Featured Health Business Daily Story, Nov. 18, 2016

Trump, Congress May Not Get Full Repeal, But Obamacare Will Unravel Without It

Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of public and private exchanges. Sign up for a $62 two-month trial subscription today.

November 2016Volume 6Issue 11

Without a 60-vote majority in the Senate, it’s unlikely that President-elect Donald Trump — and Republican leaders in Congress — can make good on the promise to quickly repeal and replace the Affordable Care Act (ACA). But a full repeal isn’t needed to gut the law. And while the new administration and Congress won’t assume power until January, the impact of the election is expected to have an immediate effect on the public exchanges (see box, p. 12).

“The GOP might find repeal and replace to be a sticky wicket,” says Michael Adelberg, a former senior official in CMS’s Center for Consumer Information and Insurance Oversight (CCIIO), now at FaegreBD Consulting in Washington, D.C. Without a 60-vote “super majority” in the Senate, any repeal effort will be met with a filibuster. Instead, Congress is expected to take advantage of the upper chamber’s budget reconciliation process, which requires just 50 votes, to strip funding from the law. Reconciliation will take time and can address only those provisions of the law that deal with revenues and outlays of the federal government.

Through that process, Republicans “could play havoc with the ACA’s financing — the guts of Obamacare,” says Adelberg. Ironically, reconciliation is the budget tool Democratic lawmakers used to push the ACA through its final legislative hurdles.

Jon Kingsdale, Ph.D., managing director at Wakely Consulting Group, agrees that reconciliation will be the legislative vehicle for overcoming a Senate filibuster, but says Republicans might not fight to overcome a Democratic standoff over the House’s repeal bill. That strategy will allow them to “take credit for immediate efforts to repeal, blame the Democrats and Washington for gridlock, and use the first few months of 2017 to hammer out some sort of plan for replacing the ACA,” he tells HEX. Kingsdale is the founding executive director of Massachusetts’ Commonwealth Health Insurance Connector Authority.

Inside Health Insurance Exchanges

What Will ‘Replace’ Look Like?

Many GOP leaders have said the repeal must be accompanied by ‘replace.’ House Speaker Paul Ryan’s (R-Wis.) plan, even if the GOP falls in line behind it, “is still far from a bill,” says Adelberg. But industry consultant Robert Laszewski says Ryan’s “Better Way” document, which was released last June (eNews Alert 6/22/16), is “as detailed as the plan Bill Clinton or Barack Obama had” the morning after they were elected.

It could prove impossible for lawmakers to undo some of the “cures the ACA offered an ailing health system,” says William Pewen, Ph.D., who served as senior health policy advisor to former Sen. Olympia Snowe (R-Maine) during the crafting of the Affordable Care Act (ACA). Such provisions include guaranteed issue, reasonable rating rules, a set of core benefits and subsidies to make coverage more affordable. “So the GOP is in a corner….What legislative replacement will maintain those features?” he asks. “Republican engagement in the complexity and painful work of reform has been mostly lacking,” he adds.

Bruce Merlin Fried, a partner in Dentons’ health care practice, says Trump and Republican lawmakers have painted themselves into a corner in the sense that they’ve raised an expectation among their supporters that they will immediately repeal and replace the law, and are certain to feel enormous pressure from voters. Moreover, he warns that if funding for the exchanges goes away, millions of people will find themselves outside of the health care system. “The financial stability of hospitals and providers around the country will be in jeopardy,” he adds. Fried served as director of the Center for Health Plans and Providers at the Health Care Financing Administration (now the Center for Medicare at CMS).

“For all the people who have complained about the ACA, I think they will like what comes next a lot less,” says Timothy Jost, Ph.D., emeritus professor, Washington and Lee University School of Law.

The individual market will shrink if the individual mandate and federal tax credits are eliminated and the cost of coverage grows more expensive, says Katherine Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation. A replacement to the ACA, she suggests, could include federal funding for high-risk pools, which could partially offset that effect. “But the net effect of these changes will almost surely be that fewer people will be covered, and those who are covered will be paying more and probably getting less,” she says.

Rather than tearing down the ACA, Ceci Connolly, president and CEO of the Alliance of Community Health Plans, says both sides need to come together to stabilize costs in the individual market and continue working to lower coverage costs. “It is in no one’s interest to have the exchanges collapse. Adding millions of Americans to the uninsured rolls simply takes us back to the dark days of Emergency Room care and cost-shifting. Everyone paid the price!” she says.

Subsidies Will Be Phased Out

At a Nov. 1 rally, Trump’s running mate, Indiana Gov. Mike Pence (R), said the Trump plan would include a “transition period” for people now receiving ACA subsidies and protections for people with pre-existing conditions when switching to a new plan. Pence likely was referring to the reconciliation bill that House and Senate Republicans approved last December. The bill, which was vetoed by President Obama, calls for a two-year phase-out of federal premium subsidies and federal funding for Medicaid expansion.

“So when the President and Democrats say, ‘you’re repealing Obamacare and you’re going to throw 20 million people off of insurance,’ it’s not entirely true,” says Christopher Condeluci, principal at CC Law & Policy PLLC, who served as tax and benefits counsel to the Senate Finance Committee during the drafting of the ACA. Medicaid expansion dollars and exchange subsidies will likely continue to flow for two years, he says.

During an Oct. 5 webinar sponsored by AIS, Thomas Scully, who served as CMS administrator under President George W. Bush, predicted that without a plan to replace the ACA, nothing will happen until at least 2019 as lawmakers spend the next two years debating alternatives. After that, the delays will continue with few if any changes, he predicted.

Simply waiting might be as effective at dismantling the public exchanges as repealing the law, says Dan Perrin, president of the HSA Coalition and a former legislative staff member of the Senate Committee on Foreign Relations. If key health insurers such as Anthem, Inc. decide to leave the exchanges once President Obama leaves office, that will have the same effect on the exchanges as a repeal, and it will give Democrats a reason to push for a deal with the new administration and Congress, he suggests.

“Despite the fixation on repeal by Obamacare supporters, the strategy has always been to wait for the insurers to pull out,” he says. The failed Consumer Operated and Oriented Plans (CO-OPs) were “the canary in the mineshaft on the death spiral,” Perrin quips, “and the conventional wisdom within Obamacare supporter’s circles missed it, don’t believe it, can’t believe it.”

Jonathan Gruber, one of the key architects of the Affordable Care Act, tells HEX that it’s important to recognize that there is “no Republican alternative to the ACA that doesn’t lead to needless suffering for millions of Americans. At this point we just have to hope that political self-interest and basic human decency will prevent the government from tearing up one of the greatest social accomplishments of our lifetime.”

“If the ACA is repealed, the rolls of the uninsured and underinsured will explode. We will see a rapid change to a ‘haves and haves-not’ health care ‘system’ where those with good employer insurance are covered and those without go without,” industry consultant Joseph Paduda, Health Strategy Associates, LLC.

© 2016 by Atlantic Information Services, Inc. All Rights Reserved.

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