Big Changes and Big Risks Are Ahead for Health Policy
The election on Tuesday of Donald Trump as the next president is one of the most consequential events in the nation’s political history for many reasons, not the least of which is that it is likely to alter the basic direction of health care policy. Trump ran hard against the Affordable Care Act (ACA), saying repeatedly it was a “disaster” that needed to be repealed and replaced, and he won. There will be a very high expectation among Trump supporters that a Republican Congress can and should move quickly to fulfill this commitment.
Moreover, the ACA itself handed to the executive branch expansive new authority to unilaterally make changes in the rules governing health insurance, and also, through Medicare regulations, in the ways physicians and hospitals organize themselves to care for patients. Many supporters of the ACA have cheered in recent years as the Obama administration moved forward with its health policy agenda using this broad authority. All of that executive power will soon fall into the hands of Donald Trump and those who work in his administration. During the campaign, Trump made it clear he will use all of the executive powers of the presidency to pursue his goals.
Further, the Obama administration has made several ACA implementation decisions that critics have said go well outside the boundaries of what the law allows. For instance, the administration chose to redirect some ACA funds that were supposed to be deposited in the federal treasury back to insurance companies in the form of “reinsurance” payments for high-cost patients. A Trump administration could reverse this decision, and others like it, rather quickly.
The election outcome itself could create more problems for the ACA. The insurance plans sold on the law’s exchanges have already experienced substantial losses due to adverse selection, leading many insurance companies to pull back on their participation. The prospect of a Trump administration steering ACA implementation may be enough to convince some of the insurers still offering products on the exchanges in 2017 to rethink their plans. If more insurance companies head for the exits, the exchanges could become even less stable than they already are.
The “replace” part of “repeal and replace” has always been the tricky part for ACA opponents, and that will also be true for the incoming Trump administration. During the campaign, Trump offered only the vaguest outline of a plan that wouldn’t come close to serving as a starting point for a workable proposal. The ACA, for all of its problems, brought many low-income households into insurance coverage, through an expansion of the Medicaid program and through heavy subsidization of the insurance plans offered on the exchanges. Unless Trump wants to preside over a massive increase in the number of Americans without health insurance during his presidency, he will have to offer a plan that ensures households with low incomes can secure health insurance in some new way.
House leaders, led by Speaker Paul Ryan, introduced a plan in June that could serve as the starting point for credible replacement legislation. An important feature of this plan is a refundable tax credit for enrolling in health insurance. Working age Americans without access to employer coverage would get the credit to help offset the cost of enrolling in a plan offered in the non-group market. This credit is essential to making a replacement plan workable. It’s the only way to provide the necessary level of financial assistance to lower income households to ensure they can enroll in an affordable plan. During the campaign, Trump offered a tax deduction for premiums instead of a credit. But a tax deduction provides no help to families who pay no income taxes and very little help to those in the lowest tax brackets. If the incoming Trump administration is serious about repeal and replace, it will embrace the tax credit proposed by House leaders.
Trump and his allies in Congress will need to decide if they want to try to pursue repeal and replace in separate bills, or in one bill. Earlier this year, Congress sent a partial repeal-only bill to President Obama, who vetoed it. In 2017, Congress could try to pass the same bill again and send it to President Trump, who would presumably sign it. It would be a mistake to pursue this approach, though. A repeal-only bill will be hard for Congress to pass when there is no veto protecting House members and Senators from its real-world consequence, which is that many millions of people would lose their health insurance coverage. Consequently, some faction of the law’s opponents is likely to find a repeal-only effort unacceptable, and withhold their support. It won’t take many defections to derail the idea.
Taking up a repeal-only bill would also create the very real risk that Congress, for political reasons, would never get around to replacing the ACA. That would be a very big mistake. The ACA has many problems; chief among them is its excessive reliance on federal control. But the pre-ACA status quo was unacceptable too. Costs were high and all too often people with expensive health conditions were denied coverage or forced to pay exorbitant premiums. ACA opponents have said for years that they want to fix the problems in health care with market-based solutions, not more regulation. They now have a window of opportunity to move forward with a reform plan consistent with their principles. If they choose not to push a credible replacement plan, they will have no one to blame but themselves when, inevitably, a reform proposal similar to the ACA is passed into law again at some later date.
The ACA is on shaky political ground in large part because of how it was enacted. Large Democratic majorities pushed it through Congress despite unified Republican opposition. The incoming Trump administration would be wise to avoid this mistake. If Republicans want what they do in health care to last, they should try to secure some level of bipartisan support for their replacement ideas. That’s a tall order in this environment. But if Trump really is the dealmaker he says he is, he should be up to the challenge.