Despite Vance’s Remarks, GOP Seems to Have Little Appetite for ACA Reform

With five weeks to go until election day, the vice presidential candidates sparred over health care during their Oct. 1 debate. There were no new revelations, but the Affordable Care Act was top of mind for both Minnesota Gov. Tim Walz (D) and Sen. JD Vance (R-Ohio), despite some industry observers’ belief that Republicans might want the candidates to steer clear of any major reforms. Vance briefly touched on his idea to move higher-risk people into separate risk pools in the individual market and allow states to “experiment a little bit” on coverage for healthier people and those with pre-existing conditions. Vance claimed protections for pre-existing conditions would remain in place but that he would also try to “make the health insurance marketplace function a little bit better.” Walz countered that ensuring “the risk pool is broad enough to cover everyone [is the] only way insurance works” and that Vance’s plan would make insurance coverage far too expensive for sicker people. “What Senator Vance just explained might be worse than a concept because what he explained is pre-Obamacare,” Walz said. Some industry experts are doubtful that the ACA will be dramatically changed under a Trump administration. In fact, some believe Republicans would prefer Trump and Vance not mention any significant changes at all. “Trump has made some reference to pursuing alternatives to the Affordable Care Act but has seemingly deemphasized this given apparent lack of interest from other Republicans in revisiting what was a losing issue in Trump’s mid-term elections,” said Wells Fargo analyst Stephen Baxter in a July research note to investors. Republicans probably would not be having this conversation at all if Vance had not mentioned it, argued Jennifer Young, partner with Tarplin, Downs, & Young. “I think Republicans have been quietly content for the last couple of years to see the conversation move elsewhere in terms of health care reform,” she said during an Oct. 1 webinar hosted by KFF. “The political realities are that undertaking something of that level of dramatic redesign just is not on the table.” Indeed, ACA repeal votes were a major factor in GOP losses in the House in 2018, and “Republicans would probably like to see the candidate not continue down this route,” Nick Manetto, principal at Faegre Drinker Consulting, said during a September webinar hosted by the firm. So far, Trump has said he would not try to repeal and replace the ACA unless a better, more cost-effective plan was at the ready. While Republicans may not love the fundamentals of the ACA, they know that people depend on it for coverage. “The ACA is not the same anathema it once was to the Republican party,” Faegre Drinker Principal Tricia Beckmann said during the webinar. Enhanced Subsidies Must Be Addressed Despite a general reluctance to mess with the ACA, Congress must address the issue of enhanced premium tax credits, which are set to expire at the end of 2025. Recent legislation introduced in the House and Senate would permanently implement the expanded subsidies, which were enacted in the American Rescue Plan Act and extended through 2025 by the Inflation Reduction Act. Several insurance trade groups endorsed the bill. But while the enhanced subsidies make coverage more affordable for many, they come with a steep price tag of $134 billion from 2025 to 2029 and $383 billion from 2025 to 2034. The legislation is unlikely to come to a vote by the end of this legislative session, Young said. Lawmakers will want to explore the issue from the perspective of what has worked and what hasn’t worked, their priorities, and other factors. Democratic or Republican sweeps of Congress and the presidency would mean extension or expiration, respectively, of the enhanced subsidies. A likelier scenario is a divided Congress, meaning compromise will be necessary. The enhanced premium tax credits may end up in an overall debate about taxes, Chris Jennings, founder of Jennings Policy Strategies, said during the KFF webinar. While insurers support extending the enhanced subsidies or making them permanent, they’re also preparing for the possibility that they’re allowed to expire. At the Wells Fargo Healthcare Conference on Sept. 4, Centene Corp CEO Sarah London noted that states could “leverage state exchanges, state dollars, federal matches to think differently about something that's feeding small businesses in their community” if the enhanced premium tax credits are not extended. The Cigna Group CEO David Cordani told the audience at the Sept. 5 Morgan Stanley Conference that while the enhanced subsidies indisputably expanded the market, ACA marketplace plans are a small part of Cigna’s portfolio, so the company can withstand their expiration. Lawmakers in the near future are also likely to examine fraud and abuse in the ACA exchanges, which is largely tied to marketplace brokers who enroll consumers or change their plans without consent. In the first six months of 2024, CMS received more than 134,000 complaints from consumers about unauthorized enrollments. CMS is cracking down on these unauthorized changes with greater broker oversight and by throwing violators out of the marketplace. “The good part about this administration…is they have gone after the agents and the brokers who have really abused some of the premium subsidies, even in ways that the enrollees have no idea,” Jennings said. Would Trump Support High-Risk Pool Redux? Part of Vance’s idea for the ACA is bringing back high-risk pools for sicker individuals and potentially experimenting with state reinsurance programs to help fund the high-risk pools. While Vance indicated that he wants to keep existing protections in place for individuals with pre-existing conditions, that concept appears at odds with what high-risk pools looked like before the ACA. High-risk pools began in the 1970s in 35 states for consumers who could not obtain individual insurance due to their health conditions. People in high-risk pools faced expensive premiums and lifetime coverage limits, and state subsidies often were not enough to ease the cost burden for consumers. The ACA eliminated high-risk pools with the pre-existing condition coverage mandate. As for whether costs would be lower for healthy young people if they were not in a combined risk pool, “that is a data point that could produce a positive answer for a very small subset of a population to a very limited question,” Young said.