United States: Obamacare In The Cross Hairs - But Procedural Hurdles Loom

President-elect Trump and congressional Republicans have promised to "repeal and replace" the Affordable Care Act (ACA), but there is deep division regarding which provisions will be rescinded and around the details of the replacement and the length of any transition period.

Last week the U.S. House and U.S. Senate took the first steps toward achieving repeal by passing a budget resolution with reconciliation instructions related to ACA repeal. The reconciliation process allows the Senate to bypass a filibuster and pass legislation with a simple majority. However, only budget-impacted provisions of the ACA can be repealed this way. Further, this year's budget resolution stipulates that changes must save $1 billion over a ten-year period to be enacted through reconciliation. While the budget resolution calls for committees to develop language to achieve this by January 27, it may take much longer given the complexity around repeal and replace.

The policy stakes are extremely high, not only because millions of Americans stand to lose coverage if the exchanges and Medicaid expansion are eliminated with no replacement, but also because developing a newly designed system which will inevitably pit health care stakeholders against one another creates significant political ramifications.

While the situation remains fluid, there are a few issues we are watching in the first few weeks of a Trump presidency.

Rolling Back Regulations

Congressional Republicans can also use the appropriations process to de-fund certain parts of the ACA, and President-elect Trump may modify portions of the law by Executive Order. This would jeopardize regulatory actions taken by President Obama, including pilot programs created by the ACA and developed within the Center for Medicare and Medicaid Innovation, which Republicans have accused of exceeding its authority. Other health-related regulations, particularly those finalized in the weeks following the election, may also be on the chopping block.

Carryover of ACA Provisions

While the GOP targets what it believes to be the ACA's most onerous provisions, many popular insurance reforms — including the prohibition on denials of coverage for pre-existing conditions — are likely to survive. President-elect Trump has voiced support for maintaining some of these so-called insurance reforms, but some Republicans argue that their elimination would give insurers more flexibility in setting prices. Keeping those requirements intact without a coverage mandate would cause severe market disruption.

HHS Confirmation

Mr. Trump's pick of Representative Tom Price (R-GA) faced severe scrutiny during a courtesy hearing before the Senate Health, Education, Labor and Pensions Committee on January 18. He must clear the Senate Finance Committee, which he will face on January 24, before proceeding to a vote on the Senate floor to secure his confirmation.

Rep. Lamar Alexander (R-TN), chairman of the Senath Health, Education, Labor and Pensions Committee, indicated the Senate wouldn't officially confirm Price until mid to late February, so it is unlikely there will be significant legislative movement until March.

Other "Must Pass" Health Care Legislation

While there is a strong impetus to address the ACA, it is not the only game in town. Key health priorities include reauthorizing the Children's Health Insurance Program (CHIP), set to expire this year. CHIP enjoys bi-partisan support and no one wants to risk getting caught in the political blowback if it is allowed to lapse. While CHIP was not part of the ACA, its reauthorization could get tied up with ACA-related measures, either attached as amendments or following in subsequent bills.

Uncertainty Surrounding Drug Prices

Contrary to what Wall Street and the pharmaceutical industry believed would happen in the wake of the presidential election, President-elect Trump said last week that drug companies were "getting away with murder," and that the United States — the largest buyer of drugs in the world — doesn't "bid properly, and we're going to save billions of dollars."
The statements roiled markets and stand in stark contrast to the historical position of his party, which has been a reliable ally of the pharmaceutical industry. We will be watching closely to see how he and majority leadership will reconcile their views on drug pricing, if at all.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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