If Obamacare’s Days are Numbered, What’s Next? Trumpcare.

The Affordable Care Act has withstood 62 repeal attempts by the House of Representatives and several challenges brought to the U.S. Supreme Court.  Now, with Donald Trump as President and a new Republican-led House and Senate, full or partial repeal of the ACA seem likely to occur sometime in 2017, perhaps with a delayed effective date.  What impact would an ACA repeal have on healthcare industry?  Is a full repeal possible?  What are the potential varieties and timing of any replacement “Trumpcare” programs?  Below are some of our initial thoughts on some of these questions.

Provider uncertainty ahead. Several stock analysts have expressed concern that successful repeal of the ACA would have a negative financial impact on health care providers and that any replacement would not be as lucrative for providers.  The first immediate impact after the election of Trump was a sharp decline in stock prices for some healthcare services companies, although some medical device and pharmaceutical companies saw a rise in stock prices, presumably on theory that less regulation would be better for their businesses.  MACRA was the result of bi-partisan consensus to move into alternative payment models as recently as 2015, but with this renewed push to repeal the ACA, the transition to new payment models may be in doubt or, at the least, substantially slowed – a result that would likely be cheered by many physician groups.

Full repeal of the ACA seems unlikely, but trap doors remain.  Given that both Trump and GOP leaders have repeatedly vowed to repeal the ACA, attempts to repeal major portions of the law seem likely in the next Congress. Yet the Democrats still hold enough seats in the Senate to filibuster any full repeal (assuming the Republicans don’t get rid of the filibuster); thus, any partial ACA repeal will likely need to be achieved using the budget reconciliation process, which only requires 51 votes in the Senate.  In 2015, both houses of Congress passed, but President Obama vetoed, reconciliation legislation that would have repealed, among other things, the ACA’s premium tax credits, the individual and employer mandates, the expansion of Medicaid coverage for adults up to 138 percent of the federal poverty level, and the ACA’s taxes.  We would expect this earlier legislation to be a model for any future ACA repeal efforts.  It seems unlikely, however, that the reconciliation process could repeal all of the ACA’s insurance reform provisions, such as guarantee issue plans and community rating. Moreover, it is undisputed that Americans like many provisions of the law such as removal of the pre-existing condition limitations, removal of caps on coverage, and allowing children to remain on a policy until age 26. It would also be difficult to repeal the exchange provisions until 2018 as policies are already being purchased for 2017. Finally, there is the question of what to do about the 20 million Americans who gained insurance coverage through the ACA.

Trumpcare, for now, is uncertain.  The GOP has yet to arrive at a consensus on the replacement for the ACA.  This 2015 article provides an excellent summary of the competing Congressional proposals, including Paul Ryan’s A Better Way and the Burr-Hatch-Upton “CARE” Act.

On November 10, President-Elect Trump announced a new healthcare reform plan that would “repeal the ACA and replace it with a solution that includes Health Savings Accounts (HSAs), and returns the historic role in regulating health insurance to the States.”  This new Trumpcare proposal would re-establish high risk pools for those who have not maintained continuous coverage and would enable people to purchase insurance across state lines.  Trumpcare would also push to protect individual conscience in healthcare, protect life from conception to natural death, advance research and development in healthcare, reform the FDA to push for innovative medical products, modernize Medicare to reflect the coming retirement of the Baby Boomer generation and beyond (which suggests a renewed push to privatize Medicare for future generations), and maximize flexibility for States in administering Medicaid.  Interestingly, this new version of Trumpcare leaves out Presidential candidate Trump’s health reform plan to allow individuals to deduct health insurance premium payments from their tax returns, require price transparency for providers, and remove barriers for overseas drugs to be more available for purchase by US consumers.

In whatever form Trumpcare takes, such a replacement program would, like the ACA, need to have regulations that would have to be written and published for comment, which could end up taking several years before they go into effect.  In other words, the ACA is fairly interwoven into our current health care system and probably will not be able to be replaced immediately, if a replacement Trumpcare emerges.

Big questions remain for Trump’s appointees.  The new heads of HHS and CMS could very quickly cause major disruption to the ACA simply through the Trump administration’s change in focus and priorities.  Some parts of the ACA could be essentially removed through executive (in)action. For example, Trump could cancel the ACA’s cost-share subsidies or simply stop defending them against the ongoing lawsuits challenging the subsidies.  If those subsidies were cancelled, some have reported that insurers would be allowed to immediately cancel any plans purchased on the exchange under a provision inserted by the Obama administration – a sort of dead man switch that could cause tremendous havoc on the health insurance exchanges if triggered.  Without a Trump administration focused on open enrollment and addressing insurer concerns, it seems likely that the exchange insurance markets would eventually collapse from a lack of consumers and plans that have been cajoled into participating.

Now it is the GOP’s turn at the wheel.  The ACA essentially sought to implement the “triple aim” – improve healthcare quality, reduce healthcare costs and improve population health.  Perhaps Trumpcare will achieve it.  In any event, it seems likely, at this point, that the ACA’s model for improving healthcare quality by increasing insurance coverage through subsidies will be substantially altered under any Trumpcare replacement.

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