How Trump Can Change the ACA, Even Without Congress

With the collapse of the GOP’s American Health Care Act (“AHCA”) last Friday, the Affordable Care Act (“ACA”) remains the law of the land for the foreseeable future.  The failure to repeal and replace the ACA was a stunning setback for President Donald Trump who campaigned on a promise to do just that.  But just because the AHCA failed to pass in the House does not mean that the current administration will embrace the ACA.  To the contrary, ongoing implementation of the ACA requires many affirmative actions from the Trump administration, and the choices this administration makes could either support or undermine the success of the ACA.  This article provides a nonexhaustive look at some of the key policy choices facing Trump and the GOP going forward, including changing the regulations that implement the ACA, stopping funding for cost sharing subsidies for marketplace plans, discouraging new enrollees from joining marketplace plans, and letting the ACA “explode.”

Changing the regulations that implement the ACA

The administration can either support or undercut the ACA through the revision of regulations that govern how the ACA operates. Like most pieces of legislation, the ACA is not a standalone document. Rather, it simply provides a broad legal framework which administrative (executive) agencies must interpret and implement through separate rules and regulations. The language of the ACA tasks the Secretary of Health and Human Services (“HHS”) with drafting regulations that implement the ACA.

The new HHS Secretary, Dr. Tom Price, an ardent opponent of the ACA, is now tasked with implementing the very law he opposes. Secretary Price could potentially alter many of the current regulations and push the ACA toward a more conservative path.  This would thereby accomplish many of the goals the GOP had in its healthcare bill. For instance, Price has flexibility to loosen the definitions of what constitutes an “essential health benefit” under the ACA.  The Secretary could also change other regulations to fundamentally alter the way in which the marketplaces work, such as by promoting high-deductible plans or Health Savings Accounts.  He has already signaled to states that they may impose work requirements for Medicaid eligibility, a policy that the Obama administration had previously rejected and that House Republicans attempted to include in the AHCA.  However, the process of administrative rulemaking is complex; Congress and the president both have authority to void proposed rules and the public has to be given an opportunity to  give input on all proposed rules, through notice and comment proceedings. Individuals and entities can also go to court over proposed regulations and courts can set aside all or part of rules for a variety of reasons, including if they are unconstitutional or are an abuse of discretion.

Stop funding cost-sharing subsidies for marketplace plans

The administration could make fundamental changes to the ACA by eliminating funding for cost-sharing subsidies to lower-income Americans.  In 2014, the House Republicans sued the Obama administration, arguing that the cost-sharing program was unconstitutional because there had never been a congressional appropriation allowing reimbursement to insurers for low-income purchasers. District Judge Rosemary Collyer ultimately agreed with the House, but stayed her decision pending appeal by the Obama administration to a higher court.  This meant that these cost-sharing payments have continued while the appeal remains unresolved.

If the administration wanted to, it could simply drop the appeal, let the lower court ruling remain, and immediately stop reimbursing these insurers.  According to many analysts, this move would almost certainly cause havoc. Insurers have to continue to sell the deeply discounted policies, but without the promised reimbursements and would eventually drop out of the marketplace. Such an outcome would likely cause the collapse of the insurance marketplaces, or the “death spiral” that President Trump and Speaker Ryan have both warned is imminent.  

Discourage new enrollees from entering the marketplace

Additionally, President Trump could simply discourage new enrollees from purchasing plans on the marketplace. To some extent, the administration has already taken steps to reduce enrollment on the exchanges. After taking office, President Trump cancelled all federally sponsored advertisements and outreach aimed at encouraging last minute signups on the exchanges. This act, which limited information to the public about enrollment deadlines, may have significantly reduced the number of enrollees in 2017.  In addition, by not enforcing the individual mandate, the administration will discourage new signups.  

“Let Obamacare Explode”

Finally, the administration and the GOP-led Congress could simply do what Trump suggested in an interview and “let Obamacare explode.”  And in fact, without support from the administration or Congress, the ACA will face severe challenges in the coming years. The federal government, through running the health insurance marketplace to ensuring that cost-sharing needs are met, has a significant role to play in the operation, and success of, the ACA.  If this administration does not actively support the law, it could very well collapse.  Premiums, at least for some people and in some markets, are likely to significantly increase in the next few years as government subsidies to insurers fade out.  Without incentives and pressure from the White House, and amidst an air of uncertainty surrounding the future of the law, insurance companies may decide to exit the marketplaces, further limiting supply and increasing premium prices. The administration could also take steps to help stabilize the marketplaces and to reassure hospitals, providers and insurers that the current health system won’t completely collapse.

As long as the ACA remains the healthcare law of the land, President Trump and the GOP-led Congress are responsible for its administration, and the choices that they make will either support or undermine its success. Many believe that letting the ACA unravel and implode could ultimately prove politically detrimental to the administration and the Republicans in Congress.  Over twenty million Americans became insured under the ACA, many of them in counties that voted heavily for Trump. Even if the ACA is unpopular with some, the unraveling of a health care system upon which millions rely will not come about without significant opposition.