Trump Administration’s ACA Replacement Bill Pushed to Post-Election

April 2—The Trump administration has switched to backing full repeal of the Affordable Care Act and to putting off replacement legislation until after the 2020 election. A lower court’s decision striking down the law is now before the 5th Circuit Court of Appeals.

The Trump Administration has shifted its stance on the Texas court case challenging the Affordable Care Act (ACA) now before the Fifth Circuit Court of Appeals. A Justice Department memo earlier last week backed the case that would overturn the entirety of the ACA. In response, the Hill is reporting that the Trump Administration (Department of Health and Human Services) will submit a healthcare plan to Congress this year. 

Marc Short, vice president Mike Pence’s chief of staff is quoted as saying, “What you will see as far as Republican plans that will be offered will provide again insurance across state lines, will be able to look to reduce premiums and provide more freedom…” Politico and other outlets are reporting that this announcement caught many, if not all, Republican senators and congressmen off guard.

On Tuesday, after considering feedback from Republican congressman and senators about the political risks of pursuing repeal and replace legislation, announced it was postponing efforts until after the 2020 election. 

Takeaway

There are a lot of things that keep me up at night. Right now, this isn’t in the top five. Although it’s an understatement to say any sweeping changes to the ACA would be highly disruptive, any effort to wholesale replace, much less repeal the ACA, is a non-starter with Democrats holding a majority in the House (unless there were some catalyst that repealed the ACA). 

Texas Attorney General Ken Paxton’s challenge to the ACA could be that catalyst. That case is currently in front of the Fifth Circuit Court of Appeals and may make its way to the Supreme Court. Most observers believe that will take at least a year.

So, what happens if the case goes to the Supreme Court? While trying to guess a court decision, much less a Supreme Court decision, is almost impossible, it’s hard to see how the current court would overturn the law. Legal scholars of both political stripes agree that the District Court Decision in the Texas case was highly flawed given Congress had the opportunity when it zeroed out the individual mandate to overturn the ACA but did not.

What happens on the off chance the ACA is overturned? Based on the president’s budget and 2017 legislation, the Republican replace plan will likely include block grants indexed to consumer inflation to states for coverage expansion (both Medicaid and state insurance markets). To help those with pre-existing conditions, there will also likely be funding for high-risk pools and guaranteed issue of coverage for those who are continuously covered.

Those that are unable to maintain continuous coverage would likely be able to buy marketplace coverage after a lockout period, face some form of experience-based premium pricing, and/or an exclusion for certain conditions. What happens to all the value-based payment (VBP) items (e.g. Centers for Medicare & Medicaid Innovation, hospital value-based purchasing, readmissions penalties)? Right now, it’s unclear, but I would count on them being included in a replacement bill.

If Democrats still hold a majority in the House after the 2020 election (assuming Republicans still hold the Senate), there’s likely to be a strong inclination to enforce the Pottery Barn rule here. Not only is it unlikely that the Republicans’ opening offer will gain traction, but the Democrats will probably insist on many of the provisions of legislation they introduced in the House last week be incorporated into a replacement bill. If Republicans hold the Senate and regain the House repeal and replace will still face an uphill slog. First, it’s highly unlikely they will gain enough seats for a supermajority so they will need to pass the bill under reconciliation rules which will require the replacement package to both reduce the deficit (requiring deeper provider cuts or savings by limiting coverage expansion). Additionally, only provisions that have a direct budgetary impact may be included in legislation passed under reconciliation which will complicate matters as well. It’s worth recalling that the failed 2017 attempt occurred under similar circumstances.