United States: Part 4: The ACA, Post-Inauguration

In Parts I-III of our blog series, Very Opaque to Slightly Transparent: Shedding Light on the Future of Healthcare, we considered the healthcare landscape before implementation of the Affordable Care Act (ACA), and explored potential market outcomes under partial repeal and potential "repeal and replace" scenarios.  Although we are just a couple weeks into the Trump Presidency, we have already seen a number of ACA-related developments.

Budget Resolution

By January 13, 2017, both the House of Representatives and the Senate approved a budget resolution that lays the foundation for a partial repeal of the ACA.  The budget resolution instructs certain Congressional committees to recommend by January 27 proposed legal changes to achieve deficit reduction targets for the period of fiscal years 2017 through 2026.  Pursuant to the resolution, Congressional leaders are expected to take aim at several of the ACA's core provisions utilizing a legislative process known as budget reconciliation, which allows legislation directly affecting the budget to pass with a simple majority vote, thereby bypassing a likely Democratic filibuster attempt.  However, as described in greater detail in Part II of the series, the budget reconciliation process has certain limitations.  While it can be employed to eliminate various key provisions, it likely cannot be used to fully dismantle the ACA or substitute a replacement bill.  Whether or not the process will be so utilized is uncertain, as both Congressional Republicans and the Trump Administration have voiced a strong desire to enact a replacement simultaneously with, or shortly after, a repeal.

Executive Order

On the day of his inauguration, President Trump issued an executive order signaling the new Administration's desire to "seek the prompt repeal" of the ACA.  The executive order is more an aspirational document than a document of true legal consequence.  It provides relatively vague prescriptions to federal agencies concerning enforcement (or non-enforcement) of certain aspects of the ACA, with an emphasis on waiving, delaying, or granting exemptions from the implementation of requirements that impose a fiscal or regulatory burden on states, individuals, or healthcare market participants, providing greater flexibility to States in implementing the law, and encouraging the development of "a free and open market in interstate commerce" for healthcare products and services.  Broadly speaking, the executive order mirrors in many respects the themes common to the potential ACA replacement bills discussed in Part III of the series.

The Patient Freedom Act

As Congressional Republicans grapple with a replacement proposal that can bridge the various internal divides within the Party, Senators Bill Cassidy (R-LA) and Susan Collins (R-ME) have proposed the Patient Freedom Act.  The Act would repeal most of the ACA's federal mandates (e.g., the individual and employer mandates, the actuarial value requirements, the benefit mandates, etc.) while retaining popular consumer protections, such as prohibitions on annual and lifetime limits and pre-existing condition exclusions.  At the local level, states would be permitted to choose to reinstate Title I of the ACA (i.e., most of the core provisions that people associate with the ACA), adopt a "new market-based system" with certain federal assistance, or design and regulate insurance markets as they see fit without any federal assistance.  While the proposal has gained a little bit of traction among certain Republican Senators, the bill could struggle to win enough Republican support in the House and Democratic support in the Senate to become law.  Nonetheless, the proposal recognizes that absent substantial changes to Senate rules, some Democratic buy-in will be required to pass any replacement legislation.

Recent Rumblings

Notwithstanding the Administration's promise to move quickly on repealing and replacing the ACA, President Trump suggested in a February 5, 2017 interview with Bill O'Reilly that repealing and replacing the law may "take 'til sometime into next year."  In addition, some Republicans on Capitol Hill have begun tempering their rhetoric, speaking of "repairing" the ACA rather than "repealing and replacing" it.  Though uncertainty remains as to the import of these shifts in vocabulary and messaging, there is every indication that dismantling President Obama's signature healthcare law will not be as simple a process as the President and Congressional Republicans originally forecasted.

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