Price’s Conundrum: Pull The Plug On Obamacare Or Keep It On Life Support?

UNITED STATES - JANUARY 24: Rep. Tom Price, R-Ga., nominee for Health and Human Services secretary, testifies at his Senate Finance Committee confirmation hearing in Dirksen Building, January 24, 2017. Chairman Orrin... UNITED STATES - JANUARY 24: Rep. Tom Price, R-Ga., nominee for Health and Human Services secretary, testifies at his Senate Finance Committee confirmation hearing in Dirksen Building, January 24, 2017. Chairman Orrin Hatch, R-Utah, appears at left. (Photo By Tom Williams/CQ Roll Call) (CQ Roll Call via AP Images) MORE LESS
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Tom Price, in his first full week as the secretary of Health and Human Services, has a major decision in front of them: Will he get a head start on GOP lawmakers and take aggressive whacks at the Affordable Care Act that could send the individual markets into chaos, but give the Trump administration a victory against President Obama’s signature achievement? Or will he take a sort of “Make Obamacare Great Again” approach that will keep the ACA exchanges operating and insurers participating, but draw conservative ire?

Though many of the changes Price can make in implementing Obamacare could take months or even well over a year, there a few key moves that will signal which direction he’s heading.

“Given the scope of Secretary Price’s administrative authority, he could either blow up the market or promote stability,” Larry Levitt, vice president at the Kaiser Family Foundation, told TPM.

Price’s takeover of the agency comes as congressional Republicans have been struggling to settle on their plan to dismantle the Affordable Care Act. Amidst the continued uncertainty about their next steps, they’ve pointed to Price — a doctor and a Tea Party conservative whose authored his own Obamacare replacement plans — as playing a crucial role (even as Price himself in his confirmation hearings described his approach as being a mere arbiter of what lawmakers legislate).

“It will be helpful when Tom Price is at HHS, because then we have someone focused on health care everyday, communicating with us,” said Rep. Pat Tiberi (R-OH), who chairs the subcommittee on health under House Ways and Means, which is writing some of the Obamacare repeal legislation.

“Once Tom gets over there I think we will have a better idea of what [the Trump administration] is thinking about,” Tiberi told reporters last week.

So far the Trump administration has sent mixed signals as to whether it’s willing to risk major insurance market disruptions in order to make good on Trump’s promise to get rid of the law on “day one.” The insurance industry has received little communication about the implications of a vague executive order Trump signed the evening of his inauguration, which, according to some analysts, could gut the individual mandate entirely. Trump also received a gentle subtweet from the industry (which has otherwise held it punches) for scaling back Obamacare outreach efforts in the final weeks of open enrollment.

But there’s reason to believe the White House, as Price prepared for his confirmation, woke up to the reality that it would be blamed for any mess it created. Reports from Huffington Post and Politico suggest that the HHS is focusing on granting insurers some long-held requests, such as tweaks to rules surrounding special enrollment and grace periods, in their first regulatory related to the law.

“Ticking off insurers’ wish list could help stabilize the market, but more importantly insurers believe that it will stabilize the market,” Levitt said. “If you give insurers what they’re asking for, they’re more likely to keep participating.”

The biggest and most immediate question concerning insurers is the fate of the so-called cost sharing reduction payments that subsidize insurers for keeping out-of-pocket costs down for low income consumers, as mandated by the ACA. House Republicans in 2014 mounted a legal challenge to the payments, which the Obama administration had been making out of the Treasury Department, because Congress did not appropriate the money. A federal judge sided with the Republicans, but the payments have been allowed to continue while the case is appealed. The Trump administration has until next week to say whether it will argue in favor of maintaining the payments.

“If they don’t provide the funds, the market might collapse this year,” said Timothy Jost, a health law specialist at the Washington and Lee University School of Law, who is supportive of the ACA. Some key GOP lawmakers, such as Senate HELP Committee Chair Lamar Alexander (R-TN), are explicitly calling for the payments to continue at least through the transition period out of Obamacare.

Sen. Lamar Alexander, who chairs the Committee on Health, Education, Labor and Pensions, one of the committees writing Obamacare repeal legislation.

“You can only go so far with signals, because of course it’s money that ultimately matters,” said Joseph Antos, a health policy scholar at the right-leaning American Enterprise Institute.

Another outstanding issue is how Price will interpret the Trump executive order that instructed the HHS and other agencies to “waive, defer, grant exemptions from, or delay” various provisions in the law, including its taxes. Many observers read the order to mean that Price could expand the availability of ACA hardship waivers — which exempt people from the individual mandate — to the point of making it toothless. Young people would then have even less of an incentive to buy insurance, which will in turn make the risk pools sicker and more expensive for insurers to cover.

“Any weakening of the individual mandate would send shudders through the insurance industry,” Levitt said.

Marilyn Tavenner, the head of an insurer trade group, testifies in front of the Senate HELP committee.

Marilyn Tavenner, the president and chief executive officer of America’s Health Insurance Plans (AHIP), told lawmakers earlier this month that her group had not received any new details about how the HHS was intending to act on the order.

“One of the tools that [Price] has at his disposal is to make very clear that whatever is happening in the legislative debate, the administration is not going to take any unilateral action that would disrupt the marketplace,” said Matt Fiedler, a former Obama administration office who is now a health policy fellow at the Brookings Institution.

But Obamacare critics are already warning that, if Price is not careful, the measures he takes to prop up the Affordable Care Act might make it harder to repeal down the road.

“The administrative actions should be implemented in tandem [with Congress’s efforts] to use the discretion provided by the secretary to alleviate any transitional difficulties,” said Joshua Blackman, an associate professor of law at the South Texas College of Law in Houston and the author of several books about Obamacare, including his latest “Unraveled.”

“But the Secretary should not implement these quasi-permanent fixes that would make it harder to repeal the law when the time comes,” Blackman said.

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