The likely impasse will mean the government's role in healthcare will be a major issue in the 2015 campaigning for the next presidential election. Republican candidates may have to present their healthcare alternatives, while Democrats may need to detail what changes to the ACA they would support. Meanwhile, though, millions more Americans will have gained coverage this year either through Medicaid expansion or the insurance exchanges, making it increasingly difficult to roll back the law's major features.
The political turmoil will heighten business uncertainty for providers, insurers and other healthcare stakeholders that have reorganized their operations to meet the requirements of the law, are benefiting from its provisions, and generally want to move ahead rather than start over.
“You need to envision a world where, whatever changes are being contemplated, you do not have fewer people with insurance coverage,” said Gail Wilensky, a senior fellow at Project HOPE who served as Medicare chief under President George H.W. Bush. “I don't see going back to where we were.”
Providers also fret that Medicare could be targeted for further cuts under budget austerity by Republicans.
The most immediate threat to the ACA comes from King v. Burwell, the lawsuit that the Supreme Court will hear in March. The justices could eliminate premium tax credits for lower-income Americans in the 37 states using the federal insurance exchange. More than 7 million Americans could lose subsidies worth roughly $36 billion, according to the Urban Institute. That would have significant financial ramifications for providers and insurers that serve those subsidized insurance customers. The Supreme Court is expected to rule by June.
Conservative health policy experts are urging Republicans to come together around a package of changes to the ACA if the Supreme Court strikes down subsidies. Their argument is that Republicans would be in a powerful position to extract major changes in the law—including less regulation, greater state flexibility and reduced federal spending on subsidies—in return for restoring the premium tax credits in all states. “It would open up the opportunity to revisit some aspects of the law in a fairly substantial way if the Congress is ready to step forward,” said James Capretta, a senior fellow at the conservative Ethics & Public Policy Center who co-authored a widely discussed reform blueprint.
But coalescing around comprehensive reform legislation will be difficult for fractious Republicans. A significant segment of the GOP base sees any effort to “fix” Obamacare as an act of betrayal, and legislators who take on that task could invite primary challenges from the right. In addition, any GOP effort to craft a specific policy proposal is sure to attract criticism, including that it would insure far fewer Americans and offer skimpier coverage. If the Supreme Court wipes out subsidies, Wilensky foresees a standoff between Republicans who want to seize the opportunity to enact changes to the law and those who see any effort to improve it as verboten.
Meanwhile, Republicans want to repeal a number of ACA provisions this year. Those include the 2.3% medical-device tax, the employer and individual mandates, the 30-hour workweek standard for requiring employers to offer coverage, the Medicare Independent Payment Advisory Board, and the risk-corridor program designed to protect insurers from losses in the new individual-insurance markets. Obama's veto pen might still protect all of these provisions. But Republicans could force Democrats to take politically uncomfortable votes that may be useful during their 2016 election campaigns.
Republicans also may seek big changes to Medicare and Medicaid, given that Rep. Paul Ryan (R-Wis.), the most vocal proponent of overhauling the two programs, is now chair of the influential House Ways and Means Committee. There is broad support among Republicans for adopting Ryan's defined contribution proposal for future Medicare beneficiaries, which they hope will sharply reduce future Medicare spending.
Stephen Parente, a healthcare policy expert at the University of Minnesota who has advised Republican candidates, points to the growing popularity of Medicare Advantage as a sign that the public will accept the big shift to private Medicare plans that would result from the GOP's so-called premium-support model. “We're probably going to hit a 50% tipping point majority within two or three years,” he said.
But that doesn't mean premium support will be enacted before the next presidential election. That's because Democrats are almost universally opposed to any Medicare changes that could be seen as benefit cuts to seniors. And the pressure to take on the politically explosive Medicare issue has eased as spending growth has slowed in recent years, though it's poised to accelerate as millions of baby boomers enter the program. “I don't think President Obama is probably going to be interested in signing a sweeping reform of Medicare before leaving office,” Capretta said.
Substantial changes to Medicaid might prove more politically viable. Ryan has advocated transforming it into a capped block-grant program giving more authority to the states to set benefits, eligibility, and program structure. The Obama administration has shown a willingness to allow states to experiment with their Medicaid programs in return for implementing the ACA's expansion provision.
But pushing for major changes to Medicare and Medicaid may be too politically risky with a presidential contest looming. That's particularly true because Ryan and other key congressional Republicans are weighing presidential bids.
Douglas Holtz-Eakin, president of the conservative American Action Forum, expects the GOP emphasis instead to be on incremental changes that can attract Democratic votes and put legislation on the president's desk. “Their loyalty to him as a lame duck is going to diminish,” he said.
One certainty is there will be another fight over fixing Medicare's sustainable growth-rate payment formula for doctors. Last year, healthcare groups celebrated a bipartisan, bicameral deal to pass a permanent fix to the widely loathed payment scheme. The problem was that Republicans and Democrats couldn't agree on a way to pay the package's 10-year price tag of $140 billion. That led to a 17th consecutive patch, which will run out at the end of March.
A similar scenario is likely to play out again this year. Because the annual SGR bill has been one of the few pieces of healthcare legislation enacted in recent years, it probably will become a magnet again for numerous other proposals, perhaps including changes in the CMS' controversial “two midnight” rule for short hospital stays.
There also will be jousting over the framework of health IT regulation.
Congressional Republicans have offered a vision of a largely deregulated sector. The administration introduced a draft framework last spring that loosened oversight of the sector, though with some scrutiny retained, including a new Health IT Safety Center. But House Republicans have challenged the administration's authority to create the safety center. The federal health IT coordinator's office, however, has convened multiple committees on the matter, with a framework expected early this year. —with Darius Tahir and Virgil Dickson