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HomeSpotlight Story | Bird’s Eye View | Budget & Taxes | Politics & Leadership | Governors | Hot Issues | Once Around the Statehouse Lightly
Donald Trump and Republican congressional leaders pledged during the election campaign to make repeal of the Affordable Care Act, often called Obamacare, their first order of business in 2017. But the controversial law is proving resilient. With insurance companies and consumer advocates sounding alarms, the congressional deadline for action has slipped to late March – and could slip further. President Trump, who has promised to replace Obamacare with something better, said in a Feb. 5 interview on Fox News, that “maybe it’ll take some time into next year” to come up with a new health plan.
Some health care experts insist, however, that Congress must send a reassuring signal by April 2017, when insurance companies file next year’s plans and premiums. If there’s no alternative in sight by then, warned former insurance company executive J.B. Silvers in the New York Times, “there will be a sizeable exit – of insurers running away from the greatly increased and unpredictable risk and of individuals not able to afford insurance without the subsidies” provided by Obamacare. Silvers is now a professor of health finance at Case Western Reserve University.
States have a big stake in the outcome, all the more so because the fate of Medicaid as well as the Affordable Care Act hangs in the balance. Tom Price, the new secretary for Health and Human Services and House Speaker Paul Ryan (R-Wisconsin) hope to overhaul Medicaid, the shared federal-state program that provides health care for the poor and disabled. They would change the present system in which states receive federal funds for every Medicaid enrollee to block grants in which states would receive annual lump sums with latitude on what medical services they would provide.
Such a change would “shift much more of the risk for health costs in the future to states and consumers,” said Drew Altman, president of the Henry J. Kaiser Family Foundation in an op-ed article in the Washington Post. One concern is that states would suffer shortfalls in an economic downturn when Medicaid rolls rise as they did in the 2008-09 Great Recession.
Medicaid has expanded since its creation in 1965 as a program for women and children on welfare. Medicaid and the Children’s Health Insurance Program (CHIPS) now cover 74 million people, about one in five Americans. In addition to women and children, Medicaid provides health care for low-income, non-elderly men and individuals of all ages with disabilities. Medicaid spending exceeds half a trillion dollars and accounts for more than half the federal funds spent by states, which administer the program. For most states Medicaid is the second costliest item (after education) in their budgets.
In the congressional dialogue over health care, Democratic members have often claimed that Republicans have no alternative to Obamacare. The actual problem is that the GOP has too many alternatives and lacks consensus on any one of them. Republicans have already introduced a half dozen bills, and more are in the offing.
But Sen. Lamar Alexander (R-Tennessee), chairman of the Senate Health Committee, is confident that a genuine health care reform bill can be winnowed from the chaff. “We can repair the individual market, and that’s a good place to start,” he said. Lamar and other moderate GOP senators may be heading for a collision with the House, where the conservative House Freedom Caucus voted Feb. 13 to oppose any repeal bill that falls short of the one passed by Congress in 2015 and vetoed by President Obama.
Obamacare’s most notable achievement has been to provide health insurance to 20 million people who previously lacked coverage, more than half of them through an expansion of Medicaid. Subsidized policies have made the ACA attractive to those at the poverty line or slightly above it. Obamacare’s biggest deficiency has been that it has failed to provide affordable health care for the middle class. As Margot Sanger-Katz of the New York Times observes, “those earning not much more [than the poor] still often struggle to pay health care premiums and face deductibles that are much higher than those seen in a typical employer health plan.” Premiums grew slowly in the first three years of Obamacare; they shot up in 2016 and insurance companies in several states decided not to participate in the ACA (see Bird’s Eye View).
Insurance companies that dropped out complained that the ACA had enrolled a disproportionate number of older and sicker persons. A central feature of the law requires insurers to enroll everyone regardless of prior medical conditions. The high cost of insuring people with prior conditions was supposed to be defrayed by younger and healthier people who were prodded to enroll in the ACA by a tax penalty imposed on those without health insurance. But as premiums soared, many of the young and healthy opted to pay the penalty instead of buying expensive health insurance.
This tax penalty, known as an “individual mandate” under Obama, looks more like a suggestion under Trump. Responding to one of Trump’s many executive orders, the Internal Revenue Service said it will no longer reject income tax returns that fail to disclose whether the filers have health insurance or not. The IRS left up in the air whether it will compute penalties for those who do disclose they lack insurance.
Trump has promised to get rid of the penalty but to keep the provision requiring insurance companies to cover every one and other popular features of Obamacare. On Thursday, responding to pleas from insurance companies, he moved to shorten the enrollment period for the ACA. But Trump has yet to submit a detailed health care proposal of his own.
Meanwhile, in Congress, Republicans are trying to extricate themselves from a corner in which they appear to have painted themselves. They have promised that none of the people who obtained coverage under the Affordable Care Act will lose their coverage when the law is repealed and the tax penalty removed. At a closed-door meeting in Philadelphia last month, a recording of which was obtained by the Washington Post, some Republicans acknowledged they may have over-promised. “I recognize that we can’t keep Obama’s promises,” said Rep. Tom MacArthur of New Jersey. “They were wrong to begin with, and the system can’t be sustained.”
But the challenge for Congress is sustaining the system until it can be changed. Trump said during the campaign that “Obamacare is certain to collapse of its own weight;” that’s the last thing Republicans want to happen because they know they’d be blamed if millions of people abruptly lost their health insurance.
One way in which Republicans could maintain or even increase the number of those insured would be to replace the Affordable Care Act’s requirement for comprehensive health care coverage with a more skeletal catastrophic insurance plan. This could lower premium costs but would be a step backwards in terms of basic or preventive medical care. The idea is nonetheless being discussed by congressional Republicans.
Also under consideration is a provision that was part of a bill introduced by HHS Secretary Price when he was a member of the House representing a Georgia district. This would substitute tax credits for the subsidies paid to low-income purchasers of policies under Obamacare. Critics say that eliminating the subsidies would put health insurance out of reach for many who are currently covered.
The politics of replacing Obamacare are particularly daunting in the Senate, which the GOP controls by a 52-48 margin. Under current Senate rules the Affordable Care Act could be repealed by a simple majority vote, but 60 votes would be needed for a replacement. At least four Republican senators have said they won’t vote for a repeal bill unless a replacement is ready at the same time.
Sen. Alexander is hopeful that some Democrats may be willing to cooperate in changing the law. That could happen but only if Republicans yield on full-scale repeal. “We can’t repair the roof while Republicans and the president are burning the house down,” said Sen. Patty Murray (D-Washington).
Hovering over the deliberations is the concern that an ill-considered repeal bill might destabilize the insurance market. Insurers that participate in Obamacare are asking Congress to give them reinsurance protection to help them pay large claims. Companies need “stability and predictability,” said Marilyn B. Tavenner, chief executive of America’s Health Insurance Plans, the industry’s lobbying group.
Conservatives have been seeking repeal of the Affordable Care Act almost since the moment it was passed by Congress on a party-line vote and signed into law by President Obama in 2009. With Republicans controlling the White House and both houses of Congress, they’re now in sight of their objective, but repeal remains an elusive – and receding – target.