Throughout the election, President-elect Donald Trump made it clear that he would make repealing the Affordable Care Act (ACA) a top priority. The question many of us are asking is: Will Trump hit the reset button on health care reform? And if so, what are the consequences?
A total repeal is unlikely
An immediate and complete repeal isn’t going to happen. First of all, coming up with a strategy for replacing the ACA will take time, and it’s unlikely that Trump would eliminate the ACA without providing an alternative. Doing so would leave an estimated 22 million Americans without health insurance.(1) Moreover, the ACA can’t be repealed without a 60-vote majority by Congress, and Republicans only hold 51 seats.
It’s more likely that Trump will retain bits and pieces of the legislation and gradually whittle away at the rest. He can eliminate portions of the ACA—such as Medicaid expansion, subsidies, tax penalties for the uninsured, and certain taxes created to help pay for ACA programs—through the budgetary reconciliation process. He would only need a basic majority vote to do this. However, provisions regarding Medicare reforms, coverage for young adults on their parents’ policies until they reach age 26, and guaranteed issue, which ensures availability of coverage regardless of medical history—cannot be repealed through the reconciliation process.
The new administration could severely handicap the ACA by not enforcing certain regulatory requirements, cutting funding for subsidies and Medicaid expansion, or simply abandoning enrollment efforts during the rest of the open enrollment period.
Trump hasn’t said what he will do about the individual mandate, which imposes penalties for not having insurance, nor has he provided any specifics about how he will address rising drug costs, though he has previously said he would consider allowing re-importation of less-expensive drugs from other countries.
According to Trump’s transition website, he intends to expand the use of health savings accounts (HSAs); work with states to establish high-risk pools—insurance programs for people who are sick or cannot get coverage through the usual means—to cover those with large medical expenses who have “not maintained continuous coverage”; and allow insurance companies to sell policies across state lines. He has also mentioned possibly converting Medicaid from an entitlement program to annual block grants to states, giving each state the power to choose how care is provided to its low-income population.
The idea of selling insurance across state lines isn’t new; it’s been a component of proposed replacements for as long as Republicans have talked about repealing Obamacare. What many fail to realize, however, is that this is already legal under the ACA.
So why haven’t insurers jumped on the opportunity? In a nutshell, it’s not financially advantageous, as least in the short term, for insurers to have to build new provider networks in states where they don’t already do business—and, naturally, people want access to local health care providers, regardless of where they purchase their coverage.
Why a piecemeal approach won’t work
At first glance, Trump’s ideas might sound appealing, but the fundamental issue is that the ACA is a set of interlocking policy measures that don’t work well, or at all, on their own.
For example, Trump has said the pre-existing condition policy is one he would like to keep. But telling insurance companies that they must accept pre-existing conditions is akin to saying they have to provide fire insurance for a burning building. If you require them to insure everyone, regardless of health status, then you must also require that everyone buys insurance. Otherwise, people would only buy insurance when they are sick—when their building is on fire and they need rescuing. In economics, we call this “moral hazard.”
Another example lies with Medicaid expansion.Several studies of the effects of Medicaid expansion have shown strikingly similar results.(2,3,4) Hospitals are providing less charity care, and more patients are getting the care they need. States that take Medicaid money from the federal government, no matter how politically difficult it may be to swallow, are helping both the previously uninsured and the hospitals that care for them.
It’s too soon to know whether the health of the Medicaid population is improving, but the data on access and financial performance are so unequivocal, we’re surprised more non-expansion states haven’t reversed course.
Even if the Trump administration can convince insurers that selling across state lines is worth investing in new provider networks, there are other potential problems. For instance, states could lose the ability to regulate their own insurance markets, as those with stricter standards for benefits and consumer protection (i.e., more restrictions upon insurers) would lose out to states with fewer restrictions. The ACA has nationwide standards for all plans sold in the individual market; without those, consumers could wind up paying exorbitant premiums and getting little in return. In particular, patients with multiple chronic conditions, who are among the highest users of health care, could have an extremely difficult time obtaining affordable coverage.
High-risk pools have been tried before—before the ACA, 35 states had them. So did the federal government during the transition to the ACA. Many people found premiums and other costs of care unaffordable. There were waiting lists for coverage and waiting periods before care was paid for. Funding for the federal risk pool ran out before the program was supposed to end. Trump’s health advisers will need to address these issues to keep them from recurring.
HSAs, a cornerstone of Trump’s plan, have become more popular since their introduction in 2003, but they tend to benefit more affluent consumers. Families struggling to pay for necessities will find it difficult to fund an HSA.
The ACA is about more than how health care is delivered and paid for, and repealing the legislation would also affect the health care workforce, research, development of biosimilars, improvements made in prevention and the quality of care, and myriad other factors.
“The name of the bill is ‘Affordable’ and the key is to make health care affordable. It’s virtually impossible to see this bill in any way repealed; it’s politically untenable. The Affordable Care Act has become part of the fabric of the United States.” (5,6)
That was Cleveland Clinic’s CEO, Delos “Toby” Cosgrove, M.D., speaking at the PRWeek conference in October.
Efforts to control government spending on health care predate the ACA. But it was this law that introduced mechanisms for real cost containment while at the same time—and this piece is crucial—endeavoring to improve the quality of care.
Every major sector of health care is moving toward value-based care, for a very simple reason: we’re an aging nation, and the amount of money spent on care, without any sort of check on costs, is untenable.
We believe that President-elect Trump made a mistake by repeatedly telling crowds on the campaign trail that he would repeal and replace Obamacare. That is not to say that elements of the law shouldn’t be amended. The rules and provisions for Medicare and Medicaid, for instance, are amended by lawmakers all the time. But we can envision Trump seated at the table with his advisers, asking, “What now?”
- Estimate by the Congressional Budget Office. https://www.cbo.gov/faqs Accessed November 15, 2016.
- Frean B.A., Gruber J, Sommers BD. Disentangling the ACA’s Coverage Effects — Lessons for Policymakers. N Engl J Med 2016; 375:1605-1608.
- Sommers BD, Blendon RJ, Orav EJ, Epstein AM. Changes in Utilization and Health Among Low-Income Adults After Medicaid Expansion or Expanded Private Insurance. JAMA Intern Med. 2016;176(10):1501-1509.
- Benitez JA, Creel L, Jennings J. Kentucky’s Medicaid Expansion Showing Early Promise On Coverage And Access To Care. Health Aff. 2016;35(3):528-534.
- http://www.mmm-online.com/legalregulatory/cleveland-clinics-cosgrove-obamacare-now-part-of-the-fabric-of-the-us/article/559410/. Accessed November 15, 2016.
- In December, Cleveland Clinic CEO Dr. Toby Cosgrove was appointed to The President’s Strategic and Policy Forum, a panel of 16 business leaders that will advise President-elect Donald Trump on how “government policy impacts economic growth, job creation and productivity,” according to a statement issued by Trump’s office. Blackstone Group CEO Steve Schwarzman, who will chair the panel, said in a Bloomberg Television interview that Trump asked him to choose the members of the group. Dr. Cosgrove is also reportedly up for consideration to head up the VA. (Updated 12.27.16)