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You're Hired: Tracking the Trump Administration Transition - March 8, 2017
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This is the March 8, 2017, edition of an email sent from November 2016 to September 2017 that covered Donald Trump's presidential transition, cabinet appointees, and the different policy positions of those individuals who may have had an effect on the new administration. Previous editions of "You're Hired" can be found here.
On Monday, March 6, 2017, Republicans in the House of Representatives unveiled the American Health Care Act (AHCA) as their proposed replacement for President Obama’s signature healthcare plan, the Affordable Care Act (ACA). Repealing the ACA, also called Obamacare, has been a major theme of Republican campaigns since the law was passed in 2010. According to Reuters, the House has voted to repeal or alter the law more than 60 times since it was passed.
Republican lawmakers intend to fast-track the legislation, meaning the bill will be what is called a reconciliation bill. Because of this designation, the bill primarily deals with changes in taxes or spending, and it can be passed with a simple majority of votes rather than the 60-vote threshold for most bills in the Senate. The ACA was passed in 2009-2010 with a 60-39 vote in the Senate and a 219-212 vote in the House. Republicans want the AHCA signed before the Easter recess begins on April 7, and they do not intend to wait on cost or coverage estimates from the Congressional Budget Office.
No Democrats have expressed support for the AHCA, and Nancy Pelosi (Calif.), the House Democratic leader, has been coordinating a strategy that would target Republicans in states where Medicaid was expanded under the ACA. House Democrats are also planning to force votes on amendments to the bill during committee markups in the coming weeks.
Below, we outline some of the major provisions of the proposed law, define some of the key terms in the conversation about healthcare, and offer some political context surrounding the AHCA.
Major provisions of the AHCA
Some major portions of the ACA that would stay without modification:
- Insurers cannot deny a person coverage based upon a pre-existing condition
- Parents can keep their children on their insurance until the age of 26
Some portions of the ACA that would be eliminated:
- Individuals would no longer be required by law to have health insurance (the individual mandate)
- Expanded coverage under Medicaid would be phased out by 2020 at which point enrollment in Medicaid would freeze and states would receive a lump sum from the federal government—called a block grant—to pay for Medicaid expenses.
- A restriction on how much insurance companies can charge older patients would be eliminated entirely. Under the ACA, companies cannot charge patients in their 50s and 60s more than three times what they charge the youngest enrollees.
- Taxes on high earners that helped to pay for the law would also be repealed.
Adjustments to the ACA’s tax credits
- Everyone enrolling in individual plans who earns less than $75,000 would receive a tax credit based on their age. The credits range from $2,000 (for those under 30) to $4,000 (for those over 60). Under the ACA, individuals earning over $48,280 did not receive tax credits for health insurance purchases.
Six terms to know for the coming weeks
Three from the ACA
- Medicaid expansion: As part of the ACA, states had the option to expand the pool of citizens covered by Medicaid, a government program that provides health services based on income, disability, household size, and other factors. The expanded version of Medicaid—which was enacted by 32 states, including Washington, D.C.—allowed for Medicaid coverage based only on income. To qualify, a person had to make less than 133% of the federal poverty level.
- Subsidy: Government money that currently helps individuals pay for insurance plans purchased on the federal markets. The government currently provides two such subsidies, the Advanced Premium Tax Credit (which lowers monthly costs) and Cost Sharing Reduction (which reduces out of pocket expenses) for those who qualify based on income.
- Individual mandate: An ACA requirement that everyone enroll in health insurance or be subject to penalties. The rationale for the individual mandate was to encourage younger and healthier people to buy insurance and provide some financial support for the system’s requirement that insurers cover consumers regardless of pre-existing conditions.
Three for the Republican Replacement
- Health Savings Account: Financial accounts that allow for tax-free (at the federal level) deposits and withdrawals for healthcare expenses. These are designed to allow individuals to save for future out-of-pocket healthcare expenses, and they stay with individuals through retirement, even if they change jobs.
- Access: Stated priority of a replacement plan, that everyone who wants health insurance has access to it and has choices available. This notion stands in contrast to the ACA’s prioritization of universal coverage.
- Continuing coverage: The AHCA allows insurance companies to raise the price of premiums by 30 percent for anyone enrolling in a plan who has been uninsured for 63 or more days. The 30 percent markup would last for one year. The rationale for this is the same as that for the individual mandate—to keep younger and healthier consumers insured as a way of paying for legal requirements concerning coverage.
How does this measure up to President Trump’s stated priorities in a replacement?
Since beginning his campaign for president in 2015, Trump has said a number of things about a potential replacement to the Affordable Care Act. In September 2015, he told “60 Minutes,” “[F]or the most it's going to be a private plan and people are going to be able to go out and negotiate great plans with lots of different competition with lots of competitors with great companies and they can have their doctors, they can have plans, they can have everything.” His official transition website said, “The Administration’s goal will be to create a patient-centered healthcare system that promotes choice, quality and affordability with health insurance and healthcare, and take any needed action to alleviate the burdens imposed on American families and businesses by the law.”
In his speech to a joint session of Congress last week, Trump gave a clearer outline of five principles he thought should guide efforts to replace the Affordable Care Act. Below, we examine what he said and how these principles are reflected in the AHCA.
“First, we should ensure that Americans with pre-existing conditions have access to coverage, and that we have a stable transition for Americans currently enrolled in the healthcare exchanges.”
- The AHCA did not alter the ACA’s provision that insurers cannot deny a person coverage based upon a pre-existing condition
- A stable transition is more difficult to gauge. The bill is intended to provide universal access to healthcare coverage, but the degree to which it does and how it applies to those currently enrolled in ACA plans has yet to be determined.
“Secondly, we should help Americans purchase their own coverage, through the use of tax credits and expanded Health Savings Accounts --- but it must be the plan they want, not the plan forced on them by the Government.”
- Tax credits are a prominent feature in the AHCA but in contrast to the subsidies provided in the ACA, they are based on age and apply to anyone earning less than $75,000 per year.
- The AHCA would allow for contribution limits to Health Savings Accounts to double and for people to have expanded options for how they can spend the money in their accounts.
“Thirdly, we should give our great State Governors the resources and flexibility they need with Medicaid to make sure no one is left out.”
- A draft of this bill that was leaked in February did not allow for Medicaid expansion. This proposal allows for the expansion to continue until an enrollment freeze in 2020.
“Fourthly, we should implement legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance -- and work to bring down the artificially high price of drugs and bring them down immediately.”
- Trump has also previously called for more specifics on this issue, saying that the government should be able to use its purchasing power to negotiate drug prices. This issue is not addressed in the AHCA.
“Finally, the time has come to give Americans the freedom to purchase health insurance across State lines --- creating a truly competitive national marketplace that will bring cost way down and provide far better care.”
- The ability to buy insurance across state lines has been a consistent point in Trump’s healthcare plans but was not addressed in the AHCA. Trump has indicated that he intends to get this provision, as well as a policy concerning drug prices, into the bill in the coming weeks.
Key players to watch
- House Freedom Caucus: This is a bloc of Republicans in the U.S. House who are among the most conservative members of the chamber. Their opposition to the ACA—and this version of the Republican replacement—is based on tax credits that reduce the cost of healthcare for individuals. Freedom Caucus member and former chair Rep. Jim Jordan (R-Ohio) said of the new proposal, “This is Obamacare by a different form. They’re still keeping the taxes in place and Medicaid expansion, and they’re starting a new entitlement.”
- GOP senators in Medicaid expansion states: On March 6, 2017, four Republican senators from states that expanded Medicaid coverage—Rob Portman (Ohio), Shelley Moore Capito (W.Va.), Cory Gardner (Colo.), and Lisa Murkowski (Alaska)—expressed concern over proposals to phase out Medicaid expansion. In a letter to Senate Majority Leader Mitch McConnell (R-Ky.), they said, “[W]e will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.”
- Marc Short: Short is the White House’s director of legislative affairs and is responsible for working with lawmakers in Congress on these kinds of legislative priorities. He was president of Freedom Partners, the nonprofit network associated with Charles and David Koch, from 2012 to 2015. Short previously worked with former Sen. Kay Bailey Hutchinson (R-Texas) and Vice President Mike Pence (R) when Pence represented Indiana in the House of Representatives.
See also
- You're Hired: Tracking the Trump Administration Transition
- Donald Trump presidential transition team
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