The Washington Report is provided courtesy of Mara Baer
Congressional Republicans intend to come out of the gate early next year with measures to repeal key elements of the Affordable Care Act (ACA). The Senate majority will hold the tightest of margins requiring bipartisanship to pass legislation, however the budget reconciliation process requires only a simply majority. This is important to understand because it is the planned route for repeal of many ACA provisions.
A budget reconciliation was passed in 2015 but was vetoed by President Obama. This legislation is the blueprint for where Republicans begin to build their repeal legislation. Key provisions include:
- Individual Mandate – The current mandate requires individuals carry coverage or face a penalty. Insurers are concerned that a continued ban on pre-existing condition exclusions absent a mandate will result in much sicker risk pools, driving up rates. Some fear this will dismantle the individual market both on and off the exchanges. Many Republicans have signaled their intent to provide a transition period so the mandate will stay in place until a replacement plan is passed.
- Tax Credits/Cost-Sharing Subsidies – The reconciliation bill provides a 2-year phase out period for the ACA’s premium tax credit and cost-sharing reductions (CSRs) for those 250% below the Federal Poverty Level (FPL). Under the ACA, insurers reduce cost sharing for low-income people and are later reimbursed by the government. Opponents are concerned that eliminating credits and subsidies will drive low-income individuals from the exchange market.
The Administration could eliminate the CSR provision by dropping a court case appeal filed by the current Administration. That case found the authority to implement CSRs without an appropriation from Congress was lacking. Insurers will likely press the new Administration to forgo lifting the appeal while a replacement is developed in order to preserve the individual market.
- Tax Repeals – The package includes numerous tax repeals including the “Cadillac tax” on high cost employer-sponsored coverage, medical device excise tax, and taxes on health savings accounts. It also eliminates the annual fee on health insurers. Some of these taxes would be repealed immediately while others have a 2-year transition period. Republicans will have to identify alternative funding sources for their replacement policies and debate is already heating up around their interest in placing a cap on the current tax exclusion for employer-sponsored benefits.
- Medicaid – The bill eliminates the expansion of coverage for low-income adults with incomes below 133% of the federal poverty level (FPL). Children age 6 and older from 100% to 133% of FPL would also no longer be eligible for Medicaid. Republicans intend to pursue reforms in Medicaid that shift more authority to the states in designing their programs. Consumer advocates are concerned that these policies will result in cost-shift to poor individuals. While Congress sorts out its replacement approach, the new Administration can use its 1115 waiver authority to provide more flexibility to states in running their Medicaid programs.
While these are some of the provisions on the table for the 2017 budget reconciliation, the question remains how the transition periods may be laid out to allow time for Republicans to develop, reach consensus, and pass an alternative to the ACA. Some are now suggesting a 3-year period is on the table and that would kick “replace” down the curb until 2020. This time may be needed to attempt to bring eight Democrats in the Senate along to pass a bill which will not benefit from the budget’s 51 vote threshold, requiring 60 votes to end a filibuster.
Discussions are already underway and this process will be highly charged. ACA advocates are urging Republicans to not pursue repeal efforts unless they are married to replacement plans, fearing major market disruption. The incoming Congress and Administration feel their election victory compels them to act swiftly and send a message that ACA as we have come to know it is at its end. What the future holds remains uncertain.