Four things to know: Payers’ biggest ACA repeal concerns

President-elect Donald Trump has vowed to repeal and replace the Affordable Care Act (ACA) on January 20-his first day in office. Given this, “The biggest fear within the healthcare industry is uncertainty,” says Jill Schwieters, president, Cielo Healthcare. “Healthcare reform has been time consuming and disruptive in recent years, and it appears this will continue for at least several more years. Thus far, the new administration has not provided many details about how it will replace it. It’s likely that some parts of the ACA will remain, but it’s unclear which ones might stay.”

Here, experts discuss four of the biggest concerns managed healthcare executives have about repealing the ACA.

If the ACA is repealed, government subsidies that assist consumers in paying for insurance premiums in the individual market may also be eliminated. “If subsidies are no longer given, consumers are likely to drop coverage given the extra cost, resulting in membership declines that could adversely affect managed care companies,” says David M. Kaufman, partner in the Healthcare Practice Group at Freeborn & Peters LLP in Chicago and the former general counsel of Blue Cross and Blue Shield of Illinois. The shortage of premiums received by issuers would likely result in losses for issuers and premium increases for consumers. A court case regarding this, House v. Burwell, has been stayed by the U.S. Court of Appeals to give the incoming administration and the House an opportunity to reach agreement on how to settle the case.

“Medicaid expansion will likely end; block grants to states or a per capita allotment are being discussed as options for a Republican-based Medicaid program,” Kaufman reports. “These modifications will likely change the way states run their respective programs, which in turn, will impact the way Medicaid managed care companies do business. In addition, retraction of Medicaid programs due to the end of Medicaid expansion will result in reduced enrollment for Medicaid managed care companies in the future. The details of how future block grants or per capita allotment would work are unclear, as are the possibilities of new business opportunities for managed care companies under the yet to be developed system.” 

If the ACA is repealed, health insurers wonder if they will still be required to cover individuals with pre-existing medical conditions.

“Will these people be taken care of through high-risk pools, sponsored by the state or the federal government instead of the insurers that subsidize them now through higher premiums?” asks Mark Rust, managing partner of Barnes & Thornburg LLP and immediate past chair of the firm’s national Healthcare Department.

“President Obama thought the ACA offered a good solution by requiring everyone to purchase health insurance, and then everyone without an employer-sponsored or a government health plan would be in one big insurance pool under the private exchanges,” Rust explains. “But while most high-risk individuals entered the pools, a much smaller percentage of healthy people did, and many others in the young population didn’t-even though the law requires it. This ended up being quite costly for insurers and taxpayers.”

“If insurers aren’t required to cover people with pre-existing conditions, the new administration will have to come up with an alternative plan to get them insurance coverage,” Rust says. “If it doesn’t, it would be a disaster both practically and politically.”

Practically, a large number (potentially 20%) of the 13 million people on the public exchange would not be able to get coverage, Rust surmises. Politically, the "guaranteed issue" component of the ACA was one of its most popular features on a bipartisan basis: Polls showed that more than 90% of the entire voting public believed this was a valued and important feature of the new law.

If the percentage of the uninsured rises across the United States or preventative care provisions are reduced, primary care delivered through emergency rooms will likely become the norm once again for the uninsured or underinsured.

“When access to affordable healthcare is not available, people tend to postpone getting care until their illness or health problem needs immediate attention,” Schwieters says. “At this point, care typically requires more intensive services-subsequently increasing costs and forcing hospitals to shift resources to this broken model again. This is a concern for managed healthcare executives because this use of emergency rooms drives up costs of care and puts additional stress on the healthcare system.”

Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.