New administration, Congress begin efforts to repeal, replace Affordable Care Act

Trump administration, GOP have yet to decide on Affordable Care Act repeal, replace strategy; here are some options 

After months of discussion during the 2016 presidential campaign and in the weeks since President Trump’s election, the new Congress and Trump administration have placed repealing the Affordable Care Act (ACA) at the top of their legislative agenda.

While specific plans are still emerging and the timing for proposed changes remains uncertain, Republican lawmakers and President Trump are wasting little time in laying the groundwork for dismantling and potentially replacing President Obama’s signature health care law.

Trump dedicated his first Executive Order to “easing the burdens” of the ACA and members of Congress introduced some proposals in the first weeks of the 115th Congress. Consensus, however, has yet to be reached on exactly how the ACA will be repealed and what or if anything will replace it. 

Dismantling the ACA through Budget Reconciliation

To dismantle many portions of the ACA, Congress is proposing to use a complex legislative procedure known as budget reconciliation. Under this procedure, Congress can use its annual budget resolution to expedite the legislative process on any matters that affect the federal budget, with a simple 51-vote majority. This allows Republican Senate leaders to avoid potential filibusters by Democratic lawmakers, which would require 60 votes to overcome under ordinary circumstances.

While the federal budget is not affected by all provisions of the ACA, many key provisions — such as tax credits for low-income individuals to purchase insurance, penalties for the individual mandate, and Medicaid expansion — affect the federal budget and therefore can be rolled back using budget reconciliation.

Senate Budget Chairman Michael Enzi (R-Wyo.) unveiled the FY17 budget resolution (S Con Res 3) on Jan. 3, and on Jan. 12, the Senate voted 51–48 to adopt the resolution, with Sen. Rand Paul (R-Ky.) representing the only Republican vote against the measure. The House followed suit the following day, passing its budget resolution with a vote of 227 – 198, with nine Republicans voting against the bill.

The reconciliation instructions in the fiscal blueprint direct two committees in the House (Ways and Means and Energy and Commerce) and two committees in the Senate (Finance and Health, Education, Labor and Pensions)to produce legislation cutting the federal deficit by at least $1 billion over 10 years. The subsequent legislation will determine the precise methods that lawmakers plan to use to repeal the ACA through budget reconciliation.

Congress initially set a Jan. 27 non-binding deadline for the committees to send reconciliation legislation to their respective budget committees, but it is now expected that the deadline will be pushed back to mid-to-late February at the earliest. In the meantime, House and Senate leadership continue to request input from stakeholders, and on Jan. 6, NACo sent a letter to House leadership urging Congress to consider implications of ACA reforms that would merely shift the costs of caring for indigent populations to counties.

Dismantling the ACA through Executive Order

As Congress continues to debate the path forward on health care, President Trump has also signaled his prioritization of efforts to repeal the ACA. Shortly after his swearing-in, he signed an Executive Order calling on the secretary of health and human services (HHS) and other federal agency leaders to “ease the burdens” of the Affordable Care Act. Specifically, the order calls on the HHS secretary to “exercise all authority and discretion available to them to waive, defer, grant exemptions from or delay the implementation of any provision or requirement of [the ACA] that would impose a fiscal burden on any state or a cost, fee, tax, penalty or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, health insurance purchases, or makers of medical devices, products or medications.”

Although the order does not call on federal agencies to take specific actions to achieve the goals listed above, and major changes to health policy will need to be carried out through legislation, the scope of the executive order, and its timing immediately after his inauguration, sends a strong message of the Trump administration’s intent to repeal the ACA.

Replacing the ACA through Legislation

On Jan. 23, Sens. Bill Cassidy (R-La.) and Susan Collins (R-N.H.) introduced S. 191, the “Patient Freedom Act,” the first of what is likely to be a series of pieces of legislation that could ultimately replace the ACA. The bill shares some features with prior proposals to replace the ACA in that it encourages the use of health savings accounts and eliminates the individual insurance mandate for states that opt out of the ACA.

Under the proposal, states could: 1) keep the ACA in place; 2) receive approximately 95 percent of federal funding and automatically enroll individuals in health savings accounts; or 3) reject all federal assistance. Certain mandates are repealed, such as the requirement that employers provide and individuals purchase insurance. Other ACA provisions are maintained, such as not allowing insurance companies to deny coverage based on pre-existing conditions and allowing children to be covered by their parents’ insurance plans until age 26.

On Jan. 24, Sen. Rand Paul (R-Ky.) introduced S. 222, the Obamacare Replacement Act, that would eliminate many central elements of the ACA, including the mandate that everyone has coverage and essential health benefits that insurance plans must cover.

Paul’s proposal would change the rules for patients with pre-existing conditions, allowing them a two-year open enrollment period to get coverage and requiring that they maintain continuous coverage thereafter. A key element of his proposal is the use of a tax credit of up to $5,000 per person to use as part of a health savings account to pay for health insurance, and prescription and over-the-counter drugs. The tax exclusion for employer-sponsored health insurance would be replaced by a universal deduction on income and payroll taxes. States would no longer be required to seek federal approval for their Medicaid waiver plans. 

While members of the Senate try to coalesce around “replacement” plans, members of the House have indicated they may introduce smaller piecemeal legislative proposals.

It remains clear — coming out of the GOP retreat held Jan. 26 and 27 in Philadelphia — that agreement has still not been reached on how to go about replacing the ACA as differences between the House and Senate, and between moderate and conservative Republicans within each chamber continue. Meanwhile, the Congressional Budget Office recently warned that at least 18 million people would lose health insurance in the first year if Republicans repeal major parts of the Affordable Care Act without including a safety net.