High anxiety: Healthcare execs want coverage continuity

“For most of my career I've slept soundly,” said Chris Van Gorder, CEO of San Diego-based Scripps Health. “Now I'm more anxious than normal.”

What's keeping him and other healthcare industry CEOs up at night is the huge uncertainty created by the Republican drive to repeal and replace the Affordable Care Act.

They fear a new GOP-crafted system would reduce premium subsidies and Medicaid funding, drive up the number of uninsured Americans, spike uncompensated-care costs, and threaten their organizations' financial viability.

“We'll be facing very serious decisions about what services we offer and how many people we can employ,” said Van Gorder, whose system has held back on hiring for administrative positions since the November elections.

Those anxieties are clear from the results of Modern Healthcare's first-quarter CEO Power Panel survey, which got responses from 81 of 110 CEOs contacted, as well as from interviews with some of the executives who completed the survey.

They accept that the election of President Donald Trump, with GOP control of Congress, probably means major health system changes. But they fervently hope Republicans move deliberately and thoughtfully, and preserve affordable coverage for the 20 million people who obtained insurance under the ACA.

“Any drop-off in coverage falls 100% on health systems, because we're the ones who pay in terms of bad debt and charity care,” said Catherine Jacobson, CEO of Milwaukee-based Froedtert Health.

The CEOs are impatient to see the details of GOP plans so they can offer informed input, especially after Trump's recent statement—which amused and alarmed many of them—that “nobody knew healthcare could be so complicated.” Their jitters increased last week when House Republicans announced they had a draft of their healthcare reform plan ready but refused to make it public, even though GOP leaders hope to pass an ACA repeal bill by early April.

“It's important for all of us with good knowledge of how the system works to make sure our elected representatives hear from us as they contemplate what changes they offer,” said Barclay Berdan, CEO of Texas Health Resources.

Of CEOs responding to the survey, 77.9% oppose repealing the ACA, even with the promise of a replacement plan and a transition period. And 79.2% favor keeping the law's expansion of Medicaid coverage to low-income adults, which would be eliminated or phased out in most Republican proposals.

The Power Panel is mostly made up of leaders of large hospitals and health systems, including some that operate their own health plans. But the participants also include CEOs of insurers, suppliers and technology companies, as well as associations representing sectors across the industry.

Nearly two-thirds (65.4%) want to preserve generous premium subsidies so no one pays more than a set percentage of income for health insurance. That contrasts with the House GOP plan to base premium tax credits on age rather than income. About the same percentage prefers to keep the ACA's minimum essential benefits, which would be erased under Republican plans.

Just 2.6% want to kill the law's requirement that nearly everyone buy coverage, a prime target of the repeal effort.

Healthcare leaders are more open to Republican proposals to give states greater autonomy to custom-design their own Medicaid programs by converting Medicaid into a program of federal block grant or per-capita payments to the states; 55.7% said they would support that model.

But there's a catch. They would back it only on the condition that current funding levels are maintained. Most GOP proposals, however, envision major reductions over time in federal payments to the states for Medicaid and the Children's Health Insurance Program, which together cover 74 million Americans.

“If we're going to use the restructuring of Medicaid as a vehicle to achieve big budget reductions, leaving lots of people uninsured, that's not a productive discussion,” said Rick Pollack, CEO of the American Hospital Association.

Julie Taylor, CEO of Alaska Regional Hospital in Anchorage, worries about reversing the ACA coverage expansions because newly insured patients are coming in sooner for management of chronic conditions, improving outcomes and reducing costs. Taylor, whose state expanded Medicaid in 2015, said that move reduced the number of patients with long, expensive hospitalizations for preventable conditions such as sepsis from abscessed teeth.

“We've definitely seen people coming in earlier, getting into primary care and addressing their issues long term,” she said.

Beyond the ACA debate, there's robust support among CEOs for aggressive policy action to curb the rapid growth in prescription drug costs; 74.4% said Medicare should be allowed to negotiate prices with drugmakers. And 78.2% said Americans should have access to cheaper generic drugs from other countries when there is a dearth of competing products.

“We have to absorb drug price increases of 10% to 18% a year, and that's not a sustainable model,” said Warner Thomas, CEO of Louisiana-based Ochsner Health System, who wants Medicare to negotiate drug prices and favors caps on price increases for older drugs. “This is the No. 1 issue in the industry today, and it hasn't been addressed in a diligent enough fashion.”

“I'm a born capitalist, but I don't believe in monopolistic behavior allowing companies to raise drug prices 600%,” Van Gorder said. “Something has to be done regulation-wise. And let Medicare negotiate prices.”

While nearly all the surveyed CEOs support continuing the CMS' shift from fee for service to value-based payment models, 65.4% favor making participation in the value-based demonstrations voluntary. And 70.1% want to make it easier for physicians to qualify for alternative payment models under Medicare's new physician payment system.

But some argue that for better or worse, the value-based experiments run by the CMS Innovation Center need to be mandatory, perhaps with more preparation time for providers. “Would I sign up for the orthopedic bundled-payment program if it were voluntary? No,” Froedtert's Jacobson said. “But now it's working fine. If they want those programs to get traction, they have to make them mandatory.”

GOP proposals to convert Medicaid from an entitlement to a program of capped federal payments to the states particularly worry healthcare leaders. That's because House Speaker Paul Ryan and other Republican leaders have made clear that their goal is to significantly reduce federal payments over time, though they haven't offered details.

Last year's House budget plan, authored by now-HHS Secretary Tom Price, would have slashed federal Medicaid funding by $1 trillion, or nearly 25%, over 10 years.

“That would mean an enormous retrenchment in quality of life for disabled people, seniors and low-income individuals,” said Dr. Georges Benjamin, executive director of the American Public Health Association. In addition, he noted, it would greatly reduce access to behavioral health and addiction services, which has increased through the ACA's Medicaid expansion.

The CEOs are desperate for details on how the Republican plan would set the baseline for calculating annual increases in federal Medicaid payments, and how each state would be affected, whether or not it had expanded Medicaid. “How people will function under a block grant is entirely dependent on how much money they get,” Jacobson said. “What's the base level of funding, and how is that indexed going forward? That's the whole deal.”

Facing large potential cuts in Medicaid and increases in uncompensated care, hospital industry leaders hope Republicans will restore at least part of the hundreds of billions of dollars in Medicare and Medicaid payments that were reduced under the ACA to help pay for the coverage expansions. But the AHA's Pollack said rescinding those cuts has not been part of the GOP discussion so far.

Healthcare leaders are steeling themselves for disruptive changes ahead. But they quietly hope that Trump and congressional Republicans, faced with growing public opposition to repealing the ACA without solid replacement coverage, will moderate their efforts and keep key parts of the law that have helped patients and providers.

“We elected a populist president who recognizes he's got to deal with 20 million people who have insurance,” Berdan said. “It's entirely plausible that if Congress takes a two-by-four to Obamacare, he could veto it. This is uncharted territory.”