The Future of the Affordable Care ActJanuary 23, 2017 |
Since its enactment six years ago, the Patient Protection and Affordable Care Act (the ACA) has faced numerous challenges from Republicans attempting to repeal the law. Though previous efforts, through both legislation and litigation, have been unsuccessful, the election of Donald Trump and a Republican-controlled Congress likely portends at least a partial repeal of the ACA. Now that Mr. Trump has been elected as the next President of the United States, doctors, insurers, patients, and the rest of the country are asking what is next for the ACA. While there is no simple answer to this question, to better understand the potential future of the ACA, we must first delve into the ACA’s key aspects.
Key Aspects of the ACA
The ACA introduced a number of reforms designed to expand access to health insurance.
First, the ACA initiated health insurance marketplaces that allow small employers and individuals to compare and enroll in qualified health plans. Second, the ACA created the individual and employer mandates, which require nearly every citizen to obtain health insurance, and employers with more than 50 full-time employees to offer healthcare coverage to all full-time employees and their dependents. Third, the law created new spending programs to facilitate the overarching goals of the ACA. For example, the ACA includes subsidies for middle-income Americans to help them afford insurance premiums, and implemented tax penalties for those that ignore the insurance mandate.
The ACA also expanded Medicaid coverage, setting the family minimum income requirement at a higher percentage above the federal poverty level, meaning a greater percentage of individuals would become Medicaid-eligible (a prior court challenge, however, made this portion of the ACA optional for states). Along with the fundamental changes to the healthcare marketplace, the ACA also implemented various other requirements relating to health insurance, including requiring that children up to age 26 be allowed to remain on their parents’ plans and prohibiting insurers from denying coverage to individuals with pre-existing conditions.
The coverage provisions of the ACA are perhaps the best known — and most controversial — portions of the law. The ACA did, however, bring about changes in other aspects of healthcare. Most notably, the law created new healthcare payment and delivery models for physicians and patients, including the Medicare Shared Savings Program (MSSP), which established Accountable Care Organizations (ACOs). ACOs are designed to decrease healthcare costs while increasing the quality of care for Medicare patients. ACOs attempt to achieve this goal by setting quality and performance benchmarks and rewarding physicians, hospitals, and other healthcare providers in the ACO for achieving those benchmarks at lower costs. The aim of this new payment model was to provide the healthcare industry with an alternative to the traditional fee-for-service payment system that Medicare has used for decades, and which has arguably contributed to inefficient spending within the program. The ACA also enacted various changes to healthcare fraud and abuse laws, including increased penalties and treating unreported overpayments as false claims.
What Changes Can Be Expected?
Can Mr. Trump and congressional Republicans make good on their promise to repeal the ACA, and if so, what changes can be expected?
There are two primary paths Republicans now have available to them to accomplish their long-standing goal of dismantling or repealing the ACA. The first and most unlikely path would be an outright repeal of the ACA. Accomplishing this would do away with all aspects of the ACA— not just the exchanges, the expanded coverage provisions, and related subsidies and penalties, but the MSSP, changes to fraud and abuse enforcement, and other aspects of the law.
To repeal the ACA entirely (whether immediately or using the “repeal-and-delay” model
Republican leaders have recently discussed), both houses of Congress would need to pass a bill explicitly repealing the ACA that then-President Trump could sign into law. Though Republicans have a majority in both houses of Congress, they would likely need to obtain at least 60 votes in the Senate to prevent a Democratic filibuster of the repeal. Republicans will likely not have the necessary 60 votes to overcome a filibuster, and Democratic leaders have openly stated that they would block any attempt to repeal the ACA, meaning achieving a complete repeal is unlikely (though not impossible).
There is, however, a far more tenable path for Republicans to effectively repeal the ACA. This path would be for Republicans to “defund” the law through a legislative process called reconciliation. Reconciliation allows federal budget bills to be approved in an expedited fashion; requiring only 51 votes in the Senate and allowing a maximum of 20 hours of debate, eliminating the threat of a Democratic filibuster. Republicans have successfully used this approach in the past only to have the reconciliation bill vetoed by President Obama, something a President Trump is unlikely to do. Though not a complete repeal, Republicans, through reconciliation, would be able to effectively repeal some of the provisions contained within the ACA.
For a reconciliation bill to pass muster, each item proposed in the bill must be demonstrated to have a measureable and direct impact on federal spending. Therefore, only those programs in the ACA that impact the federal budget would be threatened. This means that certain provisions, such as requiring insurers to cover young adults on their parents’ policies, preventing discrimination based on pre-existing conditions, the MSSP, and fraud and abuse provisions would remain in place. The most contentious provisions — the individual mandate, insurance exchanges, subsidies provided to moderate-income Americans, and the expansion of Medicaid to low-income uninsured individuals — could, however, be effectively repealed.
In addition to reconciliation, a President Trump would have executive authority to achieve similar aims. Through Section 1115 waivers, the executive branch can allow states to severely modify their Medicaid criteria. These waivers could allow states to impose premiums, work requirements, and restraints on specific procedures (including reproductive medicine) if they so desire. Further, through Section 1332 waivers, individual states can modify their insurance marketplaces, feasibly eliminating mandates, exchanges, and cost-sharing subsidies. Such waivers do require that the proposed program in the waiver improve patient access to high-quality, affordable health insurance while retaining the basic protections of the ACA.
Presumably, however, a Trump administration would have a distinct view on the way states can achieve those goals compared to the outgoing Obama administration.
Though repeal of the ACA has been a long-standing position of the Republican Party, its effect would be unclear. The ACA was designed to specifically balance the costs to private health insurers of extending coverage to high-risk individuals with pre-existing conditions against the premiums paid (and subsidized) by healthy individuals mandated to purchase insurance. While many — conservatives and liberals alike — would argue that this balancing act has at least partially failed, leading to higher premiums for all Americans to offset insurers’ costs, Republicans would almost certainly have to replace the defunded provisions with an alternative model that would offset the costs to the insurance industry, which upon a partial repeal would have all the high-risk individuals on their rolls without healthier individuals to offset the cost.
The health insurance marketplace will likely change radically in the near future. Though Donald Trump and Republicans have promised to “repeal and replace,” until we know what the replacement will be, we will not know how, exactly, the marketplace will change. The future of the rest of the ACA is equally uncertain.
Reprinted with permission from the January 2017 issue of the Employee Benefit Plan Review. All rights reserved.
* This article was co-authored by David A. Manko, Esq.