Repealing Obamacare: more tricky than Trump thinks

According to President-elect Donald J. Trump's campaign website, "on day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare." A full repeal of Obamacare, let alone replacing it, will be difficult, if not impossible, to accomplish quickly.

To repeal entirely the Affordable Care Act (ACA), aka "Obamacare," would require the vote of 60 senators to avoid a filibuster by Democrats, but the Republicans will have only 51 or 52 Senate seats. It is unlikely the Republicans will be able to avoid a filibuster unless the Republicans amend the filibuster rules to prevent the Democrats from stalling the repeal. Additionally, to-date, it is unclear whether the president-elect intends to repeal only the health insurance market reforms or whether the proposed repeal will also extend to the hundreds of different provisions contained in the ACA relating to Medicare, Medicaid, provider compensation, quality of care, and the Internal Revenue Code. Moreover, the ACA has been implemented since its enactment through extensive regulations and guidance from several federal administrative agencies and corresponding state implementing legislation, regulations and guidance. To change, withdraw or coordinate the guidance and regulations of the various federal agencies and the state implementing laws to effect a coherent change or repeal of all or a portion of the ACA will likely take years.

While the guidance provided by the federal agencies could be withdrawn or amended by the federal agencies that issued the guidance, before it is possible to repeal or replace existing federal regulations it will be necessary for the federal agencies responsible for such regulations to provide notice and an opportunity for comment prior to any repeal or amendment to such regulations. Alternatively, even without a repeal, the ACA could be weakened by the new administration ceasing to implement or enforce certain ACA requirements or ceasing to defend the several pending cases challenging various aspects of the ACA.

Based upon recent press reports, the Republicans in the Senate are considering repealing many of the ACA provisions using the budget reconciliation process. Reconciliation is a procedure that allows consideration of a budget bill with debate limited to 20 hours under Senate rules and which is not subject to a filibuster. The budget reconciliation process cannot be used if the bill: (1) does not produce a change in outlays or revenues; (2) produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions; (3) is outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure; (4) produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision; (5) would increase the deficit for a fiscal year beyond those covered by the reconciliation measure; and (6) would make changes to Social Security.

Because of the restrictions on the permitted use of a budget reconciliation bill, several of the ACA insurance reforms could not be repealed by budget reconciliation because they do not involve a change in federal outlays or revenues. For example, the ban on preexisting condition exclusions, guaranteed issue and renewal of coverage and the required minimum essential benefits do not involve federal outlays or revenues and therefore may not be amended or repealed by reconciliation. Many of the provisions of the ACA, however, could likely be amended or repealed using the reconciliation process such as the various taxes enacted to fund the ACA, the availability of insurance subsidies to individuals and employers and the various changes to the Internal Revenue Code. Repealing only the ACA tax subsidies and the other ACA funding mechanisms would undoubtedly be sufficient to prevent the ACA from operating as intended by making the coverage unaffordable for large segments of the population.

Regardless of any federal repeal or amendments made to the ACA, significant issues remain with respect to the impact of any repeal or amendment on the implementing statutes and regulations enacted by the various states to implement the ACA. Principal among the state issues is the potential impact on the Medicaid expansion enacted by 31 states. While Republicans may not reverse entirely the Medicaid expansion in the states, Congress may leave the expansion in place, but eliminate the funding payable to the states to pay the cost of such expansion or convert the funding mechanism to a block grant funding to the states. In the absence of the federal matching Medicaid funds provided by the ACA, it is unlikely that the states will have the financial resources to replace the Medicaid expansion with a state based solution. Moreover, if Congress replaces the current Medicaid funding mechanism with block grants to the states, it is unclear whether the amount of such block grants would be sufficient to cover the costs of providing coverage to the enrollees.

The potential for disruption in the California health care market is enormous. California is one of the states that enthusiastically embraced the ACA and committed to its full implementation. In California, the ACA has enabled the state to provide health care coverage for an additional 3.5 million Californians through Medicaid expansion and another 1.4 million Californians through the state health benefit exchange. Additionally, if there is a complete federal repeal of the Medicaid expansion, California is expected to lose an estimated $15 billion annually in federal funding for Medicaid.

Lastly, if the ACA provisions preempting nonconforming or inconsistent state laws, or the federal standards for minimum essential benefits, lifetime and annual limits, guaranteed availability and renewability of coverage, minimum loss ratios, and other insurance reforms are repealed, the health care system could revert to a patchwork of potentially inconsistent state laws that may vary considerably from state-to state and that have the potential to have a material impact on the quality, availability and cost of coverage in the various states.

Until there are specific proposals to repeal or amend and replace the ACA to evaluate, both the health care industry and consumers will faced increased uncertainty with respect to the future of Medicare, Medicaid and the Affordable Care Act. Only time will tell.