The Verdict is in on ACA Repeal & Replace: Now What?

Learn what the tabling of the ACA means to the future of healthcare

Jodi JohnsonMarch 30, 2017

It was scarcely a month ago—February 27, 2017, to be exact—that President Trump, while speaking to the National Governors Association on the topic of federal health law reform and repealing and replacing the Affordable Care Act (ACA), stated, “…it’s an unbelievably complex subject. Nobody knew healthcare could be so complicated.”

Whether this statement was made out of sincerity or hyperbole, the fact is, when healthcare policy and politics collide, the result is often combustible. That’s why, less than a month after the President made those remarks, the American Health Care Act (AHCA) was shelved on March 24, before a full vote of the House could even take place.

For those who’ve had a front row seat to the protracted fight for ACA passage, the challenges of ACA implementation, and the fight over its repeal and replacement, the complexities have long been apparent. Many of those were laid bare this past month as the President and republican leadership tried to make good on long-standing promises to dismantle the ACA at first opportunity.

Post Mortem of the AHCA

To start, let’s do a high-level post-mortem on the brief 17-day life of the AHCA, and then take a look at what might happen next. We won’t waste time delving into the minutiae of bill amendments and subsequent CBO scores. To do so feels a bit like a critic who reviews a movie that never made the big screen, and includes everything that wound up on the cutting room floor.

Late on March 6, republican House leadership introduced the American Health Care Act (AHCA), the legislation meant to fulfill the promise of the President and fellow republican lawmakers to repeal and replace the ACA. At breakneck speed, the two budget reconciliation bills that formed its basis were scuttled through committee approvals in preparation for the full House vote. An overview of the AHCA can be read here.

On March 13, the Congressional Budget Office (CBO) released their analysis of the bill, estimating that it would reduce the federal deficits by $337 billion over ten years, and lower taxes by $883 billion. The CBO also predicted it would result in 24 million fewer insured by 2026.

By this point, Republican Party opinion was already sharply divided on the bill. Democrats were, of course, unanimously opposed. Republican moderates were most concerned with its treatment of Medicaid and the number of Americans that might be left without coverage, and Freedom Caucus conservatives felt its individual marketplace tax credits created another entitlement program.

On March 16, four leading republican governors from Medicaid expansion states sent a letter to House Speaker Ryan and Senate Majority Leader Mitch McConnell outlining their deep concerns with AHCA treatment of Medicaid reform, and urging Congress to first focus their efforts on the individual market.

On March 20, in an effort to bridge the party divide, republican leadership released a manager’s amendment to the AHCA, mainly impacting provisions on:

  • Taxes—accelerate the repeal of most ACA taxes by one year, and push back implementation of the “Cadillac” tax an additional year.
  • Medicaid—allow a work requirement for non-disabled, non-elderly adults, allow states an option of per capita or block grant funding, and end the mandatory Medicaid expansion as of 2017 (for childless, non-disabled, non-pregnant adults).

Negotiations continued as the week progressed and late on March 23, another manager’s amendment was introduced in an effort to gain enough votes to clear the House.  This amendment:

  • Further delayed repeal of the Medicare tax on high earners—pushing it back to 2023.
  • Shifted responsibility for defining “Essential Health Benefits (EHB)” to individual states—for purposes of determining premium tax credits.
  • Augmented the Patient and State Stability Fund—adding $15 million to cover maternity and newborn care as well as behavioral health, as these would likely be removed from many states’ EHB definitions.

The AHCA Breakdown

Despite all of these 11th-hour maneuvers, the fact remained that the bill was widely unpopular beyond the beltway, roundly criticized by payer and provider groups alike, and polling at just a 17% approval rating. The concessions required to make the bill palatable to the most conservative republicans made it unacceptable to the centrists, and vice versa. Not to mention the fact that republicans were attempting to use the budget reconciliation process to approve the legislation along party lines with a simple majority in the Senate, so strict rules (the Byrd rule, to be exact) prevented consideration of any provisions that would amount to an “extraneous matter” or increase the federal deficit.

So despite the threats and entreaties of the White House and party leadership, negotiations finally broke down, the President conceded defeat, and House Speaker Ryan withdrew the bill on March 24.

Shortly after withdrawal, Ryan stated, “Obamacare is the law of the land…for the foreseeable future.” Meanwhile, President Trump stated he was moving on to taxes, as the traditional stages of Washington defeat progressed. The obligatory round of assigning blame and taking credit appears to be over, and as wound-licking draws to an end, talk of another effort at a repeal bill has quietly resumed on Capitol Hill.

Will the ACA Explode?

What is alarming is that the phrases “repeal and replace,” “repeal and delay,” or “repair and replace,” appear to have now been supplanted with “explode and replace,” or “implode and replace.” This buys into the theory that the individual market is in a death spiral, or implies that republicans might hurry along the demise of the exchanges to force some kind of cooperation among republicans and even across the aisle.

It appeared that the Trump administration was trying to reassure insurers about stability on the individual markets with their proposed rule, released in mid-February. Extending the filing deadline for plans and rates until late June, the proposed rule took several measures that were meant to restore confidence among payers about participation on the exchanges. But that was before this legislative defeat, and it wouldn’t take much for the administration to reverse course and create market instability. They could also take action on the cost sharing reduction litigation now pending in court—that could cause payers to rapidly exit the exchanges.

On March 28, President Trump tweeted, “The Democrats will make a deal with me on healthcare as soon as Obamacare folds – not long. Do not worry, we are in very good shape!” If Obamacare folds, with no viable alternative in sight, believe me—we haven’t even seen complex, yet. As for worrying, we’ll just have to see what happens between now and June 21, when plans and rates are due for 2018. I hope we’ll be in very good shape.

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