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A Slight Softening on Obamacare

A Slight Softening On Obamacare

Two weeks after Election Day, President Elect Donald J. Trump has already signaled that he will likely be far more judicious on Affordable Care Act (ACA) changes than the election season rhetoric might have led Americans to believe.

The first sign came at a White House meeting where he promised outgoing President Obama that he would consider the current leader’s viewpoints before making changes. Then there were media interviews, where he stated that certain provisions, including the pre-existing condition ban (though expensive) and child coverage to age 26, were meritorious and would be preserved if at all possible.

None of this changes the fact that, as we noted in our last blog, changes will come and changes are needed. Indeed, Vice President Elect Mike Pence, who is expected to play a prominent policy and legislative role in the administration, is already blazing a road for ACA changes. In meetings with congressional leadership, Pence has agreed to extending the nation’s spending through early March, but in so doing opened up the prospect that ACA action in some form could come early. Because of the extension, at least two budget reconciliation bills might pass next year, offering Republicans the ability to make changes without threat of a filibuster in the Senate.

How soon ACA action will come is predicated on a number of factors.

First, America reaches its debt ceiling once again in Spring 2017. This is sure to dominate congressional calendars, especially if the spending plan is pushed off several months as well.

Second, while the House seems ready for swift Obamacare action, the Senate is perhaps less sanguine and more fractured on the issue. Part of this revolves around the narrow 52-seat majority it will have for the next two years. Some GOP Senators are signaling that what is wrong with the ACA may need reflection before radical action is taken. Sen. Lamar Alexander (R-TN), for example, seems to indicate a true repeal and replace could take a number of years to consummate.

Third, while some action could be taken early, there is the real concern that repeal without some substantial indication of what future coverage will look like could undermine the already precarious state of financial affairs in the Exchanges. The problem, no doubt, is all the Obama administration’s making, but would certain actions speed the implosion of access and plan participation? It is a legitimate fear given uncertainty has already led to a massive exodus of plans nationwide. All of this could impact coverage for millions of Americans.

Fourth, the reality is the Exchanges as we know them are here at least for 2017 and perhaps even through 2018. By June 2017, plans will need to submit final benefits and rate proposals and the reality is planning will commence very soon.

Fifth, while President Elect Trump ran on an anti-Obamacare message, he has shown himself to be flexible in policy approaches so far. While he must deliver on his promise, he may already be realizing that repeal for repeal’s sake may actually undermine his political future and goes contrary to his core belief that ensuring access is a worthy goal.

A case can be made that taking a little more time could in fact fashion the best solution to the nation’s uninsured problems and to remake perhaps both the Medicare and Medicaid systems. House Republicans are especially keen on block granting Medicaid and reforming Medicare. Notwithstanding the supposed longer life expectancy for Medicare Part A due to savings within the ACA, the reality is the fund is depleted by 2028 and it is hard to argue against making lasting reforms now. Putting off change will only complicate change later.

As the consummate dealmaker, the President Elect may soon realize the leverage he has in the fashioning of healthcare’s future. In their rush back in 2010 to create Obamacare, Democrats ceded great control of interpreting and implementing the law to the Department of Health and Human Services (HHS). Indeed, much of what has been designed in the ACA has been “extra-legislative,” where HHS and sister agencies used far-reaching regulatory authority to design the Exchanges. Some would argue they overstepped their authority. So HHS under a Trump administration could set down an executive path to fundamentally change the ACA as it seeks to obtain necessary legislative concessions from Democrats for a stable and lasting alternative.

For example, the details of essential benefits, minimum essential coverage, other coverage and benefit requirements, cost-sharing subsidies, and premium subsidies (to name just a few) substantially are products of federal rules. While the Supreme Court ruled in favor of allowing premium subsidies to continue in states that did not set up their own Exchanges, certainly a Trump administration could take a differing view as a matter of regulation. Currently the House GOP is suing in federal court over a similar issue related to the provision of cost-sharing subsidies. It has won in a lower court but the Obama administration has appealed. A Trump administration may not want to immediately pull such subsidies for fear of undermining the system in the short term, but it too is important leverage for the future in negotiations. And there is no doubt that a new Centers for Medicare and Medicaid Services (CMS) under Trump could fundamentally realign the depth and breadth of the benefits in the Exchange to address plan concerns that the benefit is too rich and inflexible to attract younger populations.

President Elect Trump too could use his regulatory authority to influence the future of Medicaid (through 1115 waivers) and Medicare (with Medicare Advantage expansion).

Incoming Senate Minority Leader Chuck Schumer (D-NY) says Democrats will not oversee the dismantling of Obamacare. But faced with substantial changes to the ACA and the system as a whole anyway, could a core group of moderate Democrats in the Senate (some of them in red states and up for re-election in 2018) step forward to participate in far-reaching reforms?

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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