With oral arguments now complete in King v. Burwell, focus has shifted to Congressional back-up plans in the event the U.S. Supreme Court invalidates federal subsidies available to eligible consumers in states that use a federally-run exchange. A ruling in favor of the petitioners could mean that 7.5 million consumers in the 34 states that use HealthCare.gov could lose their subsidies, making health care coverage less affordable. The pending ruling has led some Congressional Republicans to propose alternative plans to ensure individuals keep the coverage they have but also to give states flexibility from the Affordable Care Act’s (ACA) stringent mandates. Despite all the posturing related to alternative plans, one thing is certain: Republicans should leverage a ruling in favor of King to enact many of the changes they have long-pursued, such as repeal of the Medical Device Tax and the Independent Payment Advisory Board (IPAB).
The Administration denies having any contingency plans in place in the event the Supreme Court rules in favor of the King petitioners. Indeed, the Centers for Medicare and Medicaid Services (CMS) included a provision in exchange plan issuer agreements for 2015 that would allow issuers to terminate plans if the federal government ceases providing subsidies to individuals receiving coverage through these exchanges. Some have speculated that the Department of Health and Human Services (HHS) may actually have a backup plan, although no one from the Administration has admitted to this.
Several House and Senate GOP leaders, on the other hand, have put forward various alternative plans in an effort to convince the Court and the public that invalidating the subsidies would not harm Americans or the insurance markets. Although some of these plans share similar policies, Republicans are not necessarily in agreement as to the best way to amend or replace the ACA.
A common theme among the current set of proposals is to allow states to establish their own insurance market standards to provide relief from many of the ACA’s mandates. In an op-ed published last week, Senate Finance Committee Chairman Orrin Hatch (R-UT), along with Senate Health, Education, Labor & Pensions Committee Chairman Lamar Alexander (R-TN) and Senator John Barrasso, MD (R-WY), outlined a plan that would give states flexibility to create insurance markets with more options than the current exchanges. Presumably, the plan would allow states to opt out of requirements such as the individual mandate, similar to a bill that Senators Hatch and Alexander introduced in January. Their plan also includes financial assistance for individuals to maintain the coverage they chose under the ACA during a transitional period.
In the House, Representatives Paul Ryan (R-WI), John Kline (R-MN), and Fred Upton (R-MI) – Chairmen of the House Ways & Means, Education & Workforce, and Energy & Commerce Committees, respectively – unveiled a more detailed “off-ramp” plan in a Wall Street Journal op-ed, in which, similar to the Hatch-Alexander-Barrasso plan, states could opt out of the ACA’s mandates and pursue their own coverage standards. For example, states could opt out of the individual mandate requirement. Residents would have more affordable coverage options and could shop for plans across state lines. The plan would eliminate the need for federal subsidies by allowing individuals to use refundable, advanced tax credits to purchase a broader range of insurance plans, similar to those available before the ACA went into effect. Similar to current ACA requirements, the plan would continue to prohibit insurers from imposing lifetime limits and from denying coverage to individuals with pre-existing conditions.
Senator Ted Cruz (R-TX) introduced a bill called the Health Care Choices Act, which would effectively replace the ACA. The bill would undo many of the ACA’s requirements, including the individual mandate, exchanges, and federal subsidies for individuals to purchase insurance. Senator Cruz’s bill is perhaps the most detailed plan put forth by Republicans yet. Companion legislation was introduced in the House by Congressman Marsha Blackburn (R-TN).
Regardless of the type of alternative plan Republicans end up supporting in the event the Court sides with King, most Republicans have agreed in the past on repealing or amending several unpopular ACA provisions and now is an opportune time to consider turning that consensus into action. Republicans have been attempting to dismantle the ACA for years, and while the law has remained unpopular in polling, they have never been in a position to really dismantle it. Now, with control of both chambers of Congress for the first time since the law was passed and a Supreme Court case that could potentially strike a major blow to the federal exchange’s fiscal underpinnings, Republicans should strike while the iron is hot.
For instance, Republicans have long-sought to repeal the Medical Device Tax, which renders a 2.3 percent excise tax on medical device manufacturers. Many have criticized the tax as unfairly singling out the medical device industry and causing manufacturers to shift production overseas. Republicans also have indicated support for raising the ACA’s definition of full-time work from 30 to 40 hours per week to prevent workers’ hours from being reduced in vital industries. IPAB has always been a point of contention among Republicans, who have sought to repeal the IPAB provisions on several occasions over the past four years. Republicans should negotiate with Congressional Democrats and the Administration to achieve these ends as part of any replacement or transition plan.
In the meantime, GOP leaders should continue laying the groundwork for these reforms. The Supreme Court is expected to issue its decision in King v. Burwell in late-June.
Jeffrey J. Kimbell is the founder and President of Jeffrey J. Kimbell & Associates, a Washington-based consulting firm focused on the executive and legislative branches of the U.S. federal government