The Future of the Health Care Reform

The Future of the Health Care Reform

  • On November 15, 2016

As President-Elect Donald Trump’s administration begins to take form, so does the new health policy agenda.  A new website has gone live for the Trump presidential transition team, and on it the President-Elect promises to replace the Patient Protection and Affordable Care Act (ACA) with a new plan that will revive high-risk pools for people with expensive medical conditions, encourage coverage across state lines, promote health savings accounts, lead to Medicare modernization, increase state flexibility concerning Medicaid, and reform the Food and Drug Administration.  The new administration has also named its transition team heads for both health care and labor issues. For health care, Paula Stannard, a lawyer at Alston & Bird is acting general counsel for the Department of Health and Human Services will take charge. Paula is a colleague of Kistler Tiffany’s counsel Ashley Gillihan. Attorney J. Steven Hart was also named the leader of the Trump labor transition team.  Hart is a long-time lobbyist who worked in the Reagan Administration and has focused his practice on employee benefits and tax issues.

 

One of the key questions is what options the Trump Administration and a Republican-controlled Congress have when it comes to making changes to the ACA and how quickly they may proceed with those options.  On the campaign trail, President-Elect Trump repeatedly assured voters that he would repeal the ACA in the first few days of his Administration.  Republican Congressional leaders have also been consistent in their assertions that full-scale repeal of the ACA is a top priority.  However, in recent days, both Congressional leaders and President-Elect Trump have hedged a bit with regard to the ACA, noting that they would likely either put a transition plan in place so that no one would lose coverage immediately, or that they would enact a replacement plan simultaneously that would not permit breaks in coverage.  President-Elect Trump has also indicated that he would like to keep some of the ACA’s popular provisions, including the ability of parents to keep adult children on their health plans up to age 26 and protections regarding preexisting conditions.  On Friday, President-Elect Trump told the Wall Street Journal, “Either Obamacare will be amended, or repealed and replaced.”

 

What all of this posturing reflects is the reality that, as with most things, a full repeal of the health reform law is not as simple as it might seem.  The law itself is approximately 1000 pages in length with more than 40,000 pages of related regulations.  The scope of the law is also far broader than what most members of the public view as “Obamacare” such as the individual and employer mandates, the health insurance exchanges, Medicaid expansion, and premium tax credits.  There are hundreds of provisions impacting Medicare, physician payments, prevention, wellness programs, and more that are largely uncontroversial and would be very difficult to unwind.  Furthermore, health insurance issuers and providers have already woven so many aspects of the ACA into their internal systems and processes, that even if there were to be massive changes to the law, some very practical aspects of health care delivery systems will remain changed forever.

 

With regard to what a Trump Administration and the Republican-controlled Congress could do immediately with regard to health reform, it is also important to remember that a full repeal would be logistically complicated.  First, a full repeal proposal would be subject to a filibuster in the Senate, therefore the Senate Republicans would need to flip two Democratic Senators to stop a filibuster.

 

Congress could choose to use the budget reconciliation process as a repeal mechanism; a mechanism that Congress used initially to pass the health reform law since measures passed via reconciliation only need a 50 vote majority.  The problem is that

“Reconciliation in the Senate can only contain provisions that affect the revenues and outlays of the United States and cannot contain “extraneous provisions” that only incidentally affect revenue and expenditures. Budget reconciliation is a two-step process—first Congress adopts a budget resolution with instructions to committees to meet reconciliation targets and then it adopts the reconciliation itself.”

 

Not only does the reconciliation process inherently slow down the legislative activity on the law, but it also limits what the repeal bill can contain.  For example, the subsidy provisions of the ACA, Medicaid expansion, and taxes and fees built into the law would clearly fall into the realm of revenue-related provisions.  But insurance market reforms, like age rating or preventive care mandates or actuarial value ratings, most likely would not fall within the ambit of revenue-related provisions.  Plenty of provisions, like the employer mandate and the individual mandate fall into gray areas.  The fines imposed on employers and individuals for non-compliance are definitely related to revenue, but what about the requirement to offer and/or maintain coverage itself?

 

Complicating matters further is a lack of consensus about the best methods for replacing the ACA.  Over the past six years, several bills and many ideas have been floated by conservatives and GOP members of Congress, but none have been as comprehensive as the ACA, and none to-date have garnered a majority of even GOP support.  Currently, House Speaker Paul Ryan has a “Better Way” proposal pending that would repeal all mandates and replace them with a tax-credit based system, greater state flexibility regarding a wide range of matters including Medicaid, and a reliance on high-risk pools to cover high-cost claimants, which would largely need to be recreated by the states.  Conservative think tanks and other members of Congress have released plans that are similar to the Ryan plan, but vary in details over tax credit structure and risk-sharing.

 

The area where we may see the most immediate change to the ACA is via regulation.  Although Donald Trump cannot unilaterally repeal and replace the ACA, he can do a great deal via the regulatory control the ACA gives to the Departments of Health and Human Services, Labor, and Treasury.  While unwinding finalized regulations is–to say the least–a complicated task, the Administration will have the ability to delay provisions, limit enforcement, and review and revise existing regulations and guidance while following established requirements with regard to comment periods and public review.

 

Regardless of the election results, massive marketplace shifts were going to occur in order to maintain access to health care, particularly with regard to individual coverage. The ACA has brought millions into the coverage system, but it has also done little to address the biggest issue–the cost of medical care.  Now we will see what the next steps forward may look like.  The new Administration and the GOP-controlled Congress will have to make their way cautiously because as Harvard’s David Cutler writes in the Washington Post, “If you break health care, you own it.”

 

While we may not know what the future holds in terms of health reform, one thing remains constant–as we move forward Kistler Tiffany Benefits remains committed to providing you with excellent service, advice, and information about market trends and your benefit choices.  We look forward to keeping you apprised of all health reform developments and working with you in the days, weeks, and months to come.

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