The Fix

We are at an interesting moment in the presidential campaign cycle. On the Democratic side, Hillary Clinton, as expected, has emerged as the presumptive nominee. 

In some respects, the Democrat’s campaign has been more competitive than anticipated because Sen. Bernie Sanders has captured the imaginations of college students and resurgent liberals across the country. 

The Republican race, of course, is one for the ages. The Donald Trump phenomenon is the lead story almost every night, and the party faithful have never seemed so adrift. Card-carrying Republicans are beginning to divide into two camps—those who believe the party must line up behind Trump and those who prefer an establishment candidate. Those in the latter camp, believing a top-of-the-ticket loss by the GOP to be inevitable either way, feel it’s more important to retain the soul of the party, even if it means Trump and his acolytes run a third-party campaign. Some pollsters are starting to project a Trump ticket would cost Republicans the

Senate and jeopardize the House majority—unfathomable ever since the GOP took control of the lower house in 2010. If those projections become more widespread, I think the movement to oust Trump will begin to echo more loudly.

What gets my blood churning about all this? Conjecture about what the different outcomes would mean for the future of Obamacare, of course.

If Clinton is our next president, she is highly likely to continue to support the broad contours of the law and to rebuff any efforts by a Republican Congress to make wholesale changes. She has, though, expressed disdain for the Cadillac tax (inspired at least in part by the union abhorrence of that provision, which has not moved President Obama). She may also be open to raising the full-time employee definition from 30 to 40 hours per week (another union-championed change), and she likely would support proposals to simplify health plan reporting. In the scheme of things, these are all important but relatively marginal changes.

Like the presidential race, the impact of a Republican victory on the future of Obamacare is more than a little unsettled. Trump has decreed the law a failure and promised to repeal it, but he’s offered no hint of what would replace it, other than the assurance that it will be “great.”

Other Republican victors likely would pick up the House’s “repeal-and-replace” mantra (I have lost count of the number of votes for repeal that have passed in the House), but repeal and replace with what? In fact, the first question, if we ever get that far, might be: Repeal what?

If you think of the private market components of the law in the most basic terms, you could say they primarily encompass the following:

• Market reforms (like the guaranteed issue requirements that were wildly popular and based on proposals Republicans first put forward in the 1990s)
• Individual and business coverage mandates (and the associated penalties and reporting requirements)
• Subsidies
• Public exchanges (and the associated individual and small-group market reforms like community rating)
• The Cadillac tax
• Wellness.

The dilemma for the repeal-and-replace supporters is that the market reforms (most notably guaranteed issue), the mandates and the subsidies are inextricably linked in a kind of iron triangle. The carriers, for example, believe they must have mandates if they are going to have the guaranteed issue requirements. If you eliminate the employer mandate, the subsidies become even more cost prohibitive. And without the subsidies, the individual mandate may be unaffordable for a wide swath of Americans.

Any path forward for a Republican administration easily could involve attempts to broaden the reform effort as a means to “fix” Obamacare. Revisiting the pre-tax treatment of employee-paid premiums, for example, and/or thinking about allowing subsidized individual plans to be sold through private exchanges could reshape the contours of the debate.

As an industry, we need to come to terms with what we would like to see happen in any such discussion and, conversely, on what would be unacceptable. Here’s my wish list:

•  Repeal the Cadillac tax.
• Reform the non-discrimination requirement to clarify that it is satisfied as long as all full-time employees are eligible to participate in all plan offerings on terms at least as favorable as those offered to more highly paid personnel.
• Eliminate the medical loss ratio rules, which appear to create perverse management incentives.
• Simplify the employer reporting procedures.
•  Implement a standard national benchmark plan, as the law already purports to require. 

I have written about the standard national benchmark plan repeatedly, but it should be a significant benefit and I cannot let it go. The law required the U.S. Department of Health and Human Services to establish a national benchmark plan that would have been the base offering in the individual and small-group markets. The plan was supposed to include coverage for each of the essential health benefit categories included in the statute.  The law dictates that any state imposing mandates beyond the benchmark plan requirements would be responsible for paying the subsidy associated with the premium for those mandates. We expected to get a very economical and basic national benchmark plan and there would be widespread mandate reform. 

HHS punted and issued rules—that I believe are wholly at odds with the statutory requirement—allowing each state to determine its own benchmark plan and decreeing that any mandate required by a state prior to 2011 could be maintained without subjecting the state to any subsidy obligations. Opportunity lost. At least to date.

A new administration—whether Clinton, Trump or a Republican to be named later—will have the opportunity to pick up the cudgel here. Our mission is to make sure our wishes become theirs.