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Congress poised to begin effort to repeal key provisions of the Affordable Care Act early in 2017

A budget resolution laying the groundwork to repeal key provisions of the Affordable Care Act (ACA) will be the first item on the legislative agenda for the Senate in 2017, Senate Majority Leader Mitch McConnell (R-KY) announced on Tuesday, December 6, 2016.

The move is a central element of an effort being described as “repeal and delay” that Republican congressional leaders have outlined since the November 8, 2016 elections, in which Republicans retained majorities in the Senate and House and Donald Trump was elected President. The plan calls for a vote early in 2017 on legislation that would use the budget reconciliation process to repeal major provisions of the ACA but maintain the availability of premium assistance tax credits for the purchase of health insurance coverage through the ACA Exchanges and expanded eligibility for Medicaid for a transition period of a time to be determined. Some Republicans have called for a transition period of as long as three years, while others have called for a more expeditious transition. The transition period is intended to provide time for Congress separately to develop an alternative health care approach.

The repeal of the ACA is expected to be the main item on the health care legislative agenda in early 2017 for congressional Republicans. Senate Republican leaders have said that any legislative efforts to pursue broader structural changes to Medicare would be undertaken separately at a later date.

That said, the Trump Administration will have broad regulatory authority over an array of health care issues, including key ACA provisions expected to remain in place after the repeal vote and the review of state Medicaid waivers.

Greater detail on the provisions of the ACA that could be repealed via budget reconciliation, the expected timeline for activity, and the procedural landscape ahead are provided below.

ACA repeal

Repeal of the ACA in its entirety is generally considered to be highly unlikely because Senate Democrats can use procedural maneuvers to block a vote on such legislation. Support from eight Democratic senators would be required to bring such legislation up for a vote, and no Democratic senator to date has indicated any willingness to support repeal of the ACA.

As such, Republicans could seek to use the budget reconciliation process to repeal specific provisions of the law as this process allows for consideration and passage of certain legislation with the support of a simple majority of 51 votes in the Senate. Leader McConnell’s plan to prioritize action on a fiscal year (FY) 2017 budget resolution in January 2017 will lay the groundwork for congressional Republicans to use the budget reconciliation process to repeal major provisions of the ACA.1

Under reconciliation, the Senate and House must agree to a budget resolution that includes instructions to specific Senate and House committees to develop legislation by a certain date. Because the Senate and House have not yet agreed to a budget resolution for FY 2017 (which began on October 1, 2016), congressional Republicans can use a budget resolution for FY 2017 to provide reconciliation instructions that facilitate repeal of provisions of the ACA, while preserving the option to use the FY 2018 budget resolution to provide reconciliation instructions for tax reform, which also could have significant implications for health care (see discussion below).

Legislation to repeal provisions of the ACA via the reconciliation process under the FY 2017 budget resolution is expected generally to be consistent with H.R. 3762, the bill congressional Republicans put forward under the FY 2016 budget process. H.R. 3762 contained a two-year transition period for the repeal of certain provisions, such as the premium tax credits and cost-sharing reduction subsidies (CSRs), and for federal payments to states under the expanded Medicaid eligibility criteria. Key provisions of the ACA that would have been repealed under H.R. 3762 are listed below.


President Obama vetoed the bill, and Republicans did not have the votes required to override his veto.

ACA provisions that would have remained in place under H.R. 3762

While much of the discussion heading into 2017 is focused on which provisions of the ACA might be repealed via the budget reconciliation process, it is just as important for health care stakeholders to evaluate the provisions of the ACA that are expected to remain in effect.

Notably, the 2015 bill would have left in place the ACA’s health insurance market reforms, including provisions that prohibit health insurers from denying coverage based on pre-existing conditions and allow parents to include adult children up to age 26 on their employer-sponsored plans. In an interview with the Wall Street Journal on November 11, 2016, President-elect Trump said he would support retaining those provisions of the ACA.

In addition, H.R. 3762 would have left in place the ACA’s so-called Essential Health Benefits (EHB) provision, which requires health plans in the individual and small group market to cover 10 categories of benefits. The Administration might consider using its regulatory authority to revisit these requirements in an effort to shore up the individual market during the proposed transition period.

H.R. 3762 also would have left in place the ACA’s reductions to Medicare payment updates to health care providers and Medicare Advantage plans totaling almost $700 billion over 10 years.

Effect on the health care marketplace

In its analysis of H.R. 3762, the Congressional Budget Office (CBO) projected that without taking into account the effects on coverage of leaving in place the health insurance market reforms while repealing the subsidies and effectively eliminating the individual and employer mandate penalties,2 the number of uninsured individuals in the US would increase by about 22 million people in most years after 2017 (the end date of the transition period in HR 3762, which was passed in 2016). The increase in the uninsured would be relative to projected coverage under the ACA. The CBO broke down the projected change in sources of health coverage as follows:

  • -18 million people: Coverage obtained in the nongroup market, including individual policies purchased through the ACA Exchanges or directly from health insurers
  • -14 million people: Coverage under Medicaid or the Children’s Health Insurance Program (CHIP)
  • +10 million people: Employer-sponsored coverage

Although the CBO and the Joint Committee on Taxation (JCT) did not model the effect of leaving in place the ACA’s insurance market reforms while repealing the subsidies and mandate penalties, the CBO and JCT expect that leaving the insurance market reforms in place would lead to a further reduction in the number of people covered in the nongroup market and an additional increase in the uninsured and number of people with employer-sponsored coverage.

The CBO and JCT projected that leaving in place the ACA’s insurance market reforms while repealing the subsidies and mandate penalties would result in a less healthy population in the nongroup market and higher premiums on average. The agencies further warned that the nongroup insurance market in some states – particularly smaller states – could become unstable, “leading to very low to no participation by insurers and consumers.”3 The CBO and JCT would provide a similar analysis of any reconciliation legislation the Congress considers in 2017.

Alternatives to the ACA

Republican members of Congress have not coalesced around a single alternative approach to health care since the ACA was enacted in 2010, and Republican leaders have said they will pursue piecemeal legislation focused on specific policy areas, rather than a single large bill like the ACA.

There are common elements among health care proposals outlined by House Speaker Paul Ryan (R-WI); Senate Finance Committee Chairman Orrin Hatch (R-UT), Senator Richard Burr (R-NC) and outgoing House Energy and Commerce Chairman Fred Upton (R-MI); and House Budget Committee Chairman Tom Price (R-GA), whom President-elect Trump has said he will nominate as HHS Secretary. Examples of these common elements include:

  • Expansion of health savings accounts (HSAs)
  • Advanceable, refundable tax credits for the purchase of health insurance coverage for individuals without employer-sponsored coverage, with the amount of the tax credit based on an individual’s age
  • Guaranteed issue of health insurance coverage in the individual health insurance market regardless of pre-existing health conditions for individual who have maintained continuous coverage
  • Reinstatement of state high-risk pools
  • The purchase of health insurance across state lines

President-elect Trump has voiced support for a number of these proposals.

House Republican leaders also have begun reaching out to governors for input on alternatives to the ACA. For example, House Majority Leader Kevin McCarthy (R-CA) and the chairmen of several House Committees on December 5, 2016, sent a letter to governors and state insurance commissioners requesting comments on health care policy alternatives to the ACA. Senate Finance Committee Chairman Orrin Hatch (R-UT) on December 13, 2016, sent a letter to Republican governors seeking comments on the future of Medicaid and announcing plans to convene a roundtable of governors to discuss Medicaid early in 2017.5

It remains to be seen how Republicans and Democrats in Congress will proceed on health care if Republicans pursue repeal of key provisions of the ACA via the budget reconciliation process early in 2017. Some Republican congressional leaders have said they hope to win bipartisan support for alternative health care policies during the proposed ACA repeal transition period, but Senate Democratic Leader Chuck Schumer (D-NY) told the Washington Post on December 7, 2016, that Democrats would not work with Republicans on a health care package to replace the ACA.

The American Hospital Association, the Federation of American Hospitals, America’s Health Insurance Plans, and the American Academy of Actuaries have raised concerns about the impact on the health care marketplace of repealing certain provisions of the ACA without enacting alternative policies.


President-elect Trump could issue executive orders or take other regulatory action once he takes office on January 20, 2017. Executive orders generally are used to direct federal agencies and officials in how existing laws will be enforced or interpreted and do not require approval from Congress. An executive order issued by a President can be modified or reversed by a subsequent President through another executive order.

For example, President-elect Trump could direct his Secretary of Health and Human Services (HHS) to further limit the availability of special enrollment periods (SEPs) for Exchange coverage outside of the annual open enrollment windows in an effort to encourage individuals to maintain continuous coverage and stabilize the nongroup market.

The Trump administration also could stop funding outreach and enrollment efforts for the Exchanges, and could revisit sub-regulatory guidance that has been issued jointly by HHS, the Department of Labor, and the Department of the Treasury to implement provisions of the ACA dealing with certain health care benefit requirements and funding mechanisms for health coverage.

Health plans in particular are eager to see what stance the Trump administration will take on the payment of cost-sharing reductions (CSRs), which the federal government has paid directly to plans to help reduce out-of-pocket costs for lower-income individuals enrolled in Exchange plans. The House of Representatives filed a lawsuit against the Obama Administration over payment of the CSRs to plans, arguing that Congress did not specifically authorize the spending. Trump has not indicated whether he will direct his Administration to continue to fight the lawsuit. A federal judge has put the lawsuit on hold until President-elect Trump is sworn in and decides how he will direct his Administration to proceed on the matter.

Health systems and other health care stakeholders are similarly interested in how the Trump Administration will approach Medicaid. While the Administration could not use the regulatory process to end the option for states to expand Medicaid eligibility under the ACA, President-elect Trump’s team may be more willing to approve section 1115 waivers that some states have put forward that would include premium contributions, health savings accounts, and work requirements for beneficiaries. The Trump transition website states a commitment to “maximize flexibility for States in administering Medicaid, to enable States to experiment with innovative methods to deliver health care to our low-income citizens.”

There also is growing interest as to how a Trump Administration will approach waivers under section 1332 of the ACA. The waiver provision allows states to seek approval for their own approaches to expanded health care coverage as alternatives to the approach of the ACA so long as the number of individuals covered, the benefits provided, and the cost to the federal government are comparable to what is available under the ACA. It remains to be seen how the repeal of select provisions of the ACA will affect the evaluation of applications for State Innovation Waivers. President-elect Trump has not articulated a position on the issue.

Tax reform

It is expected that the Republicans in Congress will include reconciliation instructions for tax reform in the FY 2018 budget resolution. That being said, given the overlap of US tax and health policy, congressional Republicans could use the tax reform process vehicle to enact policies focused on tax incentives for health coverage as alternatives to the ACA. Republicans in both chambers have put forth proposals to cap the individual tax exclusion for employer-sponsored plans, increase the limit on contributions to HSAs and create new incentives for individuals to participate in HSA-compatible health coverage, and allow for the use of advanceable, refundable tax credits in certain circumstances as mechanisms to support the purchase of health coverage in the individual market.

April 15 is the statutory deadline for Congress to approve a budget resolution for FY 2018, but that deadline has often slipped in the past. The process for congressional committees to develop legislation in response to the reconciliation instructions could conceivably run into the summer, with consideration of the legislation by the House and Senate to follow.

1“Senate Republican Legislative Agenda,” C-SPAN, December 6, 2016.
2HR 3762 would have set the individual and employer mandate penalties at $0 annually, rather than repeal the provisions outright.
3Congressional Budget Office, “Letter to Senate Budget Committee Chairman Mike Enzi Re: Budgetary Effects of H.R. 3762, the Restoring Americans’ Health Care Freedom Reconciliation Act, as passed by the Senate on December 3, 2015,” December 11, 2015.


This article was originally published on Reg Pulse Blog, Deloitte’s Center for Regulatory Strategy blog. 


Author bio

Anne Phelps is the US Health Care Regulatory Leader and a Principal with Deloitte & Touche LLP. She has over twenty-five years of health care policy experience having worked in federal agencies, the US Senate, the White House, and in consulting firms. She serves as a strategic business advisor to numerous health care stakeholders – including providers, health plans, employers, and life sciences companies – helping them navigate the complex health care regulatory environment and how it will impact their organizations.



Daniel Esquibel is a senior manager at Deloitte & Touche LLP in Advisory and provides services to the Life Sciences and Health Care practice. With 15 years of experience in the health care industry he has worked on a wide range of legislative and regulatory issues at the federal and state level. Daniel serves as a strategic business advisor to health care providers, plans, life sciences companies, employers, investors, and other stakeholders, providing insights and analysis on how the ever-changing health care regulatory environment could affect their organizations’ day-to-day operations and long-term objectives.