What A Trump Presidency Means For Health Care Reform

The news of Donald Trump becoming our nation’s 45^th President came as a complete shock to many in this country, yours truly included. Now that the dust has settled and this reality has sunk in, there are many questions to be asked. These relate to foreign policy, immigration reform and at least one Supreme Court nominee. We, however, are healthcare consultants and the questions crossing our desks relate to Obamacare’s future and how we see changes in the market shaping up. No one knows of course and as we also know the President does not make laws. That is the job of Congress. The President does, however, promote policy that in many cases does lead to a bill or series of bills. Considering that president-elect Trump will have both a majority in the House and Senate, we must surmise that we will see the next round of proposed health care reform rather quickly; within the first 100 days of his Presidency if he keeps his promise.

So what exactly will the “replace” portion of Repeal and Replace look like? We, at Fringe Benefit Analysts, have read the tea leaves and this is what we see:

First off, the promise to completely repeal the Affordable Care Act will be next to impossible to accomplish. Even though the new president will have a majority in the Senate, it is not one that is filibuster-proof. Using some sort of reconciliation to get around that fact, as the Democrats were able to do, is also highly unlikely. This is because two bills were initially passed and reconciliation was used to combine them. The scenario in 2017 will be much different.

Also keep in mind that many Americans, even very conservative ones, like portions of the Affordable Care Act; even if they can’t admit it. You would be-hard pressed to find a large section of the country wanting a return to pre-existing condition limitations, no longer covering children to age 26, denying coverage to members of a family with health problems and taking away the 100% coverage level on preventive care services.

Rather, we see a proposal to replace the Affordable Care Act with a modified version of…the Affordable Care Act. This will be a package of bills that maintains the core benefits with a number of market reforms. They would essentially be as follows (in no particular order):

• A modification of premium subsidies and the elimination of cost sharing subsidies altogether. In order to get the Democrats to play ball there will need to be some modicum of retaining these subsidies, albeit for much lower incomes than current, and a complete reformulation of the Modified Adjusted Gross Income calculation.
• The ability to purchase health insurance across state lines. This has been a huge talking point for Republicans, but carries little weight. Many carriers limit their network contracting to a small geographic area so this does little for them and the states will fight to maintain their sovereignty in this area.
• An effort to reign in healthcare costs. This will include limits on price markups from pharmaceutical companies as well as efforts to match the prices in the U.S to other developed nations. It will also mandate price transparency from hospitals and physicians. Good luck to the new President in fighting Pharma and the AMA on this.
• Expansion of the tax credits for small businesses that offer health insurance to their employees and an ease in qualifying for these funds. Also expanding the tax deductibility of health insurance for those who purchase personal plans.
• A complete overhaul of Qualified High Deductible Health Plans (HDHP) and the rules for Health Savings Accounts tied to them. The reforms would focus on providing more flexibility in the definition of what would qualify as an HDHP. For the HSA accounts we would see higher limits on funding as well as additional ways for these funds to be used.
• Tighter restrictions on life events which allow individuals to purchase health insurance outside the open enrollment period. We would also see shorter windows on the enrollment period.
• A repeal of a number of ACA-related taxes with an eye on the Cadillac Tax in particular.
• Richer tax incentives and rewards for companies and participants in wellness-related activities and programs, with easier compliance for companies who want to participate in these.
• A revision of the multi levels in benefits with flexibility in the actuarial requirements relating to plan design, as well as the ability to purchase plans at a coverage level that is below 60%.
• A repeal of the individual and employer coverage mandates. The insurance industry and Democrats will fight hard to keep these.

Will any of these proposed reforms actually make it into law? Our opinion is yes, although we have tried to identify some that are longer shots than others. The bigger question is whether, if passed, any of these would actually bend the cost curve. The chances are actually favorable in that regard. The Affordable Care Act version of reform focused mainly on access and quality of coverage. The Trump version will focus more on freedom of choice and opportunities to reduce health care spending; which ultimately trickles down to health insurance premiums. That, however, is a slow process and likely too slow for the consumers who have faced much higher premiums of late. For that reason alone the 2018 mid-term elections could be a rough go for the Republican party. That is a solid reason for the new President to get to work on this agenda item…and quickly.

©Copyright 2016 by Ernie Sweat and Fringe Benefit Analysts, LLC. Reproduction permitted with attribution to the author.