The New Politics of Planning

Can ACA Elude the Chopping Block?

How “Repeal and Replace” Has Become “Repeal and Delay”

by James Slotnick, JD

Mr. Slotnick is Assistant Vice President, Broker Education, at Sun Life Financial. Visit

Since the Affordable Care Act was signed into law on March 23rd 2010, Republicans in Congress have worked to repeal the legislation. The culmination of this work occurred last December, when Congress passed the Restoring Americans’ Healthcare Freedom Act and sent it to President Obama’s desk.
This bill would have repealed much of the Affordable Care Act (ACA) – but not all at once. Provisions like the individual and employer mandate would have ended immediately, whereas provisions governing the public exchanges and the funding for Medicaid expansion would have ended after a 24 month “wind down” period.

Not surprisingly, President Obama vetoed the legislation, but it is likely the Republicans will look to this legislation as a model for repealing the ACA. With President-elect Trump’s inauguration just a few weeks away, let’s look at some of the ways Republicans could change the Affordable Care Act.

The Need For Budget Reconciliation

While the Republicans hold a 52-48 seat majority in the Senate, this majority is short of the 60 votes needed to be “filibuster proof.” Only 51 votes are needed to pass legislation in the Senate, but the majority of legislation requires 60 votes to end debate on a bill before it can move to a final vote. This means the Democrats could, if they remain united, keep debate on a bill open, and block most legislation from reaching an actual final vote.

The Republicans will need to use a parliamentary tactic called budget reconciliation if they want to move legislation without any Democratic support. Bills that are part of the reconciliation process do not need 60 votes to end debate, instead debate on a bill ends after a specified time period. The reconciliation process can only be used as part of a budget resolution, and must meet a number of complex requirements. In the context of the Affordable Care Act, perhaps the most important of these requirements is that the legislation can only use reconciliation if it does not add to the deficit over the timeframe of the proposed bill. In other words, for the Republicans to leverage reconciliation, any legislation they pass repealing or replacing the ACA could not cause a long term increase in the deficit.

The Congressional Budget Office, the non-partisan agency in Washington that provides the figures on how much legislation costs or increases revenues, has stated that bills like the Restoring Americans’ Healthcare Freedom Act would reduce the deficit. On its face, this is great news for the Republicans – a repeal of the Affordable Care Act would reduce the deficit, allowing repeal legislation to move through the reconciliation process. The challenge is that any Republican replacement plan will require spending– and most likely will not be able to leverage the reconciliation process. This has led Republicans leaders to create a strategy where they keep parts of the ACA, immediately repeal other parts, and use a “delayed repeal” technique for the remaining parts of the law. Republicans would then look to create a bi-partisan ACA replacement plan that kicks in after the “delayed” ACA repeal takes effect.

Provisions To Keep Under 26 Coverage Provisions

A popular part of the Affordable Care Act has been its change to the maximum age a dependent can be on their parents’ health plan. The Affordable Care Act increased the age to 26 and Health and Human Services (HHS) estimates that 6 million people are insured today due to that provision. President-elect Trump has publicly supported maintaining this piece of the law, as have Speaker Ryan and the nominee for HHS Secretary, Congressman Tom Price.

Pre-existing condition protections

Before the Affordable Care Act, health insurers were able to factor a consumer’s pre-existing condition into their pricing, or even refuse coverage due to a pre-existing condition. The ACA protects individuals and their ability to purchase and maintain coverage, regardless of pre-existing conditions. Republicans have signaled their willingness to keep a modified version of this provision. Both Speaker Ryan’s and Senator Burr’s ACA alternatives state that individuals’ pre-existing conditions would not factor into their ability to purchase or maintain coverage, so long as an individual continuously owned health insurance coverage.

Provisions To Repeal Now

Given their slim majority in the Senate, Republicans will need to leverage the budget reconciliation process to repeal the Affordable Care Act, and then build a coalition with Senate Democrats to pass a replacement plan

Using the Restoring Americans’ Healthcare Freedom Act legislation as a guide, there would be numerous ACA provisions that would be repealed immediately.

Individual and Employer Mandates
Both the individual and employer mandates would be immediately eliminated.

Miscellaneous Tax Provisions
A number of new tax provisions that were created by the Affordable Care Act would also have an immediate repeal, including the indoor tanning salon tax, the medical device tax, the Cadillac Tax, the annual health insurer tax, and the 3.8% net investment excise tax.

Provisions To Repeal Later

A challenge the Republicans face with their ACA repeal is how to address a potential increase in the uninsured rate. HHS has estimated that the Affordable Care Act has increased insurance coverage across the country by 20 million individuals – a repeal of the law would make a majority of these individuals uninsured. To avoid a mass increase in the uninsured rate, Republicans are proposing a “wind down” period for certain aspects of the law while they create their replacement strategy.

Medicaid Expansion

When the Supreme Court ruled on the constitutionality of the Affordable Care Act, they found that only the mandatory Medicaid expansion provisions proved to be unconstitutional. This law’s expansion would have forced every state to increase their eligibility requirements for Medicaid to a higher income threshold (generally 138% of the Federal Poverty number). The Supreme Court made this provision optional – and to date 31 states (and DC) have opted to expand their Medicaid programs. Since 2014, Medicaid enrollment has increased by approximately 16 million individuals. The 32 jurisdictions that have expanded their Medicaid program have driven 14 million of that 16 million in growth.

If the ACA is repealed, voiding the language that allowed for and funded this expansion, the 32 expanded Medicaid programs will be “retracted” to their pre-ACA eligibility levels. To avoid this type of disruption, the Restoring Americans’ Healthcare Freedom Act legislation created a 24 month wind down period for Medicaid – allowing for the expanded eligibility and funding to remain during that period.

President-elect Trump has indicated he would like to keep the Medicaid safety net in place – though it is unclear whether this would include expanded Medicaid provisions. It is important to note that as a governor, Vice-President elect Mike Pence did expand Indiana’s Medicaid Program, and Seema Verma, the nominee to run Centers for Medicare and Medicaid (CMS), was the architect of that Indiana expansion. Her appointment could signal that Medicaid expansion, or some form of it, will be part of a Republican alternative.

Public Exchange System & Funding

The public exchanges currently have helped approximately 10 million individuals purchase health insurance coverage. Of those enrolled on the exchanges, a significant number, 84%, are receiving a tax credit to help with their premium costs. Should an ACA repeal immediately end both the exchange system and the financial assistance available, this would push some of these individuals back to being uninsured.

To avoid an immediate disruption to the exchange system, Restoring Americans’ Healthcare Freedom Act proposed a 24 month wind down period for both the exchanges and the financial assistance available on the exchanges.

Given their slim majority in the Senate, Republicans will need to leverage the budget reconciliation process to repeal the Affordable Care Act, and then build a coalition with Senate Democrats to pass a replacement plan. This two-step process will most likely involve an immediate repeal of certain provisions, like the individual and employer mandates, and a 24-36 month delayed repeal of Medicaid expansion and the public exchanges.

At this point we only now high level details of how the Republicans will replace the law, with more specifics to emerge during the “wind down” period of the ACA. While there will be the usual partisan back and forth, it is likely we will see “Trumpcare” in place by 2019. Until then, uncertainty will be a constant theme, and Clients should look to their Brokers to guide them as we wait for the final repeal and replace legislation to work its way through Congress.