improve
health outcomes.  The oversight
organization has put a spotlight on medical suppliers, pharmaceutical
companies, insurers, and other agents in the national healthcare landscape. For
more information on this, read Chapter 3, pages 27-29 in my 2013 book,
Unraveling U.S. Healthcare-A Personal Guide. (Winter, 2013) https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

 Of course, medical lobbyists have been deluging Congress
with appeals to remove the “onerous taxes” which impact their businesses
adversely (hardly at all) resulting in higher costs for American consumers.
These companies simply want more money to reward their shareholders and enrich their
stock option plans. No one in Congress is exempt from the influence of healthcare
industry lobbyists, because even stalwart Democrats, Elizabeth Warren (MA) and
Al Franken (MN) have lobbied to get the 3% medical device tax removed, because Boston
Scientific, St. Jude Medical, and Medtronic are big employers located in their
respective states. Removal of this tax would not result in lower costs for any
patient or health system which buys any of their devices.  Increasing pricing transparency for cardiac
and orthopedic devices would potentially result in savings for health systems
and patients, but you don’t hear any lobbying for that. If anything, this
scenario illustrates more acutely why we need independent government agency
oversight for our healthcare system.

Returning to the 1950’s model for healthcare will not lower
costs across the health system and it is important for consumers to understand
that your insurance premiums are but one aspect of the healthcare system. We all
need to be concerned about that for which we pay for our health care, the
conflicts of interest inherent in the system, and that which is negotiable. Isn’t
this how we would handle any other significant purchase? Keep reading this
column for up-to-date information on healthcare concerns, actions, and facts.
And this is the healthpolicymaven signing off wishing you fully informed
consent for your next vote, purchase, or procedure. Read the fine print and do
use “actual facts” from vetted sources for decision-making.

Roberta E. Winter, MHA, MPA is a freelance journalist and
consultant, with analytical experience in the insurance industry, hospital
systems, regulatory analysis, healthcare research, and patient advocacy.


Centers for Medicare and Medicaid. (n.d.). 2016
Fact Sheets Medicare Shared Savings Program
. Retrieved February 15, 2017,
from Centers for Medicare and Medicaid.gov:

Centers for Medicare Services. (2017, February 15). CMS
Medicare Shared Savings Programs
. Retrieved from CMS.gov:

Congressional Budget Office. (2015). Budgetary
and Economic Effects of Repealing the Affordable Care Act.
United States
Congress. Washington, D.C.: Congressional Budget Office. Retrieved February
15, 2017, from

David Blumenthal, M. M. (2015, June 18). The Afforable
Care Act at 5 Years. (M. Mary Beth Hamel, Ed.) The New England Journal of
Medicine, 372
, pp. 2451-2458. doi:10.1056/NEJMhpr1503614

ObamaCareFacts.com. (2017, February 15). ObamaCareFacts.com.
Retrieved February 15, 2017, from ObamaCareFacts.com: http://obamacarefacts.com/sign-ups/obamacare-enrollment-numbers/

Pear, R. (2016, November 28). Tom Price, Obama
Care Critic is Trump’s Choice for Health Secretary
. Retrieved from The
New York Times: https://www.nytimes.com/2016/11/28/us/politics/tom-price-secretary-health-and-human-services.html

Winter, R. E. (2013). Evidence-Based Planning-What
It Means and Why You Should Care. In R. E. Winter, Unraveling U.S.
Healthcare-A Personal Guide
(pp. 27-29). Lanham, Maryland: Rowman &

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