How Trump and Tom Price Can Kill Obamacare Without the Senateby Simon Haeder - Assistant Professor of Political Science, West Virginia University May 25, 2017
Senate leadership has indicated that passage of the American Health Care Act “will not be quick,” but it may not matter.
Individual insurance markets already are shaky, in limbo by a lawsuit that challenges subsidies to help pay out-of-pocket costs for low-income people.
Even without congressional or judicial actions, the White House and Health and Human Services Secretary Tom Price have many tools at their disposal to significantly reshape the Affordable Care Act through regulatory action.
The ACA’s Essential Health Benefits provisions provide an illustrative example, and one that is not getting nearly the attention of the subsidies.
Having conducted research on regulatory policymaking and the Affordable Care Act, particularly the implementation of its Essential Health Benefits provisions, I can show you how.
Where we are with Essential Health Benefits
The Essential Health Benefits have long been a bane for conservatives, who see them as unnecessarily driving up premiums and denying consumer choice. These provisions require health plans sold in the ACA insurance marketplaces to offer a set of 10 basic benefits including hospitalization, prescription drugs and outpatient coverage.
Implementing the EHB provisions of the ACA, like hundreds of its components, was delegated to the Department of Health and Human Services (HHS). At the time the ACA was passed, the secretary of that department was Kathleen Sebelius, a moderate Democrat from Kansas.
Now the secretary is Tom Price, a very conservative Republican and a doctor who has been one of the ACA’s most ardent critics.
With the help of the Institute of Medicine (IOM), the Obama administration HHS developed a broad set of guidelines. Shying away from setting a national standard, states were left with significant leeway in implementing the EHB.
Not surprisingly, states took many approaches to developing their EHB based on the HHS guidelines. While all states are required to cover the bare minimum services outlined by the ACA as defined by HHS, states differ significantly in what additional benefits were included. For example, 19 states do not cover autism treatments and 28 do not cover any infertility treatments.
Fast forward to 2017, with a Republican majority in Congress and a Republican in the White House.
Unable to obtain the necessary votes for the original version of the American Health Care Act, Speaker Paul Ryan (R-WI) initially sought to woo conservatives by offering the elimination of the ACA’s Essential Health Benefits provision.
The final version of the AHCA passed in the House did not eliminate the Essential Health Benefits outright. However, it allowed states to seek a waiver to come up with their definition to exclude any or all of the 10 basic benefits included in the Affordable Care Act.
What’s Next for the EHB
Even while the AHCA meanders through the congressional lawmaking process, major changes to the EHB are possible through regulatory action.
The hands-off approach taken by the Obama administration in developing the EHB was based on pragmatism and political expediency. Hoping to limit opposition, it sought expert counsel and provided states with significant discretion.
The White House and HHS Secretary Price could equally use the vast delegated powers of the ACA to significantly reshape the signature accomplishment of President Obama. This particularly applies to the EHB.
Option 1: New HHS regulations preempting state regulation
One option is a wholesale reversal of the Obama administration’s approach with regard to the implementation of the EHB. The Obama administration relied on setting broad guidelines and a benefits floor while relying on states to select their preferred approach.
Instead, HHS and Secretary Price could exclude states from the decision-making process on EHBs. Specifically, the federal government could issue a standard national package that would be applicable nationwide.
Given the history of opposition to the ACA and the EHB in particular by Secretary Price, it seems likely that the federally defined EHB would be reduced to the absolute minimum package of benefits required by the ACA. This approach would constitute a dramatic shift from the Obama administration, but it would not be without historical precedent.
Option 2: New HHS regulation giving more leeway to states
Of course, strong-arming states into accepting federal regulations clashes ideologically with traditional Republican concerns about the preservation of state sovereignty. The more likely option follows the procedural precedent of the Obama administration. It preserves the current regulatory division of labor: The federal government continues to set broad standards and relies on states to develop state-specific benefit packages.
However, this approach would likely also involve the softening of current EHB standards. To do this, Secretary Price would first reduce the minimum benefit package required to make insurance plans ACA-compliant. The implementation of actual standards would continue to rest with the states.
The important question here is whether the Trump administration and Secretary Price would allow progressive states like California to maintain more comprehensive benefit packages. Most importantly, it remains to be seen whether states would be required to incur any additional financial burdens, or whether federal subsidies would fully apply to the more comprehensive benefits package.
Despite increasing support by a majority of Americans, the future of the ACA remains far from certain. The same applies to the so-called Essential Health Benefits provisions and hundreds of other components of the Affordable Care Act.
As I have written previously, the EHBs are a crucial component of the insurance market reforms enacted in the ACA. Others include the requirement for most Americans to obtain insurance coverage and the requirement for insurers to accept all comers regardless of preexisting conditions. However, while congressional efforts to alter the ACA receive significant media and public attention, regulatory approaches to undoing the ACA are much less transparent, more complex and attract much less scrutiny and public involvement.
Ultimately, Republicans may prove much more successful in undoing the ACA through the regulatory pathway, while leaving many if not all of its statutory portions intact.