2016 Election Results and Policy Implications
The results of the November 8 elections leave Republicans in control of the White House, US House and US Senate, as well as 33 of the 50 governors’ offices. Despite a rocky relationship with President-elect Donald Trump throughout the campaign, House Speaker Paul Ryan will be a pivotal figure in the implementation of a Republican agenda. He drafted and campaigned around the country on his “A Better Way” plan, which includes a lengthy section on health care. Below is a brief analysis of what the results may mean in key areas of health care policy.
The Affordable Care Act (ACA).
Repeal and Replacement of the Affordable Care Act are now top priorities with votes to succeed. We anticipate subsidies, penalties and taxes tied to the law will be repealed; public marketplaces wound down; significant changes made to the Medicaid program; and policies enacted to encourage market-oriented options for individual coverage. We may also see an effort to amend or expand the tax treatment of costs incurred by employers and/or individuals for health coverage. Several key GOP legislators have stressed the need for at least a one-year transition period, and many are stressing the political risk of repeal without having something in place to ensure that the ACA’s 22 million enrollees do not become completely uncovered. Some popular provisions, like letting children stay on their parents’ policies until age 26 and prohibiting pre-existing condition coverage denials and rescissions could well be preserved.
Republicans are expected to replace marketplace coverage through a combination of expanded Health Savings Accounts (HSAs), new small business and individual insurance pooling options, permission to sell plans across state lines, age-indexed tax credits to let people take coverage from job-to-job, and high risk pools for those priced out via underwriting. Since full repeal would be subject to a Democratic filibuster in the Senate, Republicans will likely use the budget reconciliation process, which is precluded from being filibustered, to implement Repeal and Replace. The 2015 reconciliation package passed by Republicans and vetoed by President Obama repealed all taxes, fees and mandates in the ACA and the state-option Medicaid expansion. It did not include a dismantling of the delivery system reforms (PCMH, ACOs, etc.) of the ACA, which are beyond the scope of the arcane rules put in place for reconciliation. This may be the most likely repeal scenario in 2017.
MACRA and Value-Based Purchasing (VBP).
Given MACRA and VBP’s broad bipartisan support, we expect implementation of the law, and the general move toward value-based pay, to continue. Comments on the final rule (issued in October by the Obama Administration) will now, however, be considered by a very different team of political appointees. As a Member of Congress, Secretary-designee Tom Price was a MACRA supporter, although he also pushed for a slowdown of MACRA implementation in the final rule, particularly for small and rural practices. It remains to be seen what the appetite is among the GOP for full-bore adoption of the penalties and bonuses that are the lynchpins of the law. Regardless, the Medicare Advantage program should see renewed support and growth under Republican control of Washington.
Medicaid & States.
We expect a rapid move to transform how the Medicaid program operates in 2017. The core objective of this effort will be to cap overall costs for the federal government and tie growth of those costs to a fixed percentage. Implementing a block grant or per capita cap along these lines has been a long-term objective of Republicans in Congress and has enjoyed broad support from GOP governors, provided it comes with significantly more flexibility in how each state runs its program. Many Democrats in Congress have been opposed, concerned it will starve the program and hurt beneficiaries.
Many suggest that the “Healthy Indiana Plan” at the core of that state’s Medicaid expansion will be a model for reform, given that its architect, Seema Verma, has been tapped to head the Centers for Medicare and Medicaid Services (CMS). Additional funding for state innovation grants and a streamlined Medicaid waiver process will likely be part of a Medicaid reform package as well. Some suggest that Republicans could maintain the Section 1332 waiver option included in the ACA and allow governors to combine the subsidies currently attached to Marketplace plans with Medicaid dollars as part of a holistic, state-based replacement strategy. All of this could strongly incentivize states to move more enrollees into managed care in order to shift the associated risk to private plans.