From Health Plan Week

As Obama Administration Hands the Keys to Trump, What Will Happen at CMS and HHS?

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. Sign up for a $91 two-month trial subscription today.

By ,
January 9, 2017Volume 27Issue 1

For HHS and CMS, the potential for substantial changes in the opening days of a new year has probably never been greater. Medicaid, Medicare and the public insurance exchanges all are expected to undergo major modifications under the new president and Congress. Over the past six months, the Obama administration has released a raft of regulations aimed at strengthening the Affordable Care Act (ACA).

But industry observers contacted by HPW don’t expect radical changes or a mass exodus at HHS and CMS after Donald Trump is sworn in as the 45th president of the United States.

“This doesn’t feel like the last couple of transitions. The outgoing administration has stayed busy finalizing significant regs since the election, and the incoming administration will arrive expecting to deliver on promises to substantially change Medicaid and the ACA programs, and possibly Medicare too,” 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.

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Republican leaders in the House and Senate — who returned to work Jan. 3 — say a repeal of the Affordable Care Act (ACA) is at the very top of their agenda. On his first day back, Senate Budget Committee Chair Mike Enzi (R-Wyo.) got the process rolling by introducing a budget resolution that includes reconciliation instructions enabling Congress to repeal the ACA with a simple majority, according to his website.

Business as Usual at HHS, CMS?

Given the volume of new regs, the incoming administration will need to sift through them and determine whether to keep or reverse them, says Thomas Scully, who headed CMS under President George W. Bush.

“I don’t think there will be any radical change [at HHS or CMS]. But there will be almost nothing new coming out.” He says it could take several months before the Senate confirms an HHS secretary and a CMS administrator. Until then, the agencies will likely be operated by a skeleton transition team as government appointees pack up. But many career staffers will remain.

“Career people at the agency are incredibly loyal. They might not always agree with the philosophy of the administration, but they are supportive,” he adds. Scully is now a general partner with Welsh, Carson, Anderson & Stowe, a private equity firm in New York. HHS has more than 77,000 employees, and CMS employs more than 6,000.

Politico reported Dec. 21 that independent researchers were downloading key health care data and documents before Jan. 20 for fear they could be expunged.

It’s presumed that the exchange open-enrollment period will move along, concluding Jan. 31 as scheduled. HealthCare.gov and the call center will be available and staff will continue to work on data-matching issues, says Timothy Jost, Ph.D., emeritus professor, Washington and Lee University School of Law.

“There are people who have spent the past six years working hard to implement a very complicated statute under very difficult circumstances. Many of them have been around for quite a while and have lived through several administrations that had different views,” he says. “Those people will continue to do what they’re asked to do, and continue to serve the American people as best they can.”

A mass exodus at HHS and CMS could impact the Trump administration’s ability to carry out its promises, says Peter Nakahata, a former senior advisor on exchanges at CCIIO. Some career employees will stick around because they are invested in federal service, while some senior CMS and HHS officials might be enticed to leave by offers in the private sector. “My guess is that there will be some early attrition, but not an immediate flood.”

A spokesperson for the Trump transition team declined to respond to HPW’s questions about the exchanges, HealthCare.gov or the future of the agencies and their employees under the new administration.

Will Carriers Abandon Ship?

During a late-December conference call with reporters, HHS Sec. Burwell said HealthCare.gov had received more than 30,000 questions about whether Obamacare was ending and if they should still sign up for coverage.

Christopher Condeluci, principal of CC Law & Policy in Washington, D.C., expects that the premium subsidies and the ACA exchanges will continue for at least two years. He suggests carriers might have an incentive to stick around. Republican lawmakers will work to improve the regulatory environment for carriers because they fear being blamed if the marketplaces collapse, even though the current unbalanced risk pool is largely due to Democratic policies, he says.

“Republicans don’t want carriers to pull out and, in fact, would like to bring back carriers that left,” he says. “Republicans believe status quo isn’t healthy for the carriers and it certainly won’t encourage carriers to re-enter.” Improvements could include more robust and meaningful enforcement of the special enrollment periods (SEPs), which might require pre-verification of eligibility. They also might require that premiums be paid within 30 days, rather than 90, to ensure coverage. Condeluci worked for the Senate Finance Committee during the drafting of the ACA.

Scully agrees that exchanges will operate as usual for the next two years, or more. While carriers have lost billions on the exchanges, they now have a better understanding of the enrollees and their costs.

If insurers believe they can make money on the exchanges, they’ll continue to participate. Scully expects the incoming leadership will work to convince carriers to hang in at least another year.

Copyright © 2017 Managed Markets Insight & Technology, LLC. All Rights Reserved.


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