After Obamacare – What’s Next for Uncle Sam?
February 22, 2017
As efforts to repeal and replace the Affordable Care Act (aka ‘Obamacare’) take shape, it is too early to make specific predictions. But, based on previous proposals and public statements made by some of the key players – and some recently leaked documents – it is reasonable to anticipate some of the broader policy directions that are likely to emerge. This blog post is the first in a series that will discuss some of the shifts likely to emerge in the post-ACA environment.
This post will deal with the likely role of the federal government in setting policy and defining rules for health insurance markets. Later posts will deal with other players – such as the states, insurance carriers and employers.
At this point, it is highly likely that the role of the federal government in prescribing specific behaviors will decrease and the federal government will step back from many of the mandates established under ACA. For example, it is likely that the federal government will no longer maintain mandates on:
- Employers – such as the requirement under ACA for large employers to offer minimum levels of coverage or face penalty taxes and the ACA reporting requirements regarding coverage offered to employees (a key part of enforcing the employer mandate),
- Individuals – such as the requirement that individuals have “minimum essential” coverage or pay an annual penalty, and
- Insurance carriers – such as the requirements defining acceptable minimum “essential health benefits” that carriers must cover on individual and small group policies.
The role of the federal government will decrease in other ways. For example, federal subsidies to enable lower- and middle- income to purchase health insurance are likely to be scaled back, converted to tax credits or eliminated.
Bottom line: under the ACA the federal government became a much more active player in the U.S. healthcare markets. Whatever else occurs in the looming political firefight, it is safe to say that this active role is going to shrink.
Politics—and nature—both abhor a vacuum. In subsequent blog posts we will address how the resulting vacuum may be filled as the federal government’s role in the post-ACA environment recedes – and how states and insurance companies will fill this vacuum.
Staying on top of rapidly changing developments
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After Obamacare—What’s Next for Insurance Companies?
I have described the likelihood that, in a post-ACA world, the federal government will step back and the states will have more flexibility and responsibility. The next key player in this equation is the insurance industry.
The ACA created a substantial web of requirements and prohibitions that applied to insurance companies—including rules requiring that carriers insure all applicants, that premiums could not vary based on applicants’ health status, that (in effect) younger applicants subsidize the cost of older applicants, and that limited the companies’ profits from health insurance.
After Obamacare—What’s Next for the States?
If the federal government reduces its role in US health insurance markets in the post-ACA world, many of the rules imposed on insurance companies by the federal government under ACA will be eliminated or reduced. For example, the ACA contains rules on benefits that must be covered by individual and small group insurance policies and rules limiting insurance carriers’ ability to underwrite policies based on preexisting conditions. In a post-ACA world with a diminished federal role, regulation of insurance companies will be a state matter—which was the status of these areas before the enactment of ACA.