What's at stake across the industry for ACA repeal and delay

The Obama administration, and the provider and insurance industries with it, have spent the past six years implementing the Affordable Care Act. Since the measure was signed into law by President Barack Obama in March 2010, a mosaic of insurance exchange markets sprang up across the country, leading to more than 20 million newly insured Americans. Hospitals and physicians began transitioning to value-based care with a refined focus on preventative services. In addition, 31 states and the District of Columbia expanded Medicaid to individuals living at up to 133% of the federal poverty level.

President-elect Donald Trump vowed on the campaign trail to repeal the law. On Tuesday, he tweeted the measure "is lousy healthcare." In November, Senate Majority Leader Mitch McConnell told Politico that undoing the ACA is “pretty high on our agenda … I would be shocked if we didn’t move forward and keep our commitment to the American people.”

High on the agenda, indeed: On Tuesday, the GOP got the ball rolling on ACA repeal when Senator Mike Enzi (R-WY), Chairman of the Senate Budget Committee, introduced a concurrent budget resolution that could pave the way for repealing the measure. The resolution includes instructions for committees in the Senate and House of Representatives to follow in order to put repeal through reconciliation, a “fast-track process” requiring only a simple majority in the Senate, as well as in the House. Thus, Democrats will not be able to use Senate rules, where 60 votes are generally required to move legislation to a final vote, as a road block.

This story is moving fast. With that in mind, let's take a beat to take stock of what's at stake for prominent stakeholders/storylines across the industry regarding "repeal and delay."

More than 20 million Americans

The uninsured rate for Americans hit a new low last year. On Wednesday, CMS released new numbers showing 8.8 million individuals signed up for coverage through Dec. 31 via HealthCare.gov, an increase from 8.6 million during the same time period last season. Roughly 20 million Americans gained health insurance through the state and federal exchanges over the lifetime of the ACA, and repealing the measure could result in many of them losing coverage through a variety of means. 

For one, the ACA marketplace foretold a shaky future last year with the exits of major insurers such as United Healthcare and Aetna as well as an average premium hike of 25% across the marketplace. A "repeal and delay" strategy – an avenue increasingly bandied about where the ACA could be repealed and a replacement is held off while the GOP figures out what that is – could scare the remaining insurers in the marketplace from continuing to participate without the promise that the market will still exist. 

"Without rapid action to stabilize the exchange markets, we are likely to see more insurers dropping out and another round of sharply increasing premiums," wrote Joseph Antos and James Capretta in a recent Health Affairs Blog post, adding, "Insurers must make initial decisions about their participation in the exchange markets by next April. This leaves very little time to take steps that might encourage insurers to offer exchange coverage in 2018."

While it's still uncertain what a concentrated effort of a replacement looks likes, reports of varying economists estimate between 3 to 21 million individuals could see their coverage dropped, depending on the Republican plans currently available

A key issue for individuals signing up for new plans is that words matter. Specifically, "access" and "coverage." For coverage, the Congressional Budget Office last month stated that minimal insurance products that would "not provide enough financial protection against high medical costs to meet the broad definition of coverage" would not meet the office's past definition of "coverage." This, along with the idea of "access" that Republicans could claim is better than mandatory coverage, will matter to consumers under a new plan. That said, the higher deductibles and lower premiums in some current ACA marketplace plans highlight a stark reality: Cheaper plans don't necessarily provide the same access to care delivery services.

For example, Trump has promoted HSAs as an alternative to Obamacare, even going so far as to suggest they be passed along to a person’s heirs, according to Forbes. Just like employers that contribute funds to an employee’s HSA, the government would put money toward the deductible in a non-employer-based HSA. Not only do HSAs predate the ACA, but Obama explicitly allowed for them under the new law. Moreover, the ACA authorizes the Department of Health and Human Services to decide what qualifies as health insurance, The Hill observes. The Trump administration could use that as a vehicle to expand HSAs in ACA marketplace, as well as in Medicare and Medicaid.

However, HSAs tend to come with higher-deductible health plans, meaning higher out-of-pocket costs for consumers. And many lower- and middle-income Americans don’t have the money to put away in an HSA.

Republicans

Republicans have spent the past six years trying to take down the ACA, going so far as the Supreme Court in legal challenges. Now, with Trump in the White House and Republicans dominating both houses of Congress, there’s nothing stopping them from getting rid of a law they’ve long hated and replacing it with their own plan. The question is what plan they will come up with.

When, how and what an ACA replacement entails will be tricky for the GOP. To be seen as "winners" in the political battlefield, they'll presumably need to cover as many or more Americans than the ACA. They also need to not create a condition where they take the blame for a marketplace implosion. Trump noted this himself on Wednesday:

One of the best guesses as to what the reconciliation bill would look like is H.R. 3762, the ACA repeal reconciliation bill that Obama vetoed early last year. this effort has real consequences which should give some pause to legislators for what should actually be included and what the effects may be. A senator who spoke with Bloomberg on the condition of anonymity noted "there’s a growing sense among some of his colleagues that they need to have a replacement for Obamacare ready soon 'because we’re going to own this.'"

Hospitals

Using a budget reconciliation process means the ACA parts and bits on the chopping block are strictly the ones that affect the federal budget. Luckily for opponents, this does include many of the more unpopular bits such as Medicaid expansion, the medical device excise tax, the Cadillac tax and the individual mandate. 

The Affordable Care Act brought a host of new requirements for hospitals, from administrative tasks that necessitated EHRs to penalties when patients are readmitted within 30 days of discharge for ailments such as pneumonia or a heart attack. It also saw the launch of the Patient-Centered Medical Home program and other initiatives aimed at keeping patients out of the hospital. Repealing or rolling back the ACA could ease restrictions on admissions and help boost revenues. It could also lead to reversal of cuts to the Medicaid Disproportionate Care Hospital payment that were made in anticipation of Medicaid expansion.

While the ACA has imposed a slew of new requirements on hospitals, it has also helped health systems benefit from the subsidies most consumers in the ACA exchanges receive to offset the cost of their monthly premiums. If a Trump administration overturns the ACA with no equivalent replacement, hospitals could see an uptick in patients who can’t foot their medical bills.

According to an analysis by healthcare economics firm Dobson DaVanzo, if legislation for an ACA repeal is passed without simultaneously implementing a replacement plan, it could cost hospitals $165.8 billion in federal payments through 2026. 

Insurers

Insurance companies and the ACA have had a notably contentious, reluctant relationship. For insurers, a repeal could prove fiscally fortuitous. Rolling back certain provisions could allow insurers to drum up revenue using old means that the ACA explicitly banned:

  • Preexisting conditions - The ACA bans charging individuals higher rates for preexisting conditions. The individual mandate was used to help offset the costs of "guaranteed issue," where insurers must take customers regardless of their health condition. A return to considering previous conditions would likely benefit the insurers. Interestingly, this is a popular clause in the sweeping legislation though the idea of guaranteed issue is highly related to the individual mandate. If the preexisting condition ban is kept, it will be interesting to see what measure will help stabilize the insurance risk pool.
  • Lifetime benefit caps - The legislation also banned lifetime caps on coverage, which ensures continued coverage for serious medical problems and insurers consider onerous. Lifting these caps could not only affect individuals in the individual market but the entire insurance market, including those with coverage through their employer.  
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