One of President Trump's first official actions was to sign an executive order affirming the administration's intent to seek repeal of the Affordable Care Act (ACA) and directing federal agencies to minimize the economic and regulatory burdens of the ACA to the fullest extent permitted by law. While Congress and the White House continue to work out the specifics of a new healthcare policy, the administration has moved its repeal effort forward in important ways.
Tom Price at the Helm
On February 10, the Senate confirmed Tom Price as the new Secretary of Health and Human Services (HHS). Price is an orthopedic surgeon who served as a member of the House of Representatives from suburban Atlanta since he was first elected in 2004. In the House, he was the chairman of the Budget Committee and established a track record of opposing the ACA. He put forward his own proposal to repeal the ACA and replace it with a system that would curtail the healthcare law's preexisting condition protections and replace its premium subsidies with tax credits based on age rather than income. Price has also supported tort reform and efforts to improve patient choice. Ultimately, Price was narrowly but safely confirmed on a party line vote.
Outlook for Repeal, Replacement, or Repair of the ACA
Timing of Legislative Action
The timeline for legislative action on the ACA has been much discussed and in flux during the presidential campaign and these early days of the Trump administration. On the campaign trail, Trump promised that he would ask Congress to deliver a full repeal of the ACA on his first day in office.1 While the President has spoken about repealing and replacing the ACA, Congress has yet to take action, and consensus on how to repeal the law and what to replace it with seems elusive. A number of legislative proposals have been put forward by Republicans in Congress, and the debate over the details of the repeal and replacement of the ACA continues.
Mechanism of Legislative Action
Much discussion of the effort to repeal the ACA has focused on congressional Republicans' need to overcome a likely filibuster by Senate Democrats who would seek to preserve President Obama's signature healthcare reform law. To defeat the filibuster, Republicans could make use of the reconciliation process—a procedural tactic that allows a budget-related bill to be passed with a simple majority vote. Because a reconciliation bill can only contain provisions related to taxing and spending, such a piece of legislation could eliminate key provisions of the ACA (such as penalties associated with the individual mandate to purchase insurance), but could not replace the ACA in full. The result could be an unstable system that puts patients and providers at risk.
The American Hospital Association and the Federation of American Hospitals sent a joint letter to then President-elect Trump and Vice President-elect Pence raising their concerns about destabilizing the healthcare system.2 The letter pointed out that the ACA made cuts to several sources of funding for hospitals that serve poor and uninsured patients because those patients would gain access to affordable insurance under the Act. Eliminating the individual mandate or the premium subsidies that make insurance affordable, along with a rollback in Medicaid expansion, without restoring those funds for hospitals, could threaten hospitals' ability to care for vulnerable patient populations.
While the legislative plan is still being worked out, the Trump administration has taken regulatory action to stabilize the ACA health insurance marketplaces. On February 17, the Centers for Medicare and Medicaid Services released a proposed rule that would make several changes to these marketplaces.3 The proposed rule takes steps to improve the risk pool, encourage individuals to maintain enrollment, and decrease incentives for individuals to enroll only after they are sick. Among other actions, the proposed rule would shorten the open enrollment period for the next benefit year by approximately seven weeks, and would require pre-enrollment verification for special enrollment periods. Additionally, the Centers for Medicare and Medicaid Services also delayed the window during which qualified health plans apply for certification in the health insurance marketplace in 2018 to allow plans more time to consider whether to participate in the marketplace.
In the coming months, the administration could take further regulatory action to move on its healthcare priorities while debate and discussions continue in Congress. Regulatory efforts could include allowing insurers to charge higher premiums for older enrollees, changing the preventive care guidance, loosening nondiscrimination requirements applicable to physicians, and reducing meaningful use requirements for electronic health records. A complicating factor in these regulatory actions will be the agencies' need to comply with one of the President's early executive orders on new regulations. In general terms, the executive order requires that two regulations be eliminated for every new one that is implemented.
As the overall health policy landscape continues to shift on a daily basis, the best approach for providers, payers, and all parties in the healthcare space is to stay nimble and alert. We expect to hear more about the future of healthcare reform as part of Trump's address to a joint session of Congress this evening. Venable's healthcare team continues to closely monitor these legal and policy developments as they happen. Look for further updates from Venable and do not hesitate to contact your Venable attorneys with any questions or concerns.