Will the ACA be repealed under President-elect Trump?

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On January 20, 2017, Donald J. Trump (R) will be sworn in as the president of the United States; the Republican Party will retain its majority in both the House of Representatives and Senate, but will fall short of the 60-member Senate majority required to break a filibuster. President-elect Trump campaigned on the promise to repeal and replace the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), President Obama’s signature health care reform law.

Trump’s plan

In a position paper, Trump laid out his plan for health care, which will include:

  • complete repeal of the ACA;
  • permitting the sale of health insurance across state lines;
  • allowing individuals to fully deduct health insurance premium payments from tax returns;
  • enabling all Americans to make tax-free contributions to health savings accounts (HSAs);
  • requiring price transparency from all health care providers;
  • changing the Medicaid structure from a federal-state partnership to a block-grant system;
  • removing barriers to free-market entry for drug providers; and
  • reforming mental health programs and institutions.

The plan also calls for obtaining health care savings by enforcing immigration laws and increasing the employment rate to decrease enrollment in the Children’s Health Insurance Program (CHIP). Most of these proposals are similar to House Speaker Paul Ryan’s (R-Wis) plan for replacing the ACA (see Ryan proposes ‘A Better Way’ to repeal Obamacare, Health Reform WK-EDGE, June 29, 2016).

Without a supermajority in the Senate, the Trump Administration could potentially face a filibuster on its health care plans; that obstacle, however, may be overcome by use of the reconciliation process. Earlier this year, H.R. 3762—a bill repealing the ACA’s coverage subsidies, tax credits, Medicaid expansion provisions, individual and employer mandate penalties, and the medical device and health insurance taxes—made it to Obama’s desk before being vetoed (see Bill to repeal portions of the ACA heads to the President’s desk, Obama veto imminent, Health Reform WK-EDGE, January 13, 2016; Message in a veto: President says ACA stays put, Health Reform WK-EDGE, January 13, 2016).

Effects of Trump plan on uninsurance rate and federal spending

Under the ACA, the uninsurance rate in the U.S. has dropped to 8.6 percent, the lowest level on record (see White House celebrates ACA, Republicans refuse to join party, Health Reform WK-EDGE, October 26, 2016). The Congressional Budget Office (CBO) estimated that 22 million people would lose health insurance if H.R. 3762 became law (see Senate’s ACA repeal would reduce deficits by $474B, Health Reform WK-EDGE, December 16, 2015).

In a different report, the CBO found that repealing the ACA would first increase the federal deficit, but later begin to reduce the deficit while leaving individuals with higher premium costs (see Can health care spending be reduced while improving effectiveness?, Health Reform WK-EDGE, September 28, 2016). Similarly, Ryan’s “A Better Way” plan is estimated to reduce overall insurance coverage from ACA projections while decreasing the deficit (see ‘A Better Way’ would lead to quick gains but lower overall insurance coverage, Health Reform WK-EDGE, August 31, 2016).

The nonpartisan Committee for a Responsible Federal Budget analyzed Trump’s plan and determined that if it were implemented, the uninsurance rate would double; it also found that the Medicaid block-grant proposal lacked sufficient detail to estimate whether it would maintain current spending levels or save hundreds of billions of dollars.

Ongoing developments

In the coming weeks and months, Wolters Kluwer and Health Reform WK-EDGE will continue to provide in-depth analysis and coverage of ACA-related developments. Stay tuned for the practical tips and reliable guidance you’ve come to expect.

Is there a better way than the ACA? Hearing asks experts

Lawmakers considered health care reforms to improve pre-existing condition protections, lower patient costs, and encourage plan innovation at a hearing held by the House Committee on Energy and Commerce, Subcommittee on Health. The hearing included testimony from health reform experts on the ways the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has aided or hindered the advancement of health care and experts offered recommendations for how the health reform law can be advanced or altered to improve the industry.

ACA improvements

Sabrina Corlette, a research professor and project director at Georgetown University, testified that while the ACA has led to significant improvements in access to care and health insurance coverage, now, six years beyond the law’s enactment, lawmakers have new opportunities to further the ACA’s reach and strengthen its benefits. Corlette acknowledged that the ACA is not a perfect law and suggested that lawmakers improve upon it by: (1) providing incentives for the remaining non-expansion states to expand Medicaid; (2) fix the glitch that prevents working families from obtaining marketplace credits; (3) improve affordability because, for many low- and moderate-income individuals, insurance costs remain out of reach; (4) support outreach and enrollment efforts; and (5) improve the marketplace shopping experience.

Trends

More dramatic steps need to be taken to improve consumer choice and shrink rising costs, according to the testimony of Scott Gottlieb, resident Fellow at the American Enterprise Institute. Gottlieb pointed to alarming trends in the health insurance market, like narrowing provider network, shrinking drug formularies, increases in mandated costs for insurers, more limited tools to manage actuarial risk, provider consolidation, inefficient care, and limited economic accessibility of coverage purchased outside of employer relationships.

Improvements

Many of these problems could be alleviated, according to Gottlieb, if regulatory standards were better designed to encourage innovative plan designs. He warned that the marketplace’s current tier and formula restrictions are too narrow to allow for bottom up approaches to plan design that could lead to novel and cost saving coverage. Gottlieb noted that the tiered approach, while helpful from a consumer plan selection point of view, has served to hinder advancement of plan design by forcing insurers into narrow design corridors. He also suggested that CMS move away from mandates and towards incentives as a means to get people into the insurance market.

Flawed design

The ACA is also responsible for dramatic increases in the cost of individually-purchased health care, according to the testimony of Avik Roy, Senior Fellow at the Manhattan Institute. Roy testified that while the ACA reduced the number of Americans who are uninsured, it has fallen short of coverage projections and exacerbated other problems. To improve upon what he called the ACA’s “flawed design,” Roy recommended a transition away from ACA models towards a non-group health insurance market which would: (1) give patients control of health care dollars; (2) make premiums more affordable for young and healthy enrollees; (3) enable voluntary participation; (4) provide affordable premiums and guaranteed coverage for individuals with pre-existing conditions; and (5) streamline tax credits.

Highlight on North Dakota: three priorities highlight health needs assessment

Although numbers indicate that by the end of March 2016, more than 20,000 North Dakotans had signed up for private insurance or renewed their coverage on the marketplace under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), local public health officials still had plenty of residents’ health needs to address. Access to affordable care, chronic disease, and obesity/poor nutrition/lack of exercise were three health concerns identified as priorities in the Bismarck-Burleigh Public Health (BBPH) agency’s strategic implementation plan for 2016 through 2018, issued April 12, 2016.

A previously completed survey in 2012 had identified five areas of concern: pediatric obesity, child poverty, binge drinking, substance abuse, and affordable housing. These key concerns served as a guide for public health efforts in Bismarck at that time.

Needs assessment. In 2015, BBPH partnered with local hospitals CHI St. Alexius Health and Sanford Health in Bismarck, North Dakota, to complete a community health needs assessment with online and paper surveys. As a result, the community health needs assessment identified and ranked the top 10 concerns for Bismarck in 2015: lack of affordable housing, chronic disease, access to affordable health care, obesity, access to mental health services, child abuse, homelessness, coordination of care between health care providers and services, drug use, and stress.

Priorities and strategy. In turn, BBPH chose access to affordable health care, chronic disease, and obesity as its priorities for 2016 through 2018. In order to improve access to affordable health care, BBPH noted that it would conduct outreach and educational activities to promote access to affordable health care opportunities for minorities, underserved, and vulnerable populations. As for addressing chronic disease, BBPH also stressed that it would educate individuals to be more active in health care choices. Finally, in order to address obesity, poor nutrition, and the lack of exercise, BBPH made it a priority to support healthy behaviors at work.

When ACA costs are too high, consumers turn to short-term insurance

When prices for insurance under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) get too high, consumers are more often turning to short-term coverage as a more cost-effective option, according to a report by CBS News.  The monthly premium for a short-term plan is on average about $500 less for a family of three than that of a plan purchased on the ACA’s health insurance exchanges, which makes sort term coverage an attractive option for those who can’t afford ACA coverage.

On average, a family of three will pay a monthly premium of $283 for a short-term plan, which is about $500 less per month than coverage through a major medical plan, according to (non-ACA) online health insurance marketplace eHealth. Before the ACA, eHealth sold about 60,000 short-term policies per year, a number that more than doubled in 2014 and 2015, with approximately 140,000 policies sold over both years.

Lower costs, higher risks

While the cost of short-term plans may be more effective, consumers are making compromises in other areas. Some short-term plans lack coverage for prescription drugs, for example, and other exclude specialized coverage, such as maternity care. Most notably, unlike health insurance under the ACA, short-term policies refuse to cover preexisting conditions. Moreover, consumers must reapply for coverage annually and may be denied if their health care costs are too high—a concept that is also forbidden under the ACA.

“This is exactly the kind of coverage the ACA was designed to get rid of,” said Kaiser Family Foundation Senior Vice President Larry Levitt to the Wall Street Journal (WSJ). Consumer advocates worry that buyers do not understand the limits and risks involved with short-term policies, or that consumers do not realize they may qualify for subsidies that can dramatically reduce the cost of a plan purchased on the ACA marketplace.

Even though short-term plans such as these do not qualify as individual coverage under the ACA, triggering the tax penalty for lack of coverage, the cost of a short-term plan plus the tax penalty may still be less expensive than paying for a marketplace plan. In 2015, an individual who went without coverage for more than three months can expect to pay the higher of a percentage of his or her taxable income or a flat rate, with a maximum penalty of $975 for the 2015 tax year, CBS News reported.

Causing trouble for the ACA business

Short-term plans can put the ACA marketplaces at risk, as they can draw away healthy consumers who are needed to keep the marketplaces running as expected. Then, they add to the costs of ACA plans by buying coverage only when they have health needs. This can “cause some real problems for the market,” said Timothy S. Jost, a professor at Washington and Lee University, to WSJ. Increasingly, insurers, such as Anthem Inc. and UnitedHealth are beginning to sell short-term plans, saying that the plans fill gaps in coverage.