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Health policy outlook: What we know and don't know

January 9, 2017

    The 115th United States Congress convened last week, and President-elect Donald Trump will be inaugurated on January 20. In the two months since the election, there has been much coverage of Republicans' preparations and early steps to repeal and replace the Affordable Care Act (ACA).

    However, despite all the chatter, Republicans have not reached consensus or announced details on their plans, and the path forward is shrouded in much uncertainty. At this point, most reports are more speculative than substantive.

    Even after Republicans start releasing legislative text in coming weeks, uncertainty will persist to some degree as Republicans continue to figure out process and details of repeal, and begin navigating the challenges of developing and passing a replacement plan.

    In that light, below is a summary of what we know and what remains unknown at this point in the process. Many of the questions our Chief Research Officer Chas Roades proposed in the aftermath of the election remain open.

    What we know

    Republicans have a narrow margin in the Senate

    In December, Louisiana held a runoff election for its Senate seat. Republican John N. Kennedy won the seat, finalizing Republicans' 52-48 majority in the Senate. Because Senate rules require 60 votes to advance most pieces of legislation, Senate Republicans will be limited in the steps they can take without the support of some Senate Democrats.

    There are some noteworthy measures, however, that require approval by a simple majority, including confirmation of presidential appointees and budget reconciliation.

    Senate Republicans took the first step toward ACA repeal last Tuesday by introducing a budget resolution that includes reconciliation instructions

    "Reconciliation" is a budget-related process that allows the Senate to make legislative changes with just 50 votes but can only be used for proposals that have a significant impact on the federal budget deficit. Republicans have indicated that they will use the reconciliation process to repeal select portions of the ACA, and the Senate budget resolution introduced by Republican leaders last week includes the reconciliation instructions that serve as the first step in this legislative process.

    The vote on the budget resolution is scheduled to occur this week and will likely include a marathon session during which the Senate will consider dozens of amendments. Many of these amendments will be health care-related but few of them will actually become law, and the passed resolution will then move to the House for its consideration.

    Passage of a budget resolution with reconciliation instructions is the first step on the road to ACA repeal.

    It will likely be at least a couple of weeks before we see details of a plan to repeal the ACA

    With the budget resolution in place, the respective congressional committees will consider proposals and draft legislative text that meets the budget conditions of the reconciliation instructions.

    It is in this committee phase that we would expect to see specific language repealing (portions of) the ACA. The resolution introduced last week calls for committees to submit their proposals by January 27.

    Ultimately, passage of ACA repeal may not happen until February or March

    The complexities of the reconciliation process coupled with the current lack of consensus among Republicans could mean that the ACA repeal plan won't pass Congress and go to the president for signature until February or March.

    At one point, Republicans had talked about having the repeal bill ready for President-elect Trump to sign on his first or second day in office, but that now looks impossible. Reports last week suggested Republicans are now aiming to send the ACA repeal bill to the president on February 20, a month after the inauguration.

    Even this timeline, however, is ambitious and continuing concerns about the lack of an immediate replacement plan may further complicate this effort.

    Confirmation hearings for HHS Secretary-nominee Tom Price are likely to begin on January 18 with a Senate HELP Committee hearing

    The HELP Committee has reportedly set January 18 as the tentative date for its hearing to discuss Rep. Price's nomination. While the HELP Committee will discuss Rep. Price's nomination, the vote to determine whether to send the nomination to the full Senate will be held by the Senate Finance Committee.

    We will be watching the confirmation hearings closely for any hints as to how Rep. Price would approach key issues as HHS Secretary. Assuming Rep. Price is confirmed, the Senate would then consider Seema Verma's nomination for CMS administrator.

    What we (still) don't know

    Which parts of the ACA will be included in the repeal bill

    The best guess right now is that the Republicans' repeal bill will look very similar to the ACA repeal bill passed under reconciliation instructions in 2016 (President Obama vetoed this attempt at repeal). That bill included provisions repealing Medicaid expansion, repealing tax credits and subsidies for purchase of insurance through the exchanges, eliminating penalties under the individual and employer mandates, repealing Medicaid DSH payment reductions, and repealing new taxes including the medical device tax, the "Cadillac" tax, and the health insurance tax.

    However, Republicans' ability to go beyond those provisions may be limited by the rules of reconciliation in the Senate, where the Parliamentarian is required to certify that included provisions have a budgetary impact. Although some Republicans have indicated a desire to repeal more of the ACA than the previous bill did, the Parliamentarian's ruling will be a crucial factor.

    It is also worth noting that some Republicans—particularly Republican governors in states that expanded Medicaid—have expressed interest in preserving Medicaid expansion in some form.

    The length of any transition period to wind down the ACA

    Republicans will likely set the effective date of ACA repeal a few years out to allow time for passing and implementing a replacement plan. The timing of the effective date has been the subject of much discussion and speculation. Some Republicans want a quick transition away from the ACA while others have suggested a longer transition to ensure market stability, but the current discussion suggests a transition of at least two years..

    Details and timing of a replacement plan

    Republicans still seem to be far from consensus on a replacement plan—indeed, one group of Republican legislators proposed an additional replacement plan last week, adding to an already crowded field of proposals.

    The current expectation is that Republicans won't make significant progress on a replacement plan until after passing repeal, though a couple of Republican Senators expressed concern last week about passing repeal without a replacement plan ready.

    Assuming Republicans pass repeal without a replacement plan finalized, it's not clear how quickly they would propose and pass a replacement plan, especially since they will likely need votes from at least eight Democrats in the Senate to pass a replacement plan.

    Speaker Paul Ryan did say last week that Congress will pass a replacement plan this year, but some in Congress remain skeptical that will happen.

    What steps the Trump administration will take via executive action to stabilize the exchange market and impacted programs

    Vice President-elect Mike Pence last week told House Republicans that President-elect Trump plans to issue executive orders related to the ACA on his first days in office. However, Pence did not provide any details about what would be included in those executive orders.

    The evolution of payment reform and fate of CMMI

    Post-election, Republicans have not commented publicly on their plans for payment reform. While we expect payment reform to move forward, there are many questions about how Republicans might adjust current programs and whether they will continue to operate CMS' innovation center in some form.

    We will be watching confirmation hearings and early activities of the new administration to get a better sense as to the future evolution of payment reform.

    The new administration's approach to MACRA

    Similarly, Republicans have not made any statements post-election on how they will approach MACRA. Through the comment period on the MACRA final rule, several stakeholder groups called on CMS to ease MACRA requirements in 2018, seemingly hopeful that the new administration will be open to extending the flexibility granted by the current administration for 2017.

    But without more insight from HHS Secretary-nominee Price or others in the Trump administration, any predictions regarding changes to MACRA would be speculative at this point.

    We are continuing to monitor developments and will publish additional updates on this blog and through the Daily Briefing.

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