Election Analysis


 
 
manatt
To: Clients and Friends
From: Manatt Health
Date: November 9, 2016
Subject: Election Analysis

In a time of great uncertainty, we wanted to share some initial thoughts about what this election might mean for health policy. In addition, we are hard at work on a deck that will provide more detail on the federal and state results and how they will transform health policy that we plan to share over the next few days.

Our key takeaways at this point:

  • The Republicans will have unified control of the federal government (President, Senate and House) for the first time since 1928. However, it could be noted that the Democrats had the same unified control as recently as 2008 and experienced the checks and balances that constrain majority action. In addition, the leaders in this case do not have much experience with each other and some divisions already are apparent.
  • President Obama will continue to operate as a check on the Congress until the new President is inaugurated. Nothing can happen in the lame duck session that President Obama does not agree to since he retains the power to veto and enough Democratic votes to sustain any vetoes. That said, some things will change immediately, including Republican control over Supreme Court nominations.
  • Beyond Congressional action, the markets are expressing immediate concerns about federal fiscal policy, and there may be other immediate fall-out on issues such as Marketplace enrollment, where the push to expand enrollment will obviously face new challenges.
  • While the Presidential election can hardly be described solely as a referendum on the Affordable Care Act or health care policy in general, it nevertheless will likely have a huge impact on both, especially with Mr. Trump featuring the repeal and replacement of the ACA as a core message of his campaign. When he takes office we can expect the new President to begin to work with the Republican-controlled Congress to dismantle the ACA.
  • The process of dismantling the ACA will be complicated and not immediate. With Republicans short of the 60 Senate votes needed to end a filibuster, the path to dismantling the ACA will focus on the budget reconciliation process, which only requires a majority vote. In other words, Senate Democrats can block the wholesale repeal of the law, though there will be pressure on Democrats from more conservative states on cloture votes depending on the issue.
  • It should be noted that the Republicans have already passed a partial repeal through the budget reconciliation process (vetoed by Obama) that included repeal of the individual and employer mandates, roll back of the Medicaid expansion, and elimination of the subsidies with no replacement, though the bill did provide for a transition period to the end of 2017.
  • The Republicans have yet to agree on a replacement for the ACA subsidies and Vice President-elect Pence is already talking about a transition period. President-elect Trump and Congressional Republicans will have to decide what steps they will seek to take to transition those with ACA coverage to other coverage or out of coverage in order to ease the process and protect Congressional Republicans from electoral trouble in 2018. The eight Republican Senators up for reelection may have a big say in the scope of repeal and transition provisions.
  • Reconciliation will take time and while Congress is wrestling with that challenge, the new Administration will have other administrative levers to use, including state waivers to change Medicaid and Marketplace policy. While Congressional changes for Medicaid will be complicated by budget rules and potential filibusters, the executive holds considerable power to change Medicaid through section 1115 waivers. Expect new ground to be broken on states’ ability to impose premiums, work requirements, restrictive enrollment policies, and constraints on reproductive health care. The new programmatic flexibility may be coupled with block grant financing and an end to new waivers funding system transformation.
  • On Marketplaces, the executive holds considerable power through section 1332 waivers that allow states to eliminate the individual and employer mandates, eliminate the exchanges, and modify benefits and cost sharing subsidies. While all such waivers are subject to guardrails that require alternative approaches that protect benefits, affordability and coverage numbers, we can expect creative interpretations of those guardrails.
  • Trump will also have the ability to reverse executive orders and recent rules. Under the Congressional Review Act, the new Administration could work with Congress to overturn or rewrite recently released rules.
  • Finally, attention will turn quickly to forming a Trump health team for the new Administration. With the election behind us, more familiar Republican health care leaders may step up to serve with the realization that they can try to have a positive influence over health care policy over the next four years, but there also may be some real surprises.

 

We hope this provides some orientation in this disorienting time, but we would be remiss if we did not conclude with the observation that nothing has been predictable about Donald Trump and his political rise. We should expect more surprises including in health care.

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