The November 2018 midterm elections were some of the most closely-watched contests in recent memory and drew significantly greater voter participation than in years past. The environment, immigration policy, gun policy, and the economy were naturally on the minds of the electorate, but health care policy was a primary issue driving turnout and undoubtedly will draw voters to the polls in 2020 as well. According to a Health Research Institute survey, 59 percent of respondents stated that health care was very important and ranked as their top issue in the 2018 elections. As polling data predicted, in the November elections the Democrats took back the majority in the House (gaining 40 seats) but were not able to gain a large enough majority to provide filibuster- and veto-proof power. The Republicans actually increased their majority in the Senate. In the wake of the midterm results, what can we expect regarding health care, the Affordable Care Act (ACA), Medicaid, and Medicare? The short answer seems to be more division in the halls of Congress, with both sides attempting to drive health care policy through the regulatory process. But, and perhaps more importantly, while the federal government may be gridlocked by division, we are likely to see greater state-based efforts to shore up the ACA, Medicaid, transparency in drug pricing, and the availability of individual and group health exchanges.
Administration’s Changes to the Affordable Care Act
On the federal level, in the first two years of President Donald Trump’s administration, we have witnessed regulatory agencies attempting to eliminate industry regulation, transform Medicaid, and push to repeal the ACA—either in whole or piecemeal. The administration has eliminated the ACA’s individual mandate penalty and delayed the implementation of the 40 percent excise tax on employers that provide high-value health plans known as the “Cadillac tax.” It has also advocated the increased use of health savings accounts (HSAs), as well as employer-funded health reimbursement arrangements (HRAs). On this score, the U.S. Treasury, Department of Labor, and Department of Health and Human Services proposed regulations in October that would remove the current prohibition on integrating HRAs with individual health insurance, and would permit employers that offer group plans to provide “excepted benefit” HRAs of up to $1,800 per year to reimburse employees for certain qualified medical expenses.
The administration quietly passed multi-agency regulations allowing for greater sale of insurance across state lines and allowing individuals to claim a tax deduction for health insurance premiums. It has also stopped reimbursing insurers for their cost-sharing subsidies for some low-income ACA insureds (a requirement in the ACA when originally enacted), and cut the ACA enrollment period in half.
The administration has also stated its intention to transform Medicaid by granting Section 1115 waivers allowing work requirements to be imposed on some beneficiaries. Finally, the administration was successful in promulgating regulations allowing for sales of short-term, limited-duration health plans and supported association plan sales through a rule finalized by the U.S. Department of Labor that makes it easier for small businesses to band together to buy health insurance without some of the regulatory requirements that individual states and the ACA imposed on smaller employers. We can expect Republican members of Congress to continue to advance similar efforts to reform other ACA provisions.
Democrats’ Plans to Strengthen the ACA
The outcome of the November elections gives Democrats more say in checking the efforts of the administration to chip away at the ACA and modify Medicaid. Because of their greater control over the federal budget, Democrats will attempt to strengthen the ACA by bolstering individual and group markets and will try to restore funding for programs connecting beneficiaries to ACA navigators and connecting ACA cost-sharing reduction payments to insurers. At the same time, Democrats have promised to work toward reduced prescription drug prices and to support efforts to address the opioid crisis through federal reimbursement to treatment facilities. Democrats have also gained more oversight power in Congress, which will allow them to hold hearings on the Trump administration’s actions and perhaps slow down such efforts as the Medicaid work requirement waiver applications. The margins remain thin, however, and after the midterms, the Democrats still lack filibuster- and veto-proof majorities.
An interesting side-note that bears watching is the Texas federal district court’s declaration in Texas v. U.S.A. that the entire ACA effectively was rendered unconstitutional following the GOP-led Congress’ elimination of the individual mandate penalty (a ground for the Supreme Court’s 2012 decision upholding the law as constitutional under the taxing power). The district court’s decision has been appealed and is expected to reach the Supreme Court, where there is now a conservative majority.
Increased States’ Role in Shaping Health Care Policy
Perhaps the most interesting post-election development is the increased role of the states in shaping health care policy. This is nothing new, but we should anticipate even greater efforts in the states, given some Democratic gubernatorial and legislative gains, to shore up health insurance markets, work on drug prices, and protect Medicaid. For example, Washington Governor Jay Inslee has proposed a public health care option for Washington residents that would direct the state health care authority to offer public health insurance statewide to people in the individual market who are not covered by their employers. He has stated the goal that reimbursement rates be consistent with federal Medicare plans.
Similarly, California’s new governor, Gavin Newsom, has proposed state-funded health care coverage for 138,000 young people living in the country illegally and reinstatement of the individual mandate requiring every Californian to buy health insurance or pay a fine. New Jersey, Vermont, and Massachusetts have already enacted individual mandate penalties. Other states have expressed interest in joining such states as Alaska, Maine, Maryland, New Jersey, Oregon, and Wisconsin, which have established reinsurance programs through Section 1332 waivers granted by the Centers for Medicaid and Medicare Services (CMS). These reinsurance programs have been successful in several states in reducing the cost of ACA plan premiums, sometimes dramatically. Democratic gubernatorial gains also could lead to further Medicaid expansions under the ACA in states that had not previously agreed to expand Medicaid under the law.
While the midterm elections are unlikely to ease the division we have seen over the past decade in the healthcare context, they likely will quicken the pace of efforts to reform the law and introduce new and innovative approaches to try to ensure coverage for more Americans while reducing health care costs, both at the state and federal levels.