Potential Policy Scenarios for the Future of the Affordable Care Act

In the 2016 presidential and congressional elections, Democrats and Republicans alike campaigned on the Affordable Care Act — either to protect it or repeal and replace it with a more effective solution. Indeed, the law has prompted heated debate among elected leaders who disagree about the best ways to improve Americans’ health care access, delivery and affordability. Behind all the political theater, however, are real-life consequences for those who rely on health care coverage. So what’s next for the ACA and the people it impacts? Let’s first take a look at what’s happened so far.

President Donald Trump’s first executive order signaled his desire to quickly minimize the ACA’s “unwarranted economic and regulatory burdens.” He called on government agencies to interpret the existing law as loosely as possible to reduce the “cost, fee, tax, penalty, or regulatory burden” on key stakeholders — including patients, employers and insurers. This may include offering more exceptions or reducing enforcement for the individual and employer mandates. In February 2017, Republicans proposed the American Health Care Act, as a possible replacement option for the ACA. Met with intense opposition and scant legislative support from either side of the aisle, the bill was later withdrawn from consideration. As of late March, however, the New York Times reported that House Republican leaders have reignited “negotiations on legislation to repeal the Affordable Care Act.”

Regardless of how lawmakers proceed from here, a full repeal of the ACA won’t be easy. Tens of millions of previously uninsured Americans now have improved access to health care. In addition, 32 states, including several with Republican governors, have expanded Medicaid coverage as authorized by the law. These newly covered Americans likely won’t want to lose that insurance unless Congress can offer a comparable option. But perhaps most importantly, despite its many criticisms, some aspects of the ACA remain quite popular for individual consumers. Providing coverage despite pre-existing conditions, eliminating lifetime coverage caps, and allowing children to stay on their parents’ health plans until the age of 26 are features many Americans will not want to lose.

Rather than a full “repeal and replace,” a more likely scenario would be to address individual components of the ACA through specific legislation. This would allow Congress to improve portions of the ACA without disrupting its most popular and effective features. Health and Human Services (HHS) Secretary Tom Price may have offered a glimpse into what this may look like. In 2015, as a Georgia congressman, Price sponsored a budget reconciliation bill that addressed several core tenets of the ACA. Then-president Obama vetoed the bill, but Price’s vision could serve as a model for the future. 

The Insurance Mandate

Price has signaled his intent to eliminate both the individual mandate to purchase insurance and the employer mandate to provide insurance. This could create an immediate cost savings for the millions of Americans who purchased insurance to avoid paying the government penalty, and those who simply paid the penalty because it was less expensive than purchasing insurance. Unfortunately, eliminating the mandate would also likely drive millions of young and healthy Americans out of the insurance pool, which would shift the costs to those who remain. Congress has floated tax credits and an expansion of health savings accounts to encourage individuals to purchase insurance. 

Pre-Existing Conditions

Early proposals suggest patients with pre-existing conditions can still obtain coverage under a two-track system. Patients who maintain continuous coverage cannot be dropped by their insurers. They can also maintain coverage when switching from work-based plans to the individual market. Patients who haven’t maintained continuous coverage would be shifted to a state-based high-risk pool. But these pools are often expensive and lack comprehensive coverage. In addition, high-risk pools create a financial burden on the state. The National Association of State Comprehensive Health Insurance Plans reports states subsidized roughly 50 percent of the high-risk pools’ operating costs. 

Medicaid Expansion

The federal government currently funds 63 percent of the $532 billion cost of Medicaid, while states pick up the remaining 37 percent of the tab. One plan would shift that cost burden by providing states fixed grants and allowing them to administer the dollars. This would give states more control over who can enroll in Medicaid and what benefits they would receive. The plan could also allow states to require able Medicaid enrollees to work for their benefits. Currently, there are no work requirements for participants to receive benefits. Finally, providing states fixed block grants could eliminate the numbers game of states driving Medicaid enrollees to receive more federal funding. Block grant supporters say the move would help save millions of dollars in fraud and abuse.

According to Sam Hanna, program director of HealthInformatics@GW, the online Master of Science (M.S.) in Management of Health Informatics and Analytics program from the Milken Institute School of Public Health at the George Washington University, “The stakeholders in the health reform debate (payers, providers, pharma, new entrants, etc.) could follow an approach where they make some key ‘no regrets’ moves to bolster their position as we await the outcome of the reform process. These moves could range from continuing to invest in value-based care initiatives to developing lower-cost programs.” 

But a piecemeal solution to address the ACA may also be tough to achieve. President Trump’s plan for health care reform begins with a declaration to “completely” repeal the ACA. This means Congress and the White House will need to find some middle ground on what the future of health care will look like.

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