Health Care Reform: Republicans Face Headaches Replacing ACA

By Dana Beezley-Smith, Ph.D.
January 23, 2017



Republicans face headaches replacing ACALike many Americans, stakeholders in the health industry were stunned by Election Night 2016.

Since virtually all pundits and polls had projected a victory for Democrat presidential nominee Hillary Clinton, the Affordable Care Act (ACA) was considered “a program that wasn’t going anywhere,” as Charles Kahn, the Federation of American Hospitals’ chief executive, described it, adding, “That working assumption is now no longer operative.”

“Nobody was ready for this. We didn’t have a Plan B,” said Donald Crane, CEO of the California Association of Physician Groups (CAPG), the country’s largest physician trade association with member groups in 40 states, Puerto Rico and Washington, D.C.

With businessman Donald Trump in the White House and Republican control of Congress, ACA repeal is now considered imminent. However, in what law professor Nicholas Bagley calls “another installment in the long-running reality show called Elections Have Consequences,” two important legal matters may also be impacted.

In a 2014 lawsuit known as House v. Burwell, Congress challenged Health and Human Services (HHS) “cost-sharing” payments to insurance companies. These outlays, which reduce copayments and deductibles for low-income exchange customers, were never authorized by Congress, and according to Bagley, an ACA supporter, are not only unconstitutional, but also “a crime under the Anti-Deficiency Act.”

“Stopping the payments,” says Bagley, “is arguably the only constitutionally available course of action.” Doing so, though, would threaten the financial health of insurers participating on the exchanges, as they can’t offset losses by charging consumers more.

A recent federal court’s delay of the case permits the Trump administration until February 21 to consider its options.

The second legal issue concerns the ACA’s risk corridor program, which protects insurers from extraordinary losses. Several insurers are suing the administration for increased reimbursement, and HHS had signaled a willingness to settle their suits.

However, Congress recently crafted the “HHS Slush Fund Elimination Act,” which, if passed, would deny payouts of at least $8.3 billion.

“If Hillary Clinton had been elected,” Bagley writes, “the insurers probably would have gotten paid. But she didn’t, and they likely won’t.”

Predictions are split as to the new administration’s impact on the ACA’s pay-for-performance (P4P) programs. “Value-based” projects developed by the Center for Medicare and Medicaid Innovation (CMMI) are here to stay, according to Modern Healthcare.

Joseph Antos of the conservative American Enterprise Institute says the new administration may lessen regulatory burdens on providers and revisit the Medicare Access and CHIP Reauthorization Act and its emphasis on accountable care organizations (ACOs).

“ACOs are a top-down approach that has shown limited success in producing shared savings,” he argues. “The real success stories in making health care more efficient come from individual organizations, like Geisinger and Mayo, which did it voluntarily. They didn’t have Washington telling them what to do.”

Managed Care Magazine maintains that private entities will continue their P4P experiments, and that Congress, previously skeptical of CMMI, could find Medicare P4P “more appealing under their own supervision.”

Trump’s pick for HHS secretary, Georgia Rep. Tom Price, MD, for example, supports quality measurement, but believes outcome targets should be approved by medical specialty organizations.

Some popular ACA ambitions may be retained in a Republican “replace” proposal. Last February, Trump signaled support for protecting Americans with preexisting conditions, and more recently, for the feature allowing young adults coverage through their parents’ policies.

On the stump, Trump advocated interstate insurer competition, medical procedure price transparency and expansion of health savings accounts. He also favored block-granting Medicaid funds to the states and restoring state high-risk pools closed by the ACA.

Although many GOP plans have been offered, Price may lead with his Empowering Patients First Act, which is largely consistent with Trump’s goals. The orthopedic surgeon’s proposal also includes tort reform and nationwide insurance purchasing pools for individuals and small businesses. Empowering Patients would open the individual insurance market to those with government coverage and offer age-adjusted refundable tax credits.

While a November Reuters/Ipsos poll found “health care” the public’s top priority for the administration’s first 100 days, Greg Mertz, managing director for Physician Strategies Group, predicts that a replacement plan won’t materialize quickly “and whatever happens will be less dramatic than many expect.”

He expects “hearings, staff work and debate for at least the next year. This means that we limp along with a broken program as we argue what is better.”

GOP policymakers say current ACA beneficiaries will keep their coverage throughout 2017 and recommend a lengthy transition period before a replacement is in place.

“Congress will make sure that the transition is a smooth one for Americans,” GOP Sen. John Barrasso promised. “People have already faced too much disruption in their health care due to Obamacare.”

“There will be a transition and a bridge so that no one is left out in the cold, so that no one is worse off,” House Speaker Paul Ryan told the Milwaukee Sentinel Journal.

The ACA exchanges, however, may not survive a transition period. Mertz says they are “in trouble already” and believes the uninsured rate will grow in the near term. Bagley worries that insurer uncertainty will cause the exchanges to “unravel” even before repeal takes effect.

At the December Population Health Special Edition Conference held in Washington, D.C., conservative policy analyst Douglas Badger predicted that “there isn’t going to be a transition period.” Describing carrier losses on the marketplaces as “an immediate crisis” and “a grease fire,” he expects that in 2018 “we will have states where there are no insurers in the exchange.”

“The problem that President Trump will deal with, before he ever gets to repeal or replace, is ‘rescue,’ ” says Badger. “Before you think about doing anything – repealing it, replacing it, changing it – you’ve got to extinguish the grease fire.”

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Dana Beezley-Smith, Ph.D., is in private practice serving children, adults and families in Green, Ohio. Her email is: drdana@me.com.

 

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