States Likely to Get More Authority to Implement Health Care

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Sara Hansard

Dec. 12 — More authority to regulate health-care issues will be delegated to states under the Trump administration and Republican Congress, the first Obamacare exchange regulator said Dec. 12.

The Obama administration gave states a number of options in setting up health insurance exchanges under the Affordable Care Act, and it delegated authority to states to set standards for essential health benefits that most individual and small group plans must cover, Joel Ario, managing director of consultant Manatt Health, said. Letting states decide how to implement health-care decisions is likely to be the model followed by President-elect Donald Trump and the Republican Congress in making changes to the ACA, he said on a panel convened by the American Enterprise Institute, a free market-oriented think tank. Ario was the first director of the Office of Health Insurance Exchanges at the Department of Health and Human Services.

The Trump administration will have many options for unraveling the regulations, regulatory guidance and executive orders issued by President Barack Obama in implementing the controversial 2010 law. But some of those options, such as stopping what Republicans say are unauthorized payments of ACA cost-sharing subsidies, would result in health insurers pulling out of the exchanges and millions of people losing coverage, which would end up putting Republicans in a bind.

The U.S. District Court for the District of Columbia ruled in favor of House Republicans, who filed a lawsuit against the Obama administration over the cost-sharing subsidies for low-income people. The case is being appealed, but the appeal is on hold ( U.S. House of Representatives v. Burwell, D.C. Cir., No. 16-5202, 12/5/16 ) ( 234 HCDR, 12/6/16 ).

Of the approximately 11.1 million consumers who were enrolled in ACA marketplace coverage at the end of March, 57 percent—nearly 6.4 million consumers—received the cost-sharing reductions for copayments and deductibles, according to the Department of Health and Human Services.

`A Massive Headache.’

If the incoming administration’s position is that paying the cost-sharing subsidies is illegal, it would be “a criminal violation for the executive branch to continue making payments,” Daniel Meron, a partner with law firm Latham & Watkins LLP in Washington, said. “This is going to turn out to be a massive headache.”

The Trump administration is “going to have to make a decision, pretty early on, as to what their position is” concerning the lawsuit, Meron said. In order to compensate insurers for covering the cost-sharing subsidies, Republicans may want Congress to appropriate cost-sharing payments for the short term, he said.

“If Trump wants to dismantle the ACA then he’ll need to repeal and replace rather than drop lawsuits and deregulate,” Daniel Hemel, assistant professor at the University of Chicago Law School, said.

Congress is likely to use the budget reconciliation process to repeal significant portions of the ACA, Josh Blackman, associate professor of law at the South Texas College of Law Houston, said. That will “create sort of a game of chicken,” with Republicans calling on Democrats to support a replacement plan. If Republicans win enough Senate seats in the next election, they could have a 60-vote majority to override a filibuster and pass their own replacement plan, he said.

Resist Urge to Do Things Quickly

But there could be many lawsuits filed if Trump administration agencies dismantle the law through regulatory actions, Adam White, a research fellow with the Hoover Institution in Washington, said. “That illustrates why it’s so important for the new administration—if it wants to succeed in its reforms administratively, it’s going to have to resist the urge to do things quickly, and do things prudently.” The Hoover Institution is a Stanford University public policy think tank.

“If Congress wants to get rid of this law immediately they can,” Ario said. “And if Donald Trump wants to get rid of it immediately, he can. He can disrupt peoples’ coverage in 2017 and the law will be toast,” he said.

“I think Congress is much more likely to do it than Trump,” since congressional Republicans have voted more than 50 times to repeal major portions of the law, Ario said. However, he said he doesn’t believe either Congress or Trump will “actually get rid of the law,” because millions of people would lose coverage without it.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

More information on the American Enterprise Institute panel is available at http://src.bna.com/kGZ. The Department of Health and Human Services’ March 2016 marketplace enrollment report is at http://src.bna.com/kHl.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law