Republicans face difficult post-election healthcare decisions

November 11, 2016

ACA repeal/replace was a Congressional Republican cornerstone, so there will be lots of pressure to move quickly. But that may be easier said than done.

On the campaign trail, President-elect Donald Trump promised to repeal and replace Obamacare. Since the law passed in 2010, Republicans have vowed to overturn the Affordable Care Act (ACA). With Republicans set to control both the Senate and House of Representatives, that repeal is a very real possibility.

During a recent webinar from McDermott Will & Emery and McDermott+Consulting, experts further discussed what may be in the pipeline with Trump’s health policy agenda.
 

Goel

In addition to the complete repeal of the ACA, other policy statements president-elect Trump has talked about are derived from traditional Republican proposals, according to Ankur J. Goel, partner at McDermott Will & Emery. These include:

  • Permitting the sale of health insurance across state lines;

  • Expanding use of health savings accounts (HSAs);

  • Expanding tax deductibility of health insurance premiums when individuals purchase insurance;

  • Increasing price transparency from healthcare providers with a view to reduce costs from competition;

  • Block granting Medicaid;

  • Improving the process by which pharmaceutical manufacturers can bring drugs to market; and

  • Reimportation of drugs.

“There hasn’t been a lot of discussion and focus on healthcare in the campaign or a lot of details,” says Goel. “ACA repeal/replace was a Congressional Republican cornerstone, so there will be lots of pressure to move quickly.”

No easy task

First, Goel says, Republicans will need to come up with a plan. “In 2010, it was the Democrats trying to put together a plan-this time it’s Republicans. They own healthcare now and they will be perceived as being responsible since they control Congress and the administration.”

In addition, there are now as many as 21 million more people who are insured now than were previously, whether it be through Medicaid expansion or the exchanges.

"There may be a political imperative for people who have insurance to be able to maintain it," he says.

Finally, the exchanges are in place, but facing challenges, according to Goel.

“How do you enact a reform, a replacement, that is going to achieve those objectives?” Goel asks. “Some of the big picture concerns that were confronted previously-such as how do you make coverage affordable? and how do you get healthy people to pay into the system?-will continue to be out there.”

What to expect: Short term

Goel addressed some of pathways Congressional Republicans can take and what to expect in the short term.

One of them is reconciliation. “We heard previously that Senate Democrats will have the ability to filibuster-to stop legislation,” Goel says. “Reconciliation is a process that cannot be filibustered and in that process there’s a lot that can be done to repeal the ACA, not necessarily the replacement aspects. The limitation is that it must affect the revenues and outlays.”

Reconciliation can be done fairly quickly, according to Goel. “There’s reconciliation and just repeal and worry about replacement later or do both at the same time. If you just do reconciliation, which isn’t subject to a filibuster, Congress could get that on the President’s desk fairly quickly.”

The repeal legislation Congress enacted last year that President Obama vetoed, included key things required to repeal the ACA: It withdrew funding for the subsidies for the tax credits and the cost-sharing reductions and eliminated the individual mandate, the Cadillac Tax, and Medicaid expansion.

“All of those types of provisions got through the reconciliation process because they were related to revenues and outlays and could be part of a reconciliation package,” Goel says. “If that’s what is done, it doesn’t include a lot of the market reform issues. For example, leaving in place the guaranteed issue.”

“One possibility is that they could do something through reconciliation  … so that there would be a repeal with a transition and work out what replacement would look like,” Goel says.

Next: Few details, tight timeline

 

 

Few details, tight timeline

Su

The timeline is one of the biggest looming questions, agrees Piper Su, vice president, McDermott+Consulting.

“There’s tremendous pressure to do something at the beginning of the year that looks like repeal but how robust that necessarily has to be is open for debate,” Su says. “Even if they do repeal, they will try to build in a transition period to ease disruption. But that poses some practicality questions. The moment that Congress passes something that says, in two years, the exchange market is no longer going to exist or it’s going to exist in a very different type of format-or that you’re not going to have funding for Medicaid expansion-the stakeholders don’t wait two years to react, the reaction is almost immediate.”

While stakeholders may try to build in a buffer against the disruption caused by repeal of some of these major provisions, Su is unsure of how much of a transition that will provide.

“I think it will be disruptive early on,” she says. “Ideally they will pair it with something that looks like as much of a replacement as they can pull together. But therein lies the challenge, because Republicans have been talking about a replacement plan since the ACA passed, and they failed to reach consensus of what the details of that plan would include. Coming to that consensus in a one- to two-month period while in the transition of an administration seems like a heavy lift. There’s a lot of uncertainty around what that looks like, but there’s no doubt that something that’s called ‘repeal’ has to move forward, and the ramifications will be significant for a wide range of stakeholders.”

Unanswered questions

The open question is what kind of replacement program Republicans can agree on-and what happens while they are working that out, Goel says.

“What will the individual insurance market look like going forward? Will the new Administration support the exchanges in the interim while a replacement is being constructed?” he says.

The House has an outline of what a replace would look like and there were also bills introduced in the Senate outlining Republican proposals, according to Goel.

“They may be a starting point for discussions among congressional Republicans,” he says.

However, they are still trying to address some of the key issues that were trying to be addressed in 2010, according to Goel.

“First, how do you make it so people can afford to purchase insurance? Most of the proposals have some aspect of a funding mechanism-through a tax credit for example-some government funding," he says. "You have other types of reforms that are proposed and designed to reduce the cost of health insurance. One example could be selling insurance across state lines to increase competition and bring costs down. Another possibility would be to reduce the essential health benefits requirements, so that the plans that are offered in the individual insurance market may cover less than they currently do under the ACA, with the idea that those ‘skinnier’ plans may make them more affordable. Also, scenarios where consumers are more responsible for costs, such as with the HSAs.”