With the (surprising) election of Donald Trump as America’s next president, I’ve been asked by quite a few folks what this might mean for the Patient Protection and Affordable Care Act, especially as it relates to individual health insurance. It’s been more than seven months since I posted anything in this blog (been busy launching a couple of companies), but I thought I’d use this space to provide my perspective.
For the impatient among you, that answer is: either a complete disaster or some modest fixes that actually improve the ACA. Dramatic, but non-lethal, changes are unlikely.
As for the details: Trump’s call to repeal and replace the ACA was core to his campaign. His official health care reform platform promised to:
- Repeal Obamacare in its entirety.
- Permit the sale of health insurance across state lines.
- Allow individuals to fully deduct their health insurance premiums.
- Promote health savings accounts (HSAs).
- Require all healthcare providers to publish their pricing.
- Provide block grants to states for Medicaid expenses.
- Remove barriers that delay the introduction of new drugs.
Some of these ideas, such as promoting HSAs and increasing pricing transparency, have merit. Some, like enabling carriers to sell across state lines, are nonsensical for several reasons I have described previously. None offer much solace to the 20 million-plus consumers in danger of losing their individual coverage if the ACA is repealed. Trump and his Republican allies in Congress will need to do more.
See also: What Trump Means for Workplace Wellness
I hesitate to predict how Trump will lead as president, but he seems to be a “big picture guy” who leaves details to others. So let’s assume he lets Congress take the lead on repeal and replace. In December 2015, Republicans in Congress passed legislation aimed at gutting the ACA. President Obama vetoed the bill, but its major provisions are instructive:
- Repeal the federal government’s authority to run healthcare exchanges.
- Eliminate premium subsidies available to individuals purchasing through the exchange.
- Eliminate penalties on individuals for not buying coverage and employers who failed to offer their workers health insurance.
Combined with Trump’s campaign promises, these elements of the Republicans’ repeal-and-replace legislation give a glimpse to the starting point of GOP-style healthcare reform. Add House Speaker Paul Ryan’s call earlier this year for high-risk pools, and the hazy outlines of a possible reform package begin to emerge.
Given Trump’s commitment to start the repeal-and-replace process on the first day of his administration and Senate Majority Leader Mitch McConnell’s statement after the election that getting rid of the ACA was “pretty high on our agenda,” healthcare reform is coming — and soon.
Whether the result will be an outright, actual repeal of President Obama’s signature legislative accomplishment is no sure thing. Supporters of the ACA are already vowing to defend the law. And while Republicans will hold majorities in both chambers of the new Congress, they are a long way from having 60 votes in the Senate. And that’s problematic.
Senate filibuster rules require 60 votes to cut off debate and allow legislation to come to a vote. This means the most powerful person in Washington on healthcare reform may not be President Trump, Speaker Ryan or Senator McConnell, but the senator needed for that all-important 60th vote. Yes, the first through 59th supporters are important, but their support means little if a 60th vote is not found. As a result, the 60th senator can have a tremendous impact on the final language in the bill simply by offering (implicitly or explicitly) a favorable vote in exchange for whatever is important to that senator.
In 2017, the 60th senator for repeal and replace will be a Democrat. A Republican is expected to win Louisiana’s run-off election, giving the GOP 52 seats in the upper chamber. Assuming Republicans vote as a block — something they’ve become quite adept at in the past eight years — eight Democratic votes will be needed to end a filibuster. The requests of each of the first seven will need to be considered and addressed, but it’s the demands of the eighth senator, that 60th vote, that ultimately matters. Unless …
The Senate can temporarily eliminate the possibility of a filibuster against a bill under the rules of budget reconciliation. However, reconciliation bills must address the federal budget, a vague definition that Congress has interpreted with varying strictness throughout the years. Clearly, eliminating funding for exchanges, taxes and monetary penalties affect the budget. Much of the ACA, however, doesn’t. For example, requiring carriers to issue individual policies to all applicants regardless of their health conditions (what’s called “guarantee issue”) has no impact on the budget.
The situation in the Senate creates dangerous possibilities. Just one example: Republicans use the reconciliation process to eliminate penalties paid by consumers who fail to purchase health insurance but not the guarantee issue requirement. Under this situation, few consumers — especially young, healthy consumers — will likely obtain coverage until they get sick or injured. This adverse selection would be cataclysmic, and few, if any carriers, would want to participate in such a market. After all, insurers are in the business of spreading risk across a broad population. Guarantee issue without an obligation to buy coverage guarantees a concentration of risk across a narrow population.
President Trump can significantly affect the Affordable Care Act through executive orders, but the risk is the same as a partial repeal through legislation. The ACA is a multi-faceted construct with interlocking pieces. The wrong changes can cause devastating unintended consequences.
Republicans in Congress and President Trump may not care. The ACA has taken on nearly mythic proportions as the symbol of all that is evil with the liberal, big-government side of politics. However, making careless changes would not only be irresponsible, it would risk the wrath of millions of voters tossed out of the individual market. Those votes matter. Keep in mind, Trump’s election was close. He lost the popular vote. His leads in Wisconsin and Michigan add up to a combined total of less than 40,000 (as of today).
Yet failing to repeal Obamacare after making it so central to their 2016 campaigns could be a political disaster, as well. Republicans jumped on replace and repeal in 2010, and over the past six years this position helped deliver durable GOP majorities in both houses of Congress. Many in their ranks may not care about the consequences of dismantling the law.
Assuming a desire to address healthcare reform in a responsible way will require the help of at least eight Senate Democrats. Fortunately for Republicans, 10 Democrats have an incentive to responsibly neutralize the ACA issue in 2017. All are up for election in 2018 and hail from red or nearly red states.
- Sen. Tammy Baldwin of Wisconsin
- Sen. Bob Casey Jr. of Pennsylvania
- Sen. Joe Donnelly of Indiana
- Sen. Heidi Heitkamp of North Dakota
- Sen. Tim Kaine of Virginia
- Sen. Angus King of Maine (officially an independent, but he caucuses with Democrats)
- Sen. Joe Manchin of West Virginia (and arguably the most conservative Democrat in the Senate)
- Sen. Claire McCaskill of Missouri.
- Sen. Debbie Stabenow of Michigan
- Sen. Jon Tester of Montana
The important question, then, is not what Republicans want to replace the ACA with, but what will it take to get enough of these senators to come along? The task could be extremely difficult if new Senate Minority Leader Charles Schumer doesn’t make it politically impossible for many of these senators to break ranks.
Republican then have two choices:1) Go nuclear and gut the ACA through the reconciliation process, but keep in place market reforms like guarantee issue; or 2) pass something palatable to eight Democrats, but which they sell as “repeal” to their base. Clearly the first option is irresponsible, but these are not necessarily responsible times. Nuking the ACA will appeal to many in the party, both in Congress and in their districts.
The more responsible choice, repealing the ACA in name only, makes the law more palatable and workable. This last point is critical: once they repeal and replace the ACA, the GOP will own health care reform. It darn well better be clear by say, October 2018, that the new system is working.
Which result — destruction or refinement — is most likely? We’re in a new and wacky world. We’ll find out soon enough.