Indications of whether the Trump administration will prevent the ACA marketplaces from further collapse include an expected decision on cost-sharing subsidies.


March 29—Republican leaders in the House of Representatives may have pulled the American Health Care Act (AHCA) from consideration after appearing to lack the votes to pass it, but major healthcare policy changes remain likely, industry observers say.

Beyond conflicting statements from the Trump administration and congressional Republicans about whether a revised version of the AHCA will be considered, conditions in the healthcare marketplace will require action.

Marketplace Outlook

Geoff Manville, principal and leader of the government relations team at Mercer, said more changes are needed to keep insurers in the Affordable Care Act’s (ACA’s) individual-insurance marketplaces.

Policy watchers are worried that President Donald Trump will not implement changes to sustain the marketplaces after he predicted in a March 25 tweet that the ACA “will explode.”

“It is true that unless the administration acts soon to stabilize the individual market, [the market] could be in serious trouble if insurers pull out in 2018 and leave potentially millions of people without coverage,” Manville said.

The proposed marketplace stabilization rules that the administration already issued are a good indication that it won’t allow the ACA marketplaces to collapse, he said. However, those rules alone are unlikely to stabilize the marketplaces, according to Kaye Pestaina, a principal and senior legal consultant at Mercer, because more funding is needed.

A “watershed” decision to watch is whether Republicans allow subsidies for out-of-pocket costs to continue for about 6 million enrollees, even after a federal district court ruled that they are illegal, Manville said. A May 22 hearing on the case could provide answers.

“While the public exchanges might not be in a death spiral, there certainly are significant problems,” Pestaina said.

Megan Neuburger, managing director at Fitch, warned this week that the marketplaces are likely to have fewer enrollees in 2018.

“It will be some number less, and the question is what will that number be,” Neuburger said in an interview.

Fixes could range from a continuous-coverage requirement with bigger penalties, market stabilization funding, and subsidies for enrollees with higher incomes than are currently eligible. 

Gail Wilensky, former administrator of the precursor agency to the Centers for Medicare & Medicaid Services, is watching for several indications of how the administration will proceed with the marketplaces. Along with a decision on the cost-sharing subsidies, another key will be whether the administration opts to ensure ample notice of premium changes.

Other Legislative Approaches

Following the withdrawal of the AHCA, legislative initiatives are expected to aggressively push health savings accounts (HSAs), according to Pestaina.

“There will be a continued push to expand HSAs,” Manville said.

It remains unclear whether Republicans will eliminate all of the ACA’s taxes as part of a possible tax reform package, given the pressure to pay for the ACA’s coverage expansions—which could mean the Cadillac tax is here to stay, according to Manville. That 40 percent excise tax on high-cost employer-sponsored insurance is slated to become effective in 2020.

“It would seem that this would be an area where the Trump administration could act on its desire to ease ACA burdens, although it would have to do so consistent with the statutory requirements,” said Leslie Anderson, a member of the Washington Resource Group at Mercer.

Trump could leverage an as-yet-undisclosed drug price control initiative to garner Democratic support for healthcare policy changes.

“That coalition-of-moderates approach has worked in the past, so that could happen,” Manville said.

Administrative Initiatives

The Trump administration has wide authority to implement changes to the ACA, and Tom Price, secretary of the Department of Health and Human Services (HHS), has vowed to unwind many rules and give states more flexibility. However, the speed of such changes will be affected by lengthy rulemaking requirements for rescinding existing regulations, Manville said.

The administration would have the ability to act much more quickly to reverse or change sub-regulatory guidance issued through a frequently-asked-questions format, which does not entail a process of notice and comments.

“To the extent the Trump administration wants to change these, it is probably an easier process,” Pestaina said.

It remains unclear how HHS will implement Trump’s executive order for federal departments to minimize the compliance impacts of regulations, including those in the ACA. Similarly no administrative action has been taken on another Trump executive order that required eliminating two rules for each new one issued, Pestaina said.

The administration is allowing 2016 tax filers to leave blank a box on IRS returns—used to assess the individual-mandate tax penalty—indicating whether they had qualifying insurance coverage.

Further IRS actions could include the creation of additional hardship exemptions to allow those lacking qualifying coverage to avoid paying the penalty, according to Anderson. In 2016, 6.5 million paid individual mandate penalties and 12.7 million claimed an exemption to the requirement to purchase coverage, according to the IRS.

Bipartisan legislation from the last Congress also could be implemented to allow employers to certify the type of coverage they plan to provide to employees, which would eliminate the current requirement to fill out highly detailed statements.

Certain ACA rules have yet to be issued, including some around reporting on quality and transparency.

The administration also could change specifics of the ACA’s insurance coverage requirements, known as essential health benefits (EHBs). Although the 10 categories of EHBs are established by statute, their components are set by regulation.

Finally, the administration has urged states to submit Section 1332 waivers, under which states can use federal funding that would have been allocated for marketplace plan subsidies to instead reform their coverage infrastructure, as long as certain requirements are met.

“It could be potentially extremely important and interesting,” Wilensky said about the state-based changes allowed by the waivers.

Medicaid Changes

Some of the biggest policy changes in the AHCA would have affected Medicaid. In the wake of the bill’s withdrawal, some of the 19 states—including Kansas, Georgia, and North Carolina—that had yet to expand eligibility under the ACA are moving toward expansion.

Some state-level Medicaid changes under consideration could adversely affect eligibility or coverage quality, and employers are concerned that such changes could impact group plans.

“A well-functioning individual market and Medicaid program will prevent an increase in uncompensated care that large employers would end up paying for in increased reimbursement to providers,” Pestaina said.

The Trump administration is likely to use its waiver authority to allow states to implement some of the changes proposed in the AHCA, such as employment requirements for able-bodied Medicaid beneficiaries, according to Pestaina.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, March 29, 2017