December 5, 2016
Following the results of the November 8 election in the U.S., Republicans now control the federal executive branch, Congress, 33 state governments (Governors), and 32 state legislatures. Republicans have won more political power in 2016 than in any election since at least 1928, and they will now have the task of making significant changes to the health care system.
President-elect Donald Trump’s health care platform is wide-ranging and an aggressive shift from the past, with a stated overarching goal of lowering costs, removing uncertainty and providing financial security for Americans.
Since 2010, Republicans have vowed to repeal, the Patient Protection and Affordable Care Act, “Obamacare”. Now that they control the White House and the Congress, they will likely start the process of the repeal as one of their first acts in early January 2017. The repeal is the easiest part of the process, but Congress will have to work with the new President and Governors on a comprehensive plan to replace the law without significant disruption to the health care market.
To repeal parts of Obamacare, Congress will be using budget reconciliation, an expedited legislative procedure that requires a vote by the full House and Senate. Reconciliation bills are filibuster proof in the Senate and require 51 votes for passage.
The current goal is to push this legislation through the House and Senate in early January and have it ready for President Trump’s signature soon after he is sworn in as the 45th President of the United States. The legislation will include a 2- to 3-year delayed implementation date to give Congress, the new Administration and Governors time to negotiate a replacement plan.
The replacement process will come in at least two phases. The first phase will address “insurance market reforms”, given the concerns raised during the race regarding high double-digit increases in health insurance premiums expected for 2017, and the calls for changes to Obamacare in order to lower premiums. The President-Elect has demonstrated his commitment to this process by his first domestic cabinet nominee, Dr. Tom Price for Department of Health and Human Services (HHS), as well as consultant Seema Verma, who architected Vice President-elect Mike Pence’s Medicaid expansion plan in Indiana, to lead the Centers for Medicare and Medicaid Services. This process will be very complex and will involve a series of changes via Presidential Executive Orders; regulatory changes from key agencies such as the HHS, Department of Treasury, and Department of Labor; and legislative changes going through the congressional and state legislative processes. Congress is preparing to use the Congressional Review Act to give the new Administration the tools to repeal regulations quickly. Recently, the House passed the “Midnight Rules Relief Act”, which would allow Congress to bundle together any number of regulations to be prepared for repeal.
Several of the insurance market reforms that will be debated as part of the replacement plan include:
The second and additional phases will focus on the other parts of Obamacare that have not received as much public attention. This includes reform to the public programs (Medicare and Medicaid), as well as many other issues such as health provider taxes (i.e., medical device tax, health insurance tax, Cadillac health plan tax), menu labeling requirements, and several other new regulations of great concern to employers.
The other phases address legislation such as: the reauthorization of the Children Health Insurance Program (CHIP), and the potential the implementation of 21 Century Cures, and PDUFA VI.
Another interesting question will be interplay between the Trump-Price plan with that of House Speaker Paul Ryan, coined “A Better Way”, which entails block grant funding for Medicaid, vouchers for Medicare coverage, and the elimination of the advance paid premium subsidies for individual insurance.
While many health care providers were initially nervous by President-elect Trump’s victory given his aggressive stance on repealing Obamacare, the appointment of a seasoned veteran like Price and Trump’s recent “softening” on his stated plans and timeline for repeal is giving confidence to many that there will be an orderly transition.
FTI Consulting’s Health Care & Life Sciences and Public Affairs experts are uniquely qualified to advocate on behalf of its clients, using our industry-specific expertise to provide intelligence, spot fresh opportunities and anticipate hurdles throughout both the transition phase and the new administration. We will follow-up with additional analysis on these plans and other health care items in 2017.