On November 8, 2016, in a stunning upset, Donald Trump was elected president of the United States. The Republican Party, under whose banner he ran, retained control over both the House and Senate. President Trump will be able to appoint at least one Supreme Court justice almost immediately and possibly more during his term in office. He will also appoint dozens of district and appellate court judges. Finally, he will presumably replace the cabinet secretaries and most of the political appointees in the Departments of Health and Human Services, Labor, and Treasury — that administer the Affordable Care Act. The Republicans own the national government, and many state governments.
So what does his victory mean for the Affordable Care Act? This post is a tentative first pass at this question. More will follow. It only addresses the coverage expansion of the ACA and does not discuss Medicare or prescription drugs, two other areas likely deeply affected by a Trump presidency.
Donald Trump states at his website, “On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.” If by Obamacare Trump means the Affordable Care Act in its entirety, this will not happen. First, any repeal proposal would be subject to a filibuster in the Senate and the Democrats retain more than enough votes to stop a repeal bill. Second, the Affordable Care Act contains hundreds of provisions affecting Medicare, program integrity, the health care workforce, biosimilars, prevention, and other issues unrelated to what most Americans think of as “Obamacare.” Immediate repeal of the ACA and presumably restoring the law that preceded it would likely bring the Medicare program, for example, to a halt until new rules could be written. The ACA is inextricably interwoven into our health care system and is not going away immediately.
The Uses And Limits Of The Budget Reconciliation Process
Congress and the President, can, however, repeal many of the provisions that are identified by the public as “Obamacare” using the budget reconciliation process. A budget reconciliation bill can be passed by a simple majority and cannot be stopped by a filibuster. The final ACA in 2010 contained provisions passed through the budget reconciliation process after the Democrats lost their filibuster-proof majority.
Budget reconciliation legislation is subject to strict procedural and substantive limits. Reconciliation in the Senate can only contain provisions that affect the revenues and outlays of the United States and cannot contain “extraneous provisions” that only incidentally affect revenue and expenditures. Budget reconciliation is a two-step process—first Congress adopts a budget resolution with instructions to committees to meet reconciliation targets and then it adopts the reconciliation itself. This cannot happen on “day one.”
Congress took a dry run at repeal budget reconciliation legislation in 2015. Both houses of Congress passed reconciliation legislation that would have repealed the premium tax credits; the small business tax credit; the individual mandate, the employer mandate; the expansion of Medicaid coverage for adults up to 138 percent of the federal poverty level, presumptive eligibility, maintenance of effort, and benchmark plans for Medicaid; and the ACA’s taxes—the medical device tax, insurer fee, “Cadillac” high cost plan tax, and tax increases imposed on the wealthy—most of the provisions that the public identifies as “Obamacare.” The legislation was vetoed by President Obama. The legislation would also have defunded Planned Parenthood. Presumably this legislation, already vetted for compliance with reconciliation requirements, could serve as a model for ACA repeal.
Importantly, reconciliation legislation could probably not change the insurance reform provisions of the ACA—the ban on preexisting condition exclusions and health status underwriting, caps on annual and lifetime dollar limits, actuarial value requirements, age underwriting restrictions, as they do not affect revenues and outlays. The continued imposition of these requirements without the financing provided by the ACA could cause serious distortions and damage in insurance markets. It is possible that changes to other sections of the ACA could be made part of other “must pass” legislation, although it is hard to see what that might be.
The ‘Replace’ Part Of Repeal And Replace
Repeal would, moreover, raise the question of what would replace the ACA. The Congressional Budget Office estimated that enacting the 2015 reconciliation legislation would increase the number of uninsured Americans by 22 million. The legislation would have delayed the end of the premium tax credits until 2018 to allow time for replacement legislation, which was not part of the bill.
Donald Trump has advocated tax deductions and tax subsidies for health savings accounts (HSAs) to make health insurance more affordable for those who lack it. These provisions may help some wealthier individuals, but would do little or nothing for the millions of people now receiving tax credits for coverage through the ACA, who often pay little in taxes and receive little benefit from deductions and have little to save in HSAs. Other Republican plans offer fixed dollar tax credits to purchase insurance, which would be of more value to low-income Americans, but would likely fall far short of the cost of coverage now covered by the ACA.
A Republican replacement plan could not be implemented overnight, however. Regulations would have to be written and published for comment and mechanisms set up to handle the deductions or credits, particularly if they were provided in advance, as they would have to be. Even a two year delay might not be enough to get a program in place, much less to educate the public as to how it operated.
What President Trump Could Do On His Own To Undermine The ACA
Although Donald Trump cannot unilaterally repeal and replace the ACA, he can do a great deal to interfere with its implementation. As has been exhaustively chronicled on this blog, the ACA has been implemented by hundreds of pages of regulations and thousands of pages of guidance. Regulations cannot legally be changed without an opportunity for notice and comment and some explanation as to why a change is necessary. Guidance is easier to change.
Indeed, a Trump administration could do a great deal of damage to the ACA without even changing regulations or guidance. If a Trump administration simply stopped implementing or enforcing certain regulatory requirements, there might be little that could be done about it. Just a change in leadership in the agencies implementing the ACA will cause months of disruption, and appointment of leadership committed to destroying rather than implementing the ACA will likely cause a mass exodus of lower level employees, causing an implementation vacuum.
The Obama administration is currently engaged in an aggressive campaign to enroll individuals for the 2017 open enrollment period. A Trump administration could abandon this effort, as well as efforts to work with insurers to ensure continued ACA participation or with consumers to resolve enrollment issues. The 2015 reconciliation legislation would have required marketplace enrollees who underestimated their income to pay back all excess tax credits, regardless of the financial hardship this would cause. This might create a significant deterrence to enrollment. The repeal of the individual mandate would also discourage participation.
A number of insurers have lost money in the marketplaces. Some have withdrawn and others have stuck with the program in hopes it would turn around. Without an administration committed to the program, more will almost certainly withdraw, potentially leaving parts of the country where no marketplace plans are available. Others might raise their rates in the face of the uncertainty caused by the transition, making coverage even less affordable to individuals without premium tax credits.
A Trump administration is likely to work with conservative states to loosen remaining ACA requirements. Under section 1332 states can be granted “innovation” waivers from many ACA requirements if they can provide similar coverage under their own proposals. The Obama administration has interpreted the requirements of this provision quite conservatively, but Trump could give out the waivers much more loosely to allow states to opt out of the ACA. Trump has also proposed block-granting Medicaid, a proposal that would shift much of the burden of Medicaid financing to the states. Republicans believe that the flexibility afforded by block grants could allow states to innovate and run Medicaid more cost-effectively, but millions of Americans could lose Medicaid coverage if the block grants do not keep pace with costs.
The CHIP program also comes up for reauthorization in 2017, and Trump opposition could end CHIP as well, potentially leaving millions of children without coverage.
The Obama administration is currently involved in a number of lawsuits involving the ACA. A Trump administration might simply cease defending these lawsuits, effectively allowing the plaintiffs to triumph. If the government withdrew its appeal in House v. Burwell, for example, reimbursement to insurers for cost-sharing reduction payments could cease. Indeed, the administration could simply stop paying cost-sharing reduction payments, although this would probably take a rule change. Ending cost-sharing reduction payments would dramatically increase the cost of marketplace participation by insurers and likely lead to many insurers exiting the program. It is possible that beneficiaries or insurers could sue to reinstate the payments, but that would take time, and would likely not happen quickly enough to save the program.
The administration will also likely cease defending the contraceptive cases, indeed may likely revoke the contraceptive coverage requirement. And it will likely take a more aggressive position opposing the insurer risk corridor cases in the court of claims.
It is possible that consumer and insurer groups will file lawsuits against the administration seeking to force implementation of provisions of the ACA that remain in place. This litigation could take the place of the anti-ACA litigation the administration has fought for years. Litigants may follow the path of ACA opponents and find sympathetic district court judges in isolated districts in liberal circuits looking for easy victories. A Trump appointed Supreme Court will make progressive litigation victories harder to stick.
Now It’s The GOP’s Turn
The Democrats controlled the presidency and both houses of Congress in 2010. They adopted legislation that they hoped would dramatically increase access to health care for lower-income Americans. In many respects they succeeded, covering 20 million Americans and reducing the uninsured rate to the lowest levels in history. But many Americans believe, rightly or wrongly, that they have been disadvantaged by the ACA, and dissatisfaction with it has remained high, particularly as premiums increased and insurer participation decreased in the marketplaces this year.
It is now the Republicans’ turn. They will have to decide what they want to do with our health care system and figure out how to do it. They now own the problems of health care, and they will be judged in future elections for how they address them.