Taking the Pulse of U.S. Health Care: 50 Days into the Trump Administration

Thursday, Apr 6, 2017
by Alex Wheatley '16

On March 6, 2017, House Republican leadership introduced the American Health Care Act (AHCA) to repeal and replace the Affordable Care Act (ACA) also known as Obamacare. Leadership stated its hope to get the repeal and replace bills through the House in three weeks. That same evening the Woodrow Wilson School and the Center for Health and Wellbeing organized a panel discussion,  “Taking the Pulse of the U.S. Health Care: 50 Days into the Trump Administration,” in a packed Dodds Auditorium as part of the Day of Action, Knowledge and Democracy in Action at Princeton University and an installment of the Woodrow Wilson School’s Up To the Minute series. 

The panel featured commentary from Paul Starr (Stuart Professor of Communications and Public Affairs), Nolan McCarty (Susan Dod Brown Professor of Politics and Public Affairs), Heather Howard (Lecturer in Public Affairs, faculty affiliate of the Center for Health & Wellbeing and director of the Robert Wood Johnson Foundation-funded programs Advancing Coverage in States and the State Health and Value Strategies), Ilyana Kuziemko (Professor of Economics and Co-Director of the Center for Health and Wellbeing), and was moderated by CHW Co-Director and Henry Putnam Professor of Economics and Public Affairs Janet Currie. In front of an attentive audience, these five speakers contextualized, explained, and predicted what it might meant to repeal and replace the ACA.

                Kuziemko opened the discussion with a general overview of the Affordable Care Act and its potential replacement, the American Health Care Act (ACHA). Passed in 2010, the ACA came into full effect in January 2014. She described the ACA as a set of sticks and carrots meant to improve healthcare coverage. Provisions like the individual mandate, employer mandate, parental coverage of children through age 26, government marketplaces for private insurance, and the Medicaid expansion push, pull more people toward coverage. Kuziemko emphasized the importance of the Congressional Budget Office’s (CBO) predictions for evaluating the performance of the ACA. In 2012, the CBO had predicted 20 million new enrollees and an annual cost of $129 billion by 2015. In 2015, there were 19 million new enrollees and the annual cost was $110 billion. Kuziemko went on to discuss the potential relative economic impacts of a full and partial repeal of the ACA.

                McCarty then described how an ACA repeal process might work. An arcane facet of the budgetary process called “reconciliation” will be crucial to how events unfold. Reconciliation bills ensure that Congress spends what it budgets. In this context, they’re powerful because they’re protected from a Senate filibuster; Republicans can pass reconciliation bills with just 50 votes rather than the traditional 60 vote requirement. McCarty highlighted how this dynamic will make party unity extremely important in the repeal/replace process: Republicans would need 50 votes to pass the bill, there are only 52 Republican senators, and no Democrats were expected to support it. Party unity was slightly less important when the ACA was originally passed—via a similarly partisan reconciliation bill adopted in the House and passed in a filibuster-proof Senate—because there were 59 Democratic senators. After he explained this process, McCarty moved on to describe how the reconciliation process and the goals for healthcare reform do not perfectly match up. Reconciliation is strictly limited to fiscal provisions (like Medicaid funding, tax structures, and individual subsidies). Any non-fiscal provisions, i.e. new regulatory structures to replace key components of the ACA, would require 60 votes. In this sense, gutting the ACA may be easier than replacing it.

                ""At this point, Starr provided the audience with a history of healthcare reforms/counter-reforms in the United States. Republican counter-reforms tend to follow a similar pattern: they’re offered as market friendly alternatives to democratic proposals that rely on “too much government.” He highlighted three moments in this history: Richard Nixon’s counterproposals to Ted Kennedy’s universal health plan in the 1960s, Republican senators’ counterproposals to Bill Clinton’s universal health plan in the 1990s, and current Republican counter-reforms to the ACA. Nixon’s market friendly alternative included an employer mandate and federal support for building up a health management organization; when these components were incorporated into Clinton’s plan, Republicans then called for an individual mandate and expanding coverage for the near-poor (i.e., those within 138% of the poverty line). These proposals were incorporated into the ACA, but Republicans now want to eliminate the individual mandate and roll back Medicaid. He suggested that Republicans are not driven by the policy details of the ACA but rather political promises and a desire to change tax policy. In this regard, the 2018 elections may motivate when and where certain provisions are rolled out.

                To conclude the discussion, Howard addressed how states could prepare for a potential repeal. She emphasized that states have much at stake in the debate: although the ACA is federal law, much of the implementation responsibility has fallen to states. Governors must implement the new rules and programs, but must also balance their budgets every year. They have seen coverage and budgetary gains under the ACA that they don’t want to see reversed.  As a result, governors have been a moderating influence in repeal/replace discussions. For context, New Jersey has received $3 billion in additional funding for Medicaid and has cut in half its uninsured rate (adding 800,000 insured individuals) with the ACA and Medicaid expansion. Howard then focused on how changes to Medicaid could affect states. If Medicaid funding is capped under a block grant or per capita cap (as is proposed), states will receive a certain amount of money each year for Medicaid, which changes the entitlement nature of the Medicaid program. This approach is flexible in theory, but Howard believes that this flexibility will be constrained by increased competition over a shrinking supply of state funds. Medicaid funding accounts for 25-30% of state budgets; changes to this program’s funding will affect many aspects of state financing.

               "" After the panelist statements, audience members raised questions about public perceptions of the ACA, price transparency, cost containment, and how different populations may fare if the ACA is repealed. Currie noted that the ACA remains poorly understood but polls better today than it ever has in the past. Kuziemko brought up recent research by Princeton Professor Uwe Reinhardt that identified healthcare prices—rather than healthcare utilization—as the driver of costs.  Starr commented that the ACA is unique in that it hasn’t been amended: unlike in the cases of Social Security and Medicaid (which were significantly amended a few years after they were adopted), Democrats who passed the ACA were unable to make midcourse corrections to the bill because they lost control of Congress immediately after they passed it.