OK, Now What? Health Care Reform Next Steps

By Carmel Shachar

The latest push to repeal at least some aspects of the Affordable Care Act (ACA) died late into Thursday, July 27, 2017 when John McCain (R-AZ) joined Lisa Murkowski (R-AK) and Susan Collins (R-ME) to vote against a much stripped down repeal bill.  This dramatic moment has been replayed over and over again by health policy wonks and on cable TV.  However, now that we have all “watched the show” a pressing question is unavoidable: What happens next?

Next Steps for Congress

The failure to pass repeal and replace (in the form of the Better Care Reconciliation Act), complete repeal (in a variation of the Obamacare Repeal Reconciliation Act), or skinny repeal (in the form of the Health Care Freedom Act), suggests that Congress may have to resort to something previously considered unthinkable: bipartisan action.  Indeed, soon after Senate Republicans failed to pass a health care bill, Senate Democratic leader Chuck Schumer (R-NY), stated that “[o]n health care, I hope we can work together to make the system better in a bipartisan way.”

Because health care reform was expected to pass along party lines, bipartisan health care reform efforts are still nascent.  Some Democrats want to provide additional funds to insurers to reduce out of pocket expenses for poorer consumers, which has gained some support among Republicans.  A federal reinsurance program to help pay the largest health insurance claims, and presumably control insurance premium costs, was included in earlier drafts of the Better Care Reconciliation Act and also has proponents among the Democrats, including Thomas Carper (D-DE) and Tim Kaine (R-VA).  Both parties are concerned with individuals who face empty Marketplaces in 2018, but the solution for that pressing problem remains unclear.  The difference between these efforts and the bills voted upon on July 27 is that all of these solutions presuppose that ObamaCare is here to stay—in essence legitimizing the ACA by providing a sort of grudging Republican acknowledgment.

Whether these bipartisan solutions will materialize is an open question.  Lamar Alexander (R-TN), chair of the Senate health committee, has announced that the committee will hold hearings on possible solutions to the problems facing the Marketplaces.  These hearings will be a good indication of the progress of bipartisan attempts to stabilize the Marketplaces, and whether the repeal movement has any momentum left.

Next Steps for the Administration

Immediately after the dramatic late night vote, President Donald Trump tweeted, “3 Republicans and 48 Democrats let the American people down.  As I said from the beginning, let ObamaCare implode, then deal.  Watch!”  There is a lot that the Administration can do to let ObamaCare implode, ranging from how proactive it is in populating the Marketplaces to whether the Administration will protect cost sharing reduction payments for low income Americans.  Unfortunately, Trump’s tweet suggests that the Administration will make choices to undermine the health care system, rather than stabilize it.

Open enrollment for 2018 qualified health plans begins in the late fall, and insurers are expected to commit to offering these plans in September.  Already, because of the turmoil in Congress, insurers have been reluctant to commit to another year of the Marketplaces.  The Department of Health and Human Services (HHS) has both attempted to help and hinder the Marketplaces.  On one hand, HHS released the Marketplace Stabilization Rule, which gave insurers some of their “wish list” in an effort to retain participation in the Marketplaces.  On the other hand, HHS has used funds to launch a public relations campaign against ObamaCare and terminated contracts for health insurance navigators in key cities such as Chicago and Dallas.  Insurers, already wary of the Marketplaces, will likely view HHS as an unreliable partner in the Marketplaces and may choose to steer clear in 2018.  This will leave many Americans without options for health insurance and contribute to the Republican argument that Obamacare isn’t working.

The Administration can also disrupt the Marketplaces by choosing not to defend a lawsuit relating to cost sharing reduction payments.  The ACA requires insurers to offer plans with lowered cost sharing, and the federal government makes additional payments directly to insurance companies to offset the lost revenue.  In 2014, the House of Representatives sued the Secretary of HHS, arguing that these payments were made without an explicit appropriation.  A district court judge ruled in favor of the House, but the case has been in abeyance and payments are permitted to continue as long as the appeal is pending.  The Administration, however, could choose to no longer defend the lawsuit and concede that the payments are not properly appropriated.  Eliminating these payments would require insurers to significantly raise premiums to offset their continued obligation to offer plans with reduced cost sharing.  It is estimated that premium increases would be about 19%, a problematic development considering that premiums are already rapidly increasing in many parts of the country.

There are ways to mitigate the Administration’s attempts to undermine the Marketplaces.  The House could properly appropriate funds for cost sharing reduction payments, perhaps in the bipartisan legislation now being discussed.  Important stakeholders, such as insurers, hospitals, and physician groups, could put further pressure on HHS to recommit to the Marketplaces.  Governors could also put pressure on their local insurers to participate in the Marketplaces.  Nevertheless, the perceived reluctance of HHS to improve rather than implode ObamaCare is just as much of a threat to the current health care system as anything rejected by McCain, Murkowski, and Collins last week.

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