Price Stresses Health Care Affordability and Choice at Confirmation Hearings

Testimony outlined broad goals for the U.S. health care system

Stephen Miller, CEBS By Stephen Miller, CEBS January 19, 2017
Price Stresses Health Care Affordability and Choice at Confirmation Hearings

updated on Jan. 24, 2017

Round Two: Health Care and Employment

Six days after Rep. Tom Price's initial hearing to become Secretary of Health and Human Services (see below), he answered questions during a subsequent four-hour confirmation hearing on Jan. 24 before the Senate Finance Committee, which is charged with voting on his nomination and sending it to the full Senate for approval. This time, Price received some questions addressing employer-provided health care.

In response to Sen. Tim Scott, R-S.C., who asked about decoupling health care from employment, Price said that "the employer system has been absolutely a remarkable success in allowing individuals to gain coverage" and that "preserving the employer system is imperative."

"That being said," he added, he has heard from employers who would like the opportunity to provide their employees with resources that would enable them to select the coverage that they want. "And if that works from a voluntary standpoint for employers and for employees, then it may be something to look at," Price said.

Sen. Scott clarified that Price was alluding to a health reimbursement arrangement (HRA) approach, under which an employer funds an HRA and the employee choses the health insurance they'd like to purchase "not necessarily under the umbrella of the employers," and Price concurred, "Exactly. And [the employer] gains the same tax benefit," since HRAs are funded with pretax dollars.

With the passage of the 21st Century Cures Act last December, employers with fewer than 50 full-time employees may fund a new type of employee HRA that can be used to pay health insurance premiums on policies that employees purchase themselves on the open market—often called defined contribution health care. However, larger employers are still not permitted to follow this approach.

When questioned by Sen. Dean Heller, R-Nev., Price said, "There may be a better way to make it so that individuals who gain their coverage through their employer are able to gain access to the kind of coverage that they desire." He added that he would "work to make certain that those who are getting their coverage through their employer have the access to the highest quality care and coverage possible in a way that makes the most sense for individuals from a financial standpoint as well."

When Heller asked whether Price would make a commitment to repeal the so-called Cadillac tax—a 40 percent excise tax on employer-sponsored health coverage above certain thresholds, now set to start in 2020—Price said, "I think there are other options [than the Cadillac tax] that may work better." He agreed with Heller that the Cadillac tax would represent a tax increase on the middle class.

"Whether it's decreasing access to coverage, increasing premiums or higher deductibles, something is going badly wrong" with the U.S. health care system, said Rep. Tom Price, R-Ga., President-elect Donald Trump's nominee for Secretary of Health and Human Services (HHS), during a Jan. 18 confirmation hearing before the Senate Health, Education, Labor and Pensions (HELP) Committee.

Replacing the ACA

During the initial four-hour hearing, HELP Committee Chairman Lamar Alexander, R-Tenn., noted that the HHS spends $1.1 trillion a year, mostly directed at entitlement programs such as Medicare and Medicaid. He presented a chart, based on government data, showing that Americans with coverage receive health insurance from the following sources:

  • Employer-based: 61 percent (178 million Americans).
  • Medicaid: 22 percent (62 million).
  • Medicare: 18 percent (52 million).
  • Individual market: 6 percent (18 million).

Within the individual market, 4 percent of Americans–11 million—receive coverage through policies purchased on the Affordable Care Act's (ACA's) public exchanges, Alexander said.

Most of the HELP committee's discussion with Price focused on the individual market and the effect that repealing and replacing the ACA would have on exchange-based policies. Price was also questioned extensively about the future of Medicaid and Medicare, but scant attention was paid to the employer-provided plans through which most Americans receive health care coverage (a topic Price did address in his subsequent Senate Finance Committee hearing; see box above).

"The changes that we have to address immediately are in the individual market and in the Medicaid market," said Price, a former orthopedic surgeon.

Sen. Patty Murray, D-Wash., the ranking Democrat on the HELP Committee, said that "Price's own proposals [for replacing the ACA] would cause millions of people to lose coverage, force many people to pay more for their care and leave people with pre-existing conditions vulnerable to insurance companies rejecting them." Beginning in 2009, Price has sponsored the Empowering Patients First Act, which would repeal the ACA and provide age-adjusted tax credits tied to average insurance costs for those who purchase health insurance through the individual market, and create new incentives to promote the funding of health savings accounts, among other provisions.

Price told Murray that he favored including in any ACA replacement plan high-risk pools "that would allow every person in the individual and small-group market who is challenged with pre-existing illness to be able to gain access again to the coverage that they want," at a price they are able to afford.

[SHRM members-only toolkit: Managing Health Care Costs]

6 Guiding Principles

Price listed six principles of health care he said would be necessary in an ACA replacement plan: affordability, accessibility, quality, responsiveness, innovation and choices. "Health coverage doesn't do you any good if you can't afford it," he noted. "Today, many folks have coverage but they don't have care because they lack access to the physicians they'd like to see."

"We were encouraged to hear Tom Price continue to push his six principles of health care policy,” Harrison Stone, general counsel and compliance officer at ConnectYourCare, a benefits tech firm based in Baltimore, told SHRM Online. These principles are essential to improving the overall health care system in the U.S.—one that’s focused on the patient and provider relationship and limits the burden on small businesses."

Sen. Maggie Hassan, D-N.H., asked about requiring health plans to cover a range of essential health benefits, as under the ACA, such as treatment for drug addiction. Price called it "absolutely imperative that we as a nation make certain that every single individual has access to [treatment for] mental health and substance abuse challenges." When the issue was brought up again later in the hearing, he pointed out that the mental health parity laws are separate from the ACA and those requirements were not repealed in the Empowering Patients First Act that Price had previously sponsored.

When Hassan asked about requiring plans to cover, on a first-dollar basis, services such as annual physical exams and contraceptive options for women, Price said he favored allowing patients to select "the kind of choices they want" for health coverage "rather than having somebody else decide for them." He agreed with Sen. Bill Cassidy, R-La., who also is a physician, that the more services that plans are required to cover, the higher the premiums will be—which often makes coverage unaffordable even with subsidies provided under the ACA.

When Alexander asked about the sequencing of replacing the ACA, Price responded, "Nobody is interested in pulling the rug out from under anybody. It's absolutely imperative that individuals that have health care coverage be able to keep the coverage and be able to move, hopefully, to greater choice and opportunities for them to gain the coverage that they want for themselves and their families."

Focusing on the paperwork and reporting burden imposed on health care providers, Price said that "We've turned many physicians and other providers into data entry clerks and it detracts from their productivity [and] their ability to provide quality care," leading more doctors to give up their practices.

The U.S. health care system "is continually evolving and should," Price noted. "We ought to be looking at how it's working, whether it's working for patients and those [health care professionals] seeking to provide quality care." When it's not working, "it is incumbent on policymakers to make certain we adjust that policy so it can work," he said.

Price parried questions from several Democrats about his own managed portfolio's purchase of health care stocks, some of which were alleged to have benefited from legislation he backed. Price said those investment decisions were made by the financial firm managing his account and that he was unaware they were being made at the time.

[Update: The U.S. Senate confirmed Price in a 52-47 party-line vote on Feb. 9.] 

Related SHRM Online Article:

How Tom Price Could Transform Employer Health Coverage, SHRM Online Benefits, December 2016

SHRM Health Care Reform Resource Page

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