Donald Trump and GOP Lawmakers Turn to Health-Law Overhaul

Focus turns to goal of replacing the Affordable Care Act

By Stephanie Armour and
Louise Radnofsky
Nov. 9, 2016 7:52 p.m. ET

Congressional Republicans and President-elect Donald Trump are in agreement: The Affordable Care Act as it now stands is over.

On the day after the election, the focus turned quickly to the long-sought GOP goal of gutting the law and installing a replacement. Discussions are under way about what aspects to keep, what programs to kill, and how to create some sort of transitional plan to cushion the blow to consumers who now get coverage under the health law.

Both House Speaker Paul Ryan (R., Wis.) and Senate Majority Leader Mitch McConnell (R., Ky.) in postelection news conferences on Wednesday said addressing the law is a priority.

The immediate repeal Mr. Trump vowed is unlikely, however. One top Senate staffer said some time will be needed to build party consensus. And then there is the potential for a public backlash if millions of people suddenly lose health coverage. To that end, Mr. Trump has acknowledged the need for some sort of transition process.

Mr. Trump could topple parts of the law before Congress becomes involved, smoothing a legislative path for deeper repeal work. Rep. Michael Burgess (R., Texas), a physician and an influential GOP lawmaker on health policy, said he is eager to see Mr. Trump use executive action on this first day to weaken the law’s requirement that individuals buy health coverage or pay a penalty.

That change could be possible under a provision of the law that gives the federal government flexibility in creating exemptions from the penalty for people who want to forgo insurance, he said. Striking that down could spur insurers to re-evaluate their participation and encourage them to engage in negotiations about the future of the law.

Without 60 votes in the Senate to get around procedural hurdles, Republicans couldn’t repeal the whole law in one shot but could take out pillars of it using a budget maneuver that requires only a simple majority.

One target would be subsidies that blunt the cost of premiums for people who get coverage on the health law’s exchanges, said Timothy Jost, a professor at Washington and Lee University School of Law. Without a transition plan, 85% of exchange consumers who get subsidies would face the full cost of their premiums, prompting a major drop-off in participation.

The employer mandate that requires many companies with 50 or more full-time workers to provide health insurance also would likely go.

The transition time Republicans are discussing may help stave off a backlash if subsidies are immediately cut off and millions lose coverage, and it could give the GOP time to negotiate with hospitals and insurers that have supported and benefited from the ACA and now are concerned about major new financial burdens.

“I think they know you can’t yank the rug out from people,” said Molina Healthcare Inc. Chief Executive J. Mario Molina.

And during the months before the inauguration, the current Obama administration may try to push through regulations that would make dismantling the law more difficult. Those could include more changes to how providers are paid on patient outcome versus volume, for example.

Mr. Trump also could end parts of the health law without turning to Congress. He could drop the government’s appeal on a House lawsuit that challenges funding for cost-sharing subsidies to exchange consumers. Without those payments to help offset deductibles and out-of-pocket costs, more insurers likely would drop their participation on the marketplaces. The exchanges, a centerpiece of the health law, would further wither.

Mr. Trump also has pledged to shift Medicaid to a block grant program with capped funding, with greater flexibility for states in administering it. That would allow states to enact conservative changes to the program, often in the form of tougher rules for beneficiaries and for the 31 states that have extended eligibility to most low-income residents.

Republicans and Mr. Trump will have to work together on fashioning the law’s replacement, and some have said they hope to work with Democrats to find common ground.

Republican Senate Finance Committee Chairman Orrin Hatch of Utah said that they will “continue to work towards replacing Obamacare with common-sense reforms that will lower cost and increase choice.”

Future proposals will aim to tackle rising health-insurance premiums and increase patient choice, GOP officials said. Mr. Trump’s plan is scant on details but includes selling insurance across state lines and repealing Medicaid expansion. An ACA replacement plan backed by Mr. Ryan holds on to key aspects of the current law such as providing coverage for people with pre-existing conditions.

The hard work of hammering out a replacement will now begin but analysts say the plans to eviscerate most of the law will create a period of unprecedented chaos that will ripple throughout the health-care industry, said many executives.

“The result of Tuesday’s election will shape national policies for years to come,” said Rick Pollack, president and chief executive of the American Hospital Association, which supported the ACA. “With the election now behind us, we must pivot from politics to governance.”