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Beyond Obamacare—How Trump and Price will disrupt the health care system

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Tom Price faced off with the Senate during his recent confirmation hearing for the role of Secretary of Health and Human Services in the Trump cabinet. But he's been laying the groundwork for what he sees as the future of health care since 2015.

A repeal of the Affordable Care Act has been front and center since the presidential campaign began. But many of the planned changes could affect an even bigger audience - Medicare and Medicaid enrollees.

How Medicare will change

President Donald Trump actually hasn't said much about what he wants to do about Medicare, at least not formally. Medicaid and the Affordable Care Act are mentioned throughout his healthcare policy platform, but Medicare doesn't get mentioned at all.

Price, however, is a strong advocate for changing the program. In mid-November, before he'd even been selected by Trump, Price predicted an overhaul of Medicare within the first six to eight months of the administration. That's because it's not just Price (or Trump) who have Medicare in their sights: Republicans as a whole do, too.

The biggest potential change would be requiring premium payments for Medicare support. That's Paul Ryan's plan. His premium support model would "change Medicare from a single payer system in which the government pays directly for seniors' health care to one where beneficiaries could use their government benefits to buy private insurance."

Proponents argue that a premium support system would make Medicare services more competitive, leading to lower costs and increased coverage. What it would really do is complicate what is currently a straightforward, essentially-guaranteed healthcare program for seniors. Seniors would have to shop for their own health insurance, defeating most of the purpose of Medicare: to simply provide health insurance to the older population who may have more trouble affording it.

How Medicaid will change

Whether you're talking about the Republicans in general or Trump in particular, the major change to Medicaid will likely come in the form of block grants.

In short, here's how Medicaid works now: each dollar spent in the program by a state government is matched by the federal government. Sometimes more money is given for states with a higher number of low-income citizens. Block grants would provide a lump sum of money to states. That's basically it.

States wouldn't get additional federal funds, which means that they'd either have to raise taxes to make up the difference, charge enrollees, or cut spending to programs. Paul Ryan wants to allow states to require adults to work or receive training before they receive Medicaid funds, and to charge Medicaid premiums. Under Mike Pence, Indiana's Medicaid system began requiring premium payments, a system that happened to be guided by Seema Verma, who Trump nominated to lead the Centers for Medicare and Medicaid Services.

Estimates predict that over the next decade, annual block grant increases would average 4.3 percent less than Medicaid's projected growth, and the Center on Budget and Policy Priorities also estimates that by 2024, under Ryan's proposed plan, Medicaid and CHIP -- the Children's Health Insurance Program -- would be cut by 26 percent. The Republican course of action will result in one of two different outcomes: the residents of the state pay more (whether it's only the enrollees, or everyone in the form of tax hikes) or the most vulnerable population loses access to much-needed services – or both.

The broader impacts of proposed policy changes

The proposed changes mean a lot for consumers - particularly low-income families and seniors.

First, we would see a rollback in coverage for low-income families. What didn't get as much attention as the 22 percent average premium increase this Open Enrollment season was the fact that a large portion of shoppers wouldn't be hit quite that hard thanks to subsidies and expanded Medicaid coverage offered by the government in an attempt to make health insurance more affordable.

Approximately 15.7 million people have enrolled in Medicaid and CHIP since the October 2013 expansion. Repealing Obamacare would cause an estimated 22 million people to become uninsured – including many consumers who are covered through the Medicaid expansion. Eight million children are covered by CHIP, so if that program expires (which it is currently set to do at the end of September 2017) as part of Medicaid's rollback, that leaves even more people uninsured.

If Medicare requires premium payments and for senior consumers to buy private insurance, that, along with other potential changes like changing age banding requirements from a 3-to-1 ratio to a 5-to-1 ratio (which serves as a rate cap for what insurers can charge older consumers) means that some seniors will end up with wildly different, and potentially more expensive, healthcare options. It's not far-fetched to predict a scenario where many seniors - facing a more expensive and confusing array of private health insurance options - just throw up their hands and forego coverage.

Changes to both programs go outside of just consumers. Medicaid cuts would affect insurers in the Medicaid managed care market, not to mention "hospitals, drug companies, medical equipment manufacturers, doctors and other health-care providers." If Medicare becomes another insurance marketplace, that could be a boon for insurers offering Medicare Advantage plans who would stand to gain many more customers.

The purpose of Obamacare was to offer healthcare protection. Though it's been mired in compromise and controversy, it's achieved this goal, or is at least well on its way. Changes to Medicaid and Medicare, and the subsequent results those changes will have on the health insurance system, threaten to roll back those protections for the people who need them most. Higher cost for coverage and a more convoluted system may not be what Republican lawmakers are trying to impose, but it's what their proposed changes may result in if they go forward.

Commentary by Jennifer Fitzgerald, the CEO and co-founder of PolicyGenius, an independent digital insurance company for consumers. Previously, she was a junior partner at McKinsey & Company where she advised Fortune 100 financial services companies on marketing and strategy. Follow her on Twitter @jenlfitzgerald.

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