Regulatory, legislative efforts focused on ACA repeal move forward as Congressional Budget Office releases new health coverage projections

Hours after taking the oath of office on Friday, January 20, 2017, President Trump signed an executive order that opens the door for the secretaries of the departments of Health and Human Services (HHS), the Treasury, and Labor, as well as the leaders of other federal agencies, to take regulatory action to ease requirements under the Affordable Care Act (ACA) or waive or delay enactment of certain provisions.

The executive order directs the HHS Secretary and leaders of other federal agencies 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 Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, health care providers, health insurers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products, or medications.”1

The executive order itself does not make specific policy changes or advocate specific regulatory actions. Further, the order reaffirms that agencies must continue to comply with the Administrative Procedure Act and other applicable statutes for revisions to regulations issued through notice-and-comment rulemaking. However, health care stakeholders will be keeping an especially close eye on changes the Administration might consider to the enforcement of the individual mandate, the essential health benefits requirement for plans sold on Exchanges, and the purchase of health insurance across state lines. Similarly, stakeholders will be watching for changes to the Notice of Benefit and Payment Parameters final rule for the 2018 benefit year in Exchanges; the Obama Administration issued the final rule December 16, 2016, in part to have certain changes to risk adjustment programs take effect for the 2017 benefit year. Changes in each of these policy areas could affect health plans’ participation in Exchanges in the 2018 benefit year, which is widely expected to fall within any transition period to facilitate the winding down of certain ACA provisions and the date when alternative health care policies would take effect.

Because the executive order also directed the Administration “to provide greater flexibility to States and cooperate with them in implementing health care programs,” health care stakeholders also are watching to see how the Administration approaches Medicaid waiver applications from states.

Budget reconciliation process moves forward

The House of Representatives on Friday, January 13, 2017, voted to pass a budget resolution for fiscal year 2017, kicking off the budget reconciliation process that congressional Republicans intend to use to repeal major provisions of the ACA. The Senate passed the budget resolution the day before. No Democrat voted in favor of the resolution in either the House or the Senate.

The budget resolution sets a deadline of Friday, January 27, 2017, for certain congressional committees with jurisdiction over health care issues to develop legislation to repeal key ACA provisions related to taxes and federal spending. That said, Senate Republicans have emphasized that January 27 is a target date for reporting legislation and that no procedural penalties will apply if committees report legislation after that date.

A segment of congressional Republicans in recent days have raised concerns about the prospects of repealing provisions of the ACA without having legislation to enact alternative health care policies ready for consideration by Congress. Republican congressional leaders have pressed ahead with the budget reconciliation process, seeking to assure their members and constituents that they would move to enact targeted alternative health care policies in a deliberate manner.

Some health care stakeholders have said that President Trump’s executive order could provide an additional incentive for Congress quickly to repeal ACA provisions and put forward alternative policies.2

Timing of cabinet confirmations

Execution of President Trump’s executive order will depend heavily on the timing of confirmation of his cabinet nominees.

The Senate Finance Committee on January 24, 2017, considered the nomination of Rep. Tom Price (R-GA) as HHS Secretary, following a similar hearing by the Senate Health, Education, Labor and Pensions (HELP) Committee on Wednesday, January 18, 2017. A date has not been set for a vote before the full Senate.

A hearing on the nomination of Seema Verma as Administrator of the Centers for Medicare and Medicaid Services has not been scheduled.

The Senate Finance Committee on January 19, 2017, held a hearing on the nomination of Steve Mnunchin as Secretary of the Treasury. A date has not been set for a vote before the full Senate.

A hearing on the nomination of Andrew Puzder as Secretary of Labor before the Senate HELP Committee has been scheduled for February 2, 2017.

Updated projections on health coverage

The Congressional Budget Office (CBO) on January 24, 2017, released updated projections on how many individuals will be covered under the ACA under current law.3 The updated projections are part of the CBO’s annual outlook on the US budget and economy. CBO emphasized that the projections were completed before the Trump Administration took office on January 20, 2017, and do not incorporate effects of executive orders or other actions taken by the Administration.

In general, the CBO analysis projected that enrollment through Exchanges would be lower than the agency had previously estimated. CBO projects that in calendar year 2017, 9 million people per month on average will purchase coverage through Exchanges with the help of premium assistance tax credits under the ACA and an additional 1 million people will purchase coverage through ACA Exchanges without a premium assistance tax credit. Overall, CBO projects that 18 million people will have nongroup coverage in 2017, including coverage purchased on ACA Exchanges.

In 2017, CBO projects that an average of 12 million people per month will have coverage under Medicaid as a result of the ACA’s optional Medicaid expansion.

If the ACA were to remain in place in its current form in 2027, CBO projects that 11 million people would purchase coverage through Exchanges with the help of premium assistance tax credits under the ACA and an additional 2 million people would purchase coverage through ACA Exchanges without a premium assistance tax credit. Overall, CBO projects that 20 million people would have nongroup coverage in 2017, including coverage purchased on ACA Exchanges.

CBO projects that an average of 17 million people per month would have coverage under Medicaid as a result of the ACA’s optional Medicaid expansion.

For 2017 through 2027, CBO estimates that 27 million to 28 million people under age 65 would remain uninsured.

The new baseline projections followed a CBO report on January 17, 2017, that provided an updated estimate of how health coverage would be affected by the enactment of H.R. 3762, the bill that President Obama vetoed last year that would have repealed key provisions of the ACA.4 H.R. 3762 was passed via the FY 2016 budget reconciliation process and is expected to be the basis for Republicans’ ACA repeal efforts this year. Key projections from CBO’s analysis are presented below:

  • Year after enactment of HR 3762. According to CBO, 18 million people would lose coverage in the year after the bill were enacted, reflecting the nullification of tax penalties under the ACA’s individual mandate and corresponding increases of 20% to 25% beyond increases projected under the ACA for health insurance premiums for coverage on the individual market.
  • Plan year after elimination of premium assistance tax credits for Exchange coverage and the optional expansion of Medicaid under the ACA. CBO projects that the number of individuals who would lose coverage would increase to 27 million. Premiums for health insurance premiums for coverage on the individual market would increase by 50% beyond increased projected under the ACA, according to CBO.
  • The number of individuals who would lose coverage as a result of HR 3762 would increase to 32 million by 2027, and premiums for coverage on the individual market would “about double,” CBO projects.

Importantly, the CBO’s analysis does not reflect the effects on coverage of the enactment of alternative health care policies that Republicans have pledged to enact. CBO did not address these policies because they were not included in HR 3762. Republican leaders have said they will seek to include some alternative health care policies in the reconciliation bill for FY 2017 that they plan to use to repeal key ACA provisions.

Anne Phelps
Principal | Deloitte Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

Heather Hagan
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

1Executive Order: Patient Protection and Affordable Care Act, Minimizing Economic Burden, Pending Repeal. Federal Register, January 24, 2017. https://www.federalregister.gov/documents/2017/01/24/2017-01799/minimizing-the-economic-burden-of-the-patient-protection-and-affordable-care-act-pending-repeal
2“Donald Trump’s Health-Law Directive Spurs a Dash to Decode It,” Louise Radnofsky and Stephanie Armour, Wall Street Journal, January 22, 2017.
3“The Budget and Economic Outlook: 2017-2027,” Congressional Budget Office, January 24, 2017. https://www.cbo.gov/publication/52370
4“How Repealing Portions of the Affordable Care Act Would Affect Health Insurance Coverage and Premiums,” Congressional Budget Office, January 17, 2017. https://www.cbo.gov/publication/52371

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s