United States: President Trump Announces Health Care Priorities: Repeal/Replace of Obamacare; Tort Reform on Agenda

On February 27, 2017, President Trump gave his first address to a joint session of Congress, outlining key points of his administration's agenda. In his speech, the President reiterated his desire to repeal and replace the Affordable Care Act ("ACA"), echoing many of the proposals included in the draft Republican leadership replacement bill leaked last week and the Policy Brief ("Blueprint") released last month (together, the "House Leadership Proposal"). A summary of the President's remarks on health care is below.

• Full repeal of the ACA. The President reaffirmed support for a full repeal of the ACA. As broad indications of what he might seek to replace it, he struck a broad theme of consumer choice and an opposition to both individual and employer insurance mandates.
• Pre-existing conditions. Consistent with the Blueprint, the President's plan emphasized the need to ensure that those with pre-existing conditions have access to coverage.
• Tax credits. The President voiced support for the use of tax credits to subsidize the purchase of insurance and payments for health care. Tax credits remain a contested issue among House Republicans—members of the Freedom Caucus oppose advanceable tax credits and some House Republicans favor only deductions. Under the House Leadership Proposal, the credits would be age-adjusted, advanceable and refundable, a considerable step away from the means-adjusted credits supplied under Obamacare.
• Health savings accounts. The President expressed support for expanded use of health savings accounts ("HSAs"). With HSAs, consumers can allocate pre-tax income to an account for costs associated with their health care.
• Medicaid support and flexibility. The speech advocated for providing state governors with "the resources and flexibility they need with Medicaid to make sure no one is left out." The flexibility likely refers to the use of block grants or capitated payments to states, the latter of which was included in the House Leadership Proposal.
• Tort reform. The President emphasized his desire to enact "legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance." He did not reference specific reform measures, but the House Judiciary Committee approved a bill¹ on February 27 that would place limits on the amount that hospitals and doctors would have to pay in settlements for medical malpractice lawsuits. Tort reform does not appear in the House Leadership Proposal, but is an element of Rep. Mark Sanford's Patient Freedom Act² and of bills introduced in the past by Rep. Tom Price before his appointment as Health and Human Services Secretary.³
• Drug prices. The President called for reductions in the "artificially high price of drugs." The new Food and Drug Administration Commissioner has not yet been appointed, but the rumored appointees generally support deregulation of the industry, which they argue may lead to a faster drug approval process, arguably bringing down the price of drugs.
• Market access. The last point made by the President on health care proposed to allow consumers to purchase health insurance across state lines. He stated that this would create a "truly competitive national marketplace" for health care.

The President did not address value-based health care initiatives expressly, but his opening remarks on ACA reform emphasized the importance of ensuring access to quality health care at lower costs. President Trump's speech and the House Leadership Proposal both support the use of tax credits and health savings accounts, the repeal of the insurance mandates, and the protection of those with pre-existing conditions.

Although differences among House Republicans make the final outcome uncertain, the President's apparent support for key elements of the House Leadership Proposal may increase the likelihood that this version of "repeal and replace" will ultimately prevail in the House. Most of the provisions in this version track with the ACA repeal bill proposed in 2016,⁴ which Congress passed last year using the budget reconciliation process, but was vetoed by President Obama. Because those provisions were approved by the Senate parliamentarian as budget-related then, presumably they would be again. This bill contains some additional provisions, including a premium penalty paid to the insurer on beneficiaries who purchase coverage after a lapse of 63 days. If the Senate parliamentarian concludes that this or one of the other changes is not budget-related, the bill would require 60 Senate votes to pass. In addition, at least 3 Republican senators (Ted Cruz, Mike Lee, and Rand Paul) have indicated that they would not vote for a repeal that includes refundable, advanceable tax credits, as the House Leadership Proposal does. If they withhold their votes, then the measure could fail. Either way, the fate of the bill in the upper chamber could be more uncertain.

¹ Protecting Access to Care Act of 2017, H.R. 1215, 115th Cong. (2017).

2 Patient Freedom Act of 2017, S. 191, 115th Cong. (2017)

3 Empowering Patients First Act of 2015, H.R. 2300, 114th Cong. (2015); Saving Lives, Saving Costs Act, H.R. 2603, 114th Cong. (2015).

4 To Provide for Reconciliation Pursuant to Section 2002 of the Concurrent Resolution on the Budget for Fiscal Year 2016, H.R. 3762, 114th Cong. (2016).

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