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USC-Brookings Schaeffer on Health Policy

Election results 2014: Biggest changes to health care will happen outside of Congress

Some of the Republican faithful imagine the party’s capture of the Senate means repeal of the Affordable Care Act (ACA) – or Obamacare. But, given filibuster rules the notion that a full repeal bill could pass the Senate, let alone be signed into law, is unthinkable.

So what can we expect after the election turnover?

One view is that a Republican Senate, in tandem with the House, will rip out the vital organs of the ACA.  By attaching key ACA changes to must-pass bills, the argument goes, Republicans would so weaken the central core of the ACA that it would essentially fall apart. On the hit list are the individual and employer mandates. Also vulnerable is federal funding for insurance “risk corridors” – a subsidized cross-subsidy that encourages insurers to take part in the ACA because it reduces the financial risk of ending up with costly enrollees. Weaken that provision, some believe, and many insurers would pull out of the ACA health exchanges altogether, causing the whole edifice to crumble.

But that’s an unlikely scenario, mainly because these organs aren’t so vital anymore. For one thing, the Administration recognizes that the mandates will likely have to be watered down to maintain much public support. But as individuals and businesses adapt to the law, and more Americans obtain often-subsidized insurance, the mandate stick is less necessary to achieve enough coverage for the ACA to be viable. Meanwhile expect worried insurers to pressure the GOP enough to prevent adjustments to the risk corridors from causing a collapse.

A lethal blow is unlikely to come from the Republican Congress. Rather a more likely threat is from the Supreme Court’s Halbig case. If the Court does strike down federal insurance subsidies in states with federal rather than state-run exchanges, that would be quite a body blow. At the very least it would eliminate a central plank of the ACA in over 30 states.

It’s true that some congressional measures might make it to an Obama signature in certain circumstances, such as eliminating the medical device tax or curbing the role of the ACA’s various boards. But while these efforts would frustrate the White House and add to the costs of the law, they wouldn’t critically wound the ACA.

Far more important will be what happens at the state level, where actions by state legislatures and governors could shape the future of the ACA, eventually changing it considerably even if not ending it.

Thanks to Democratic control and Administration encouragement, it’s likely that more states will move ahead with an expansion of Medicaid, though Republican victories in several states will slow that momentum. But also expect several states, following Arkansas, Ohio and others, to get the Administration’s go-ahead to pursue a “private option” and other variations of Medicaid expansion.

Two other developments outside the Beltway could mean significant changes that don’t actually conflict with the ACA, but could mean a future health system that departs from the original White House vision in crucial ways.

One is the enormous growth in private employer exchanges. Some predict that within a few years more working Americans will get coverage through these exchanges than through the state or federal exchanges. With weakened individual and employer mandates, private exchange coverage rather than the ACA could be the future for millions of households.


The other, deep within the ACA itself, is a provision – Section 1332 – which allows states to ask for waivers from central features of the law, including the mandates and the standardized benefits package, providing states can assure equivalent coverage. That provision, which takes effect in 2017 with a new president in the White House, could do far more to transform the ACA than anything Mitch McConnell’s Republicans can accomplish.

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