How the Better Care Reconciliation Act changes Section 1332 State Innovation Waivers

Section 1332 of the Affordable Care Act (ACA) permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance through the state or federal health care marketplace. While at least 18 states have considered legislation related to the 1332 State Innovation Waiver application process, only five states (Alaska, California, Hawaii, Massachusetts and Vermont) have actually filed 1332 waiver applications with CMS under the structure setup in the ACA. And to date, HHS has only approved one (Hawaii’s) request for an Innovation waiver to waive the ACA requirement that a Small Business Health Options Program (SHOP) operate in the state.

Many health experts have contemplated the opportunity 1332 waivers may afford states, but the low take up rate during the Obama Administration limited its potential to implement innovation. With the Better Care Reconciliation Act (BCRA) released by Leader McConnell last week, the changes made to the 1332 waiver process in the Senate health bill is the Republican’s attempt to make these waivers not only more attractive to states, but also easier for them to actually opt-out of many of the ACA requirements Republicans have long bemoaned.

Due to the constraints of the budget rules imposed under reconciliation, Senate Republicans are constrained from directly making the kind of market changes to the ACA they have publicly discussed since the ACA was signed into law. So, in order to still try to deliver on those public promises, the BCRA beefs up the 1332 waivers by simplifying the process and therefore increasing the ability of states to actually opt-out of several ACA created federal regulations.

Current Section 1332 Waiver Requirements Under the ACA

Section 1332 of the ACA provides the Secretary of Health and Human Services and the Secretary of the Treasury with the discretion to approve a state’s proposal to waive specific provisions of the ACA. Specifically, the Secretaries are authorized to waive a broad array of ACA provisions related to the following:

  • Establishing qualified health plans
  • Consumer choices and insurance competition through health insurance marketplaces
  • Premium tax credits and cost sharing reductions
  • Employer mandate
  • Individual mandate

Some specific examples of ACA provisions that are allowed to be waived by 1332 under the ACA: the definition of a qualified health plan (QHP), what is an Essential Health Benefit (EHB), actuarial value requirements, requirements that exchanges must meet, premium subsidy design and eligibility requirements. However, the ACA does include an exhaustive list of requirements that any waiver application must prove that its plan will do, including:

  • Will provide coverage that is at least as comprehensive as the coverage that would be provided absent the waiver;
  • Will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as would be available absent the waver;
  • Will provide coverage to at least a comparable number of its residents as would be provided coverage absent the waiver; and
  • Will be Federal deficit neutral.

Therefore, requiring that when a state submits an application under these ACA restrictions, it will also need to provide additional and resource intensive information, like: actuarial analyses and certifications, economic analyses, data and assumptions, targets, an implementation timeline, in order to support a state’s assertions that the waiver proposal complies with the requirements set forth above.

Trump Administration Touting 1332 Opportunities

In an effort to highlight to states that the new administration views 1332 waivers as a beneficial opportunity for them to innovate in their state markets, on March 13, 2017, Secretary Price sent a letter to state governors regarding 1332 waiver opportunities. Specifically, Secretary Price provided that State Innovation Waivers that implement high-risk pool/state-operated reinsurance programs may be an opportunity for states to lower premiums for consumers, improve market stability, and increase consumer choice. In addition to inviting states to pursue approval of waiver proposals that include high-risk pool/state-operated reinsurance programs, the Secretary encouraged states interested in applying for Section 1332 waivers to reach out to HHS and the Treasury Department for assistance in formulating an approach that meets the requirements of section 1332. , HHS in follow up even published a checklist for section 1332 State Innovation Waiver applications, including specific items applicable to high risk pool and state operated reinsurance program applications. The checklist is intended to help states pursuing section 1332 waivers as they develop and complete the required elements of the application.

The Better Care Reconciliation goes even farther

With Republican leadership in the Senate looking for ways to increase state flexibility to regulate their own insurance markets while not running afoul of the Senate budget rules, the BCRA draft suggests they have focused on using the 1332 waivers as the solution. While the BCRA does not increase the number of ACA provisions states may opt out of per a 1332 waiver, it does make several changes to the process so as to make it easier for states to apply for 1332 waiver authority. For example, the BCRA removes most of the ACA requirements that states have to meet in order to obtain a waiver, it also now directs that the Secretary must approve any complete waiver application as long as it doesn’t add to the federal deficit, it also increases the length of the waiver and restricts the ability of future administrations to cancel a waiver once it has been approved.

Specifically the BCRA would:

  • Waiver Requirements. As discussed above, currently under the ACA a waiver application must prove that it does not reduce the number of people with health coverage; not reduce the affordability of health coverage; not reduce the comprehensiveness of health coverage; and not increase the federal deficit. The BCRA effectively removes three of the four waiver requirements, thus allowing states to waive coverage, affordability and benefit requirements as long as the state plan does not add to the federal deficit. In place of the coverage, affordability and benefit requirements, the BCRA requires only that a waiver application include a description of how the proposal would “take the place” of the waived requirements as well as a description of “alternative means” for increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment.
  • Deficit Neutrality. While the BCRA retains the requirement that a Section 1332 Waiver be deficit neutral, the legislation amends the requirement to provide that a waiver “not increase the Federal deficit” rather than requiring that a waiver be “budget neutral for the Federal government.”
  • State Legislative Authorization. Under the ACA, in order for a state to apply for a Section 1332 Waiver, the state must pass a law that gives the state the authority to apply for and implement an innovation waiver. However, the BCRA provides states with greater flexibility by including an option to either enact a law or execute a certification. For purposes of 1332 waiver authority, the bill defines a “certification” as “a document signed by the Governor and the State Insurance Commissioner that provides authority for state actions” under a Section 1332 waiver.
  • Secretary Discretion. The BCRA also significantly restricts the Secretaries’ discretion in approving Section 1332 Waivers. Under current law, the Secretaries “may” approve a waiver that satisfies the four statutory requirements – coverage, affordability, comprehensiveness and deficit neutrality. However, the BCRA removes that discretion and instead directs that the Secretaries “shall” approve the waiver unless it would increase the federal deficit. Therefore, the bill basically deems the waiver approved as long as it does not add to the deficit.
  • Expedited Review. The BCRA also provides the Secretaries with the authority to implement an expedited application and approval process if it is determined that an expedited process is necessary to respond to an urgent or emergency situation regarding health insurance coverage in a state. The legislation does not define what would qualify as an “emergency” or “urgent” situation.
  • Waiver Period. The BCRA extends the maximum waiver period from five years under the ACA to eight years.
  • Incentive Funds. The BCRA also includes a $2 billion fund for the next two years in order to incentivize states to apply for waivers. The funds are intended to remove the cost barrier on states imposed by the application process. The fund is to be used to give grants to states to help with the cost of submitting and implementing a Section 1332 waiver.

Looking Forward

Whether or not the BCRA, or a version of it, ultimately becomes law, we anticipate that states will increasingly take a look at the flexibilities offered in the 1332 process, especially considering the new Administration’s encouragement of states to do so. Even more so if these additional flexibilities and funds for the Section 1332 Waiver process are ultimately signed into law. We will continue to watch this space closely.

Six ways the Senate Obamacare replacement plan differs from the House bill

After an eight year effort to dismantle Obamacare, Republicans are closer than ever to redesigning significant portions of the law. While the politics in the Senate are quite similar to those in the House debate–conservative senators want an aggressive repeal and centrists warn of cutting entitlements too much and too fast–the Senate discussion draft deviates from the devastatingly unpopular House-passed bill in six significant ways.

Changes to Medicaid Expansion. Senate centrists oppose the House Medicaid cuts, including a phase out beginning in 2020 of the extra money the federal government has provided to states as an incentive to expand Medicaid program eligibility. The Senate discussion draft would gradually phase out the Medicaid match rate after seven years, not three, through 2024. This important modification should satisfy Republican senators from the 31 states that agreed to expand Medicaid coverage.

Changes in Subsidies, Tax Credits. The House bill replaces Obamacare’s income-based subsidies to help the poor buy insurance on the exchanges with refundable tax credits based on age. Critics argue the House tax credits would make health insurance substantially less affordable since the credit would not increase when premiums increased and there are not additional monies for those in higher-cost areas. The Senate measure uses people’s income, age and geography as the benchmark for helping those without workplace coverage to buy private insurance. The discussion draft also extends Obamacare subsidies down to 0 percent of the FPL which moderates asked for to make sure those cycling off Medicaid expansion would be eligible for the subsidies. However, opponents say the Senate bill could be further improved if it made tax credits more generous, particularly for older patients. The Senate draft set the income threshold at which credits are phased out at 350 percent of the federal poverty level ($42,210), a reduction from the 400 percent of FPL cap in Obamacare and a substantial reduction in general from the $115,000 cap in the House bill (with a gradual phase-out beginning at $75,000).

Modifies Preexisting Condition Provisions. The House bill was criticized for ripping away Obamacare’s protections for people with preexisting conditions. The politics got far ahead of the reality (the House bill includes essential health benefits and community rating), but the House plan did give states the option for applying for waivers from these two provisions if they can show the waivers will lead to lower premiums and broader coverage.  The Senate discussion draft leaves in place the popular ObamaCare market protections like pre-existing condition protections, community ratings and essential health benefits. But the Senate draft also broadens the flexibility available to states under the ACA’s Section 1332 waivers including opting out of essential health benefits. Critics question whether the Section 1332 waivers set a higher barrier for states as compared to the House structure. However, Health and Human Services Secretary Tom Price has assured Senators that he has plenty of administrative flexibility in the 1332 waiver process to accomplish the goals the Republican conference are seeking.

Extends Cost Sharing Reduction (CSR) Subsidy Payments.  The Senate discussion draft would provide money to insurance companies to offset the out-of-pocket costs for millions of lower income individuals through 2019. The “cost-sharing” reductions (which prompted a 2014 lawsuit from the House of Representatives) are available to the approximately 7 million consumers who fall between 100 percent and 250 percent of the poverty line to cover co-pays and deductibles. The House passed bill eliminates the CSR subsidies entirely. The Trump Administration has been threatening to discontinue these payments ($135 billion projected 10 year cost), and some insurance companies have cited uncertainty as a reason they are abandoning some markets and raising premiums.

Establishes a Short-Term Stabilization Fund. The Senate bill appropriates $50 billion over four years to try to stabilize ObamaCare’s exchanges. More specifically, the language seeks to “fund arrangements with health insurance issuers to address coverage and access disruption and respond to urgent healthcare needs within states.” Critics like Senator Rand Paul (R-Ky.) say the stabilization funding is a “new entitlement.” The stabilization money, combined with the continuation of ObamaCare’s cost-sharing reduction subsidies through 2019, have lead some conservatives to say the bill keeps too much of ObamaCare in place.

Creates Association Health Plans. The Senate discussion draft includes a provision that would allow small businesses to purchase large group coverage through associations largely free from state insurance regulation. Insurers could offer coverage regulated as large group coverage to small employers through these association plans, encouraging a Trump campaign promise to allow the sale of insurance across state lines. The House bill did not include these provisions, although the House has passed association health plan legislation in the past. It’s likely this provision will face a point of order challenge to being included in reconciliation since it’s an insurance provision that affects neither government revenue nor outlays.

Contrary to statements that the House bill was dead on arrival in the Senate, the new discussion draft does not rewrite the House bill – it simply modifies some of the more unpopular House provisions.  Leader McConnell has considered how to fix the troublesome parts of the House bill so it will pass the Senate.  He’s accomplished the first goal of tacking the unpopular House provisions, even as the politics surrounding Senate passage remains a challenge.

For Republicans who have made erasing ObamaCare a marquee pledge, failure in the Senate is not an option. And for millions of Americans who will suffer as the ObamaCare markets continue to deteriorate, failure is not an option, either.

Why repealing Obamacare is proving so difficult

“Do not confuse motion and progress. A rocking horse keeps moving but does not make any progress.” Alfred A Montapert

Alfred Montapert’s quote about not confusing motion and progress is an apt description of current House effort to get the failed Obamacare replacement process–one of the most significant setbacks for the Trump Administration–back on track.  The behind-the-scenes negotiations to craft a new version of the House GOP replacement bill have yet to produce progress on a consensus bill.

Republicans are struggling to repeal and replace Obamacare for three primary reasons. First, the stated goal of providing better coverage at a lower cost is exceedingly difficult if not impossible. Second, without Democratic support, Republicans face procedural rules that limit the scope of what can be changed. Finally, the Republican Caucus is not monolithic and deep policy disagreements  among hardliners and moderates have made consensus challenging.

First, President Trump has said he wants to broaden healthcare access and provide better coverage for Americans at a lower cost. But these goals are inconsistent. The Affordable Care Act created new markets for the uninsured – with subsidies for those with moderate incomes to make insurance affordable – and it offered the states money to expand the Medicaid programs. But it’s simply not possible to roll back coverage and not affect healthcare access. Also, it’s equally difficult to improve access or coverage without increasing beneficiary out-of pocket or federal costs. Americans across the political spectrum support health coverage for the uninsured and a legislative push to reduce Obamacare’s substantial costs will ultimately impact beneficiary coverage. This is one of the reasons that curtailing entitlements is politically challenging.

Second, Obamacare repeal faces procedural barriers. Many Republican candidates campaigned on complete repeal of Obamacare. The fact remains that full repeal of Obamacare would take 60 Senate votes to overcome a Democratic filibuster.  To counter Democratic opposition, Republicans can proceed under budget reconciliation procedures that end filibusters with only 51 votes. However, those procedural rules limit provisions to items that directly affect federal revenues or outlays. Under Senate reconciliation rules, various insurance market reforms are prohibited. House conservatives bristled at the idea that key elements of Obamacare were not repealed under Speaker Ryan’s American Health Care Act (AHCA). They could not understand why an unelected Senate Parliamentarian should decide the content of their Obamacare repeal legislation.

The second time around we expect to see a House bill that is much broader in scope, the reconciliation rules be damned. The current House thinking appears to be to repeal portions of the ACA and attempt to lower costs regardless of whether those provisions impact outlays. Under this approach, the House will pass a broader bill and let the Senate figure out the budget procedures.

Third, consensus on how to proceed in the House remains elusive. Several modifications to the Ryan’s AHCA replacement have been discussed. First, conservatives are particularly interested in rolling back Obamacare’s essential health benefit requirements, which they believe dramatically increased health premiums. The White House conceding to repeal the essential health benefits in the AHCA caused problems with Republican moderates. Second, conservatives are pushing for state flexibility on Obamacare’s “community rating” provisions which require insurance companies to charge the same premium price to individuals regardless of health condition.  The new bill likely will give state waivers from ACA insurance if they can show that exemptions would improve coverage and lower costs. However among non-Freedom Caucus Republicans, there’s opposition to changes that would let insurers charge higher premiums to older adults, and many disapprove of cuts to Medicaid for low-income people. Third, moderates had raised concerns about the prior bill replacing the ACA’s subsidy system – created to help low and some middle income families purchase insurance on the state exchanges – with refundable tax credits.

On the advent of President Trump’s Inauguration, we expected a drawn out Obamacare fight between Republicans and Democrats, but not a major fight within the GOP. Obamacare repeal efforts in the House are far from dead. Speaker Ryan reminded participants in a donor event in Florida before Easter that Obamacare repeal and replacements were a major campaign promise made by President Trump and scores of GOP members in last year’s election. But Ryan’s AHCA was criticized for making the individual insurance market even less stable than under Obamacare. And every concession to Republican hardliners created additional problems for moderates, which is one reason Ryan’s AHCA failed to gain traction. Health care changes may slip on the national agenda but will reemerge because the ACA’s problems are not going away. The trick is to craft Obamacare alternatives that prove to be more popular- and that can pass Congress.

Medicaid the lynchpin in Obamacare replacement debate

As Obamacare replacement legislation moves through the House and Senate, one issue will continue to shape the debate: the level of Medicaid spending which impacts more than 72 million low-income Americans.

The battle lines within the Republican caucus are clearly drawn. At the conservative side of the spectrum, Freedom Caucus members see the House replacement legislation as too much like Obamacare and they chafe at the provisions that allow states to continue to expand Medicaid until 2020. Moderate Republicans, and several senators representing the 31 states whose Republican governors took the ACA’s expanded Medicaid funding, balk at the idea of rolling back Medicaid coverage and significantly overhauling the program. At stake is a large portion of federal spending and perhaps the success or failure of Obamacare replacement legislation.

Why are the Medicaid provisions important?

Obamacare addressed the U.S. health insurance marketplace in two major ways. First, in the individual insurance market (for those not receiving insurance through their employer, Medicare, the VA or Medicaid), Obamacare provided people earning less than $30,000 generous subsidies to lower health premiums and deductibles. Over 85 percent of people enrolled in Obamacare exchange plans receive subsidies which help keep premiums to no more than 9.6 percent of their income. In 2016, those subsidies averaged $291 per month.

Second, provisions in the 2010 Obamacare law also expanded Medicaid eligibility and funding. Legal residents with incomes up $16,400 a year could qualify for coverage. The federal government paid 100 percent of the cost of Medicaid eligibility expansion in 2014, 2015, and 2016. Under current law, the federal government would pay 95 percent of Medicaid expansion in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and beyond.

The current House Republican bill goes beyond just changing the individual health insurance market. It freezes the Medicaid expansion and changes the way its funded by sending states a fixed amount of money per enrollee, known as a per capita cap. The proposed changes are significant because of the 23 million Americans who have received health coverage under Obamacare, over 12 million received coverage from the ACA state or federal health exchanges. The remainder – around 11 million of the newly enrolled since 2010 – obtained coverage from the ACA’s Medicaid provisions and enhanced federal match. Almost half of those who have received health coverage under Obamacare have done so under Medicaid expansion.

Conservative concerns with Obamacare’s Medicaid expansion. For some Republicans, Medicaid expansion is not as problematic as mandated coverage provisions and the requirement that all health plans contain certain essential benefits. But deficit hawks face a vote on a stop-gap funding bill for fiscal 2017 that currently expires on April 28. The Trump Administration is also advocating for a 10-year $1 Trillion infrastructure bill with no apparent pay-for and a tax reform bill likely to increase the deficit. Simply put, Republicans who think Congress has done little to reduce long-term debt have difficulty overlooking Obamacare’s Medicaid expansion given the current opportunity to curtail health spending.

Moderate concerns with the Replacement Bill’s Medicaid cuts. The counter argument, which is the foundation of Democratic opposition to Obamacare repeal, is that the House proposal would reverse recent gains and increase the ranks of the uninsured. Opposition to the Republican replacement plan has gained momentum since the CBO predicted that House bill would cut the deficit but also reduce the number of people with health coverage by24 million over the next decade. CBO said the House replacement plan would cut Medicaid spending by a quarter over the next 10 years, a reduction of $880 billion. The predicted drop in coverage is also due to the less generous GOP tax credits for those receiving subsidies under current law and resulting increased premiums for those in the individual marketplace.

Medicaid and the House Bill

The original House bill that was approved by two key House committees, would freeze Obamacare’s Medicaid expansion in 2020. As noted, instead of the current open ended entitlement, states would also get a capped payment based on Medicaid enrollment in an effort to make federal Medicaid spending limited and predictable.

The House committee debate illustrated the divide over Medicaid in the Republican caucus. One provision in the House bill was designed to placate Republican governors in Medicaid expansion states. The provision gives expansion states two more years to enroll the expansion population. Conservatives do not like the additional time, because they argue other states will rush to expand and therefore increase the size of the Medicaid program. Former Committee Chairman Joe Barton (R-TX) offered and then withdrew a conservative Republican Study Committee amendment during the Energy and Commerce Committee mark-up that would have frozen Medicaid enrollment under Obamacare in 2018, not 2020.

To help win over fiscally conservative Republican governors who did not take advantage of the Obamacare federal dollars to expand Medicaid, another House bill provision authorizes $10 billion over five years. A state’s funding share would be determined by the percentage of residents in the state with incomes under 138 percent of the federal poverty limit.

What to expect over the next 60 days

Republicans find themselves in a political box. They can’t renege on campaign promises to repeal Obamacare. Repeal was core to President Trump’s campaign and there is no excuse for not replacing the law given House and Senate majorities in Congress. But the replacement bill has policy implications that could bring political consequences for Republicans in 2018, 2020 and future elections.
Two House bill developments are likely over the next 60 days.

  • Bill revised before House consideration. Speaker Ryan has acknowledged that the House bill will be amended before it comes to the floor. He can only afford 21 Republican defections with no Democratic support for the bill. Speaker Ryan and VP Pence have floated changes to the House bill, and general agreement was reached March 17 on two significant modifications. House conservatives and the White House agreed to give states the option to impose work requirements on Medicaid recipients. States also will have the option to receive block grants instead of the per capita cap. There could be additional revisions to move up the Medicaid expansion freeze by one year to 2019. Republicans also are considering dropping a provision to charge higher premiums for people who have a gap in coverage lasting longer than two months.
  • Revised House bill squeaks by the House; bogs down in the Senate. Changes to shore up conservative support are likely to alienate moderates. There will likely be additional revisions in the Senate as leadership reaches out to moderates. Again, the Medicaid provisions loom large. (See Senator Portman and other moderate Republican’s letter to Senate Majority Leader McConnell.) We expect to see an increase in the tax credits currently in the House bill to help individuals purchase insurance along with other changes if those changes are not included in the House-passed bill.

Leadership will attempt to balance competing demands in the Republican caucus and the political reality of reductions in federal health care spending inevitably leading to higher rates of people who will be uninsured, including those currently on Medicaid. If Obamacare replacement legislation falters, it will be a political debacle for Republicans and fracture the Administrations relationship with Congress. The consequences are significant for a new President who wants to quickly pivot to tax reform and infrastructure investments. President Trump has talked about an open negotiation, which means he’s willing to do what he needs to do to reach the 216 vote threshold in the House (with two vacancies).
After heated debate and delay in the Senate, we expect the Obamacare repair to pass the Senate but it won’t be pretty. And the political stakes are high. Health care can be complicated, who knew?

Obamacare repair, not replacement: more than a change in messaging

Last week Republicans on the House Energy and Commerce Health Subcommittee held a hearing on four Obamacare replacement bills. The move is consistent with recent Republican leadership comments that  they plan to replace the Affordable Care Act with a series of small measures instead of one major replacement bill.

But at the same time President Donald Trump in a Fox interview said that an Obamacare replacement may take until 2018. And now House Speaker Paul Ryan leading committee chairs are saying they want to “repair” the ACA, not “repeal and replace” the law.

Legislating is hard

What’s going on here? The President is acknowledging what many policy makers already knew. Despite the campaign rhetoric that Obamacare would immediately be repealed and replaced, the process could have serious political repercussions if not done right.

There appears to be general agreement about moving away from the ACA’s insurance benefit mandates.  Also, the aforementioned House subcommittee explored popular issues like how to deal with people with pre-existing health conditions, how to spur people to keep continuous coverage throughout their lives, and loosening age-rating bands. Alongside Democratic taunts that Republicans don’t know what to do after the “dog has caught the car,” or in some versions is actually trying to drive the car, the simple fact is finding a consensus on how to replace the ACA will take longer than expected.

 Individual mandate is instructive

The repeal of the individual insurance mandate provides a perfect example of the dilemma Republicans face. The mandate that individuals purchase health insurance or face a penalty is a core feature of Obamacare. Republicans hate mandates and see the provision of as symbolic of Obamacare overreach in attempting to correct deficiencies in the individual insurance market.

There is broad agreement that the law should bar insurers from discriminating against people with medical problems as long as they remained enrolled in an insurance plan. But if you eliminate the mandate that people buy insurance, you’re left with a worsening and dysfunctional market that attracts high risk enrollees and leaves insurers with a pool customers who are older and less well.

To cover those with existing health conditions, Republicans have floated the idea of continuous coverage–requiring everyone to maintain health coverage throughout their lives–although that sounds like a mandate to many and the GOP is still figuring out how to do it. Other ideas like levying a surcharge on those who fail to sign up for insurance or to automatically enroll individuals eligible for subsidized coverage who don’t signup don’t sit well with the conservative wing of the GOP.

Crowded Congressional Calendar

The Congressional calendar looms large in the analysis of how to repair or replace Obamacare. During the Republican retreat in Philadelphia Speaker Ryan said he planned to bring the a budget reconciliation package–that requires only 50 votes to pass rather than the usual 60–to the House floor by the end of March. This measure is expected to contain repeal and some replacement elements.  But a leaked recording from the same GOP retreat last month shows a party that remains divided and uncertain about how to move forward.

The delay on ACA “repair” pushes back legislative activity on almost every other priority. In addition to action on Obamacare, Republicans want to address an overhaul of the tax code and a massive infrastructure bill.  On top of that, Republicans hope to pass all 12 fiscal year 2018 appropriation bills before Oct. 1 —including funding for a wall on the Mexican border. Congress hasn’t passed its appropriations bills in two decades. In addition, there are several must-pass deadlines. Congress needs to fund the government before money runs out on April 28 and raise the debt ceiling by this summer. There is widespread concern that Trump and GOP leadership have simply identified too many big-ticket, politically thorny items to tackle in year one.

On Obamacare, expect a drawn out fight, not just between Republicans and Democrats but within the GOP. The Obamacare alternatives being considered may not prove any more popular.

The probable versus the promised as power changes in Washington

The 115th Congress kicked off on January 3 with Republicans in control of both the legislative and regulatory agenda in Washington — at least as much as a party without the magical 60 votes in the Senate can be. What was unimaginable for GOP leaders on election day is now tantalizing close, but only if President-elect Trump and Congressional Republicans can get and stay on the same page.

Whether or not the new president and Congressional Republicans will be able to work together to implement most of their respective agendas, there is no doubt that they share a goal of reversing much of the work of the Obama administration. The current president’s legacy is surely under siege and it will be illuminating and instructive to see how hard Senate Minority Leader Chuck Schumer (D-NY) and other Congressional Democrats will be willing to work to protect the former president’s achievements.

To that end, January will be the start of a very busy first few months of the new Congress as the Congressional Republican agenda is loaded. It starts with repealing Obamacare, although it’s not yet clear how long a transition period Republicans will propose. It also remains to be determined whether or when Republicans will offer a replacement alternative for those who will lose insurance coverage when Obamacare is repealed.

Once Obamacare is addressed, the candidates for legislative action are virtually endless as what for many years was simply the Congressional Republican wish list is now squarely within the realm of the possible. It involves such issues as undoing much of Dodd-Frank; reversing the Obama administration’s climate change agenda; making fundamental changes in immigration policy designed to strengthen the border and curb illegal immigration; moving away from global trade deals and toward bilateral agreements; substantially increasing defense spending while getting rid of the sequester and ending the policy of parity between defense and domestic discretionary spending increases; reforming the tax code perhaps through a border adjustment tax, nominating conservative judges to serve on the Supreme Court and all across the Federal bench; and making profound changes to federal personnel practices, including withdrawing various protections from federal employees, to make it easier to fire or discipline those employees whose performance is considered unacceptable or substandard.

Republicans will use all the parliamentary and executive authority available to them to pursue their goals. Under Majority Leader Mitch McConnell (R-KY), the Senate is expected to use Budget Reconciliation, a parliamentary tactic that only requires a simple majority in the Senate to end debate, as part of the effort to force the more controversial measures through the Senate floor and to the President’s desk. Beginning within minutes of his January 20 inauguration, the new tenant of the Oval Office also is expected to use his pen to undo Obama Administration Executive Orders and force the review of regulations the prior administration put into law.

The coin of the realm in Washington remains floor time in the Senate. There is no more precious commodity to an Administration’s agenda. When one reviews the President-elect’s agenda, pairs it with the agenda of the House and Senate leaders, and adds into the mix the left-over appropriations work from the 114th Congress that still must be addressed, one quickly realizes that the 115th Congress is setting up to be one of the busiest in recent memory. Notice we said busiest, we didn’t say productive, because the Democratic Senate Minority, particularly those Democratic Senators in states that President-elect Trump carried and who are up for reelection in 2018, will have significant sway over how much of this aggressive agenda finds its way to the president’s desk.

It is also critical to consider that not all Republicans, and this is especially true in the Senate, are necessarily in favor of the sweeping agenda the President-elect proposes. We are beginning to see this in the debate surrounding the repeal of ObamaCare, as GOP members in both chambers begin to question the necessity for immediately repealing with no replacement bill ready for floor consideration. Moreover, if President Trump elects early in his term to offer anything that looks like the massive infrastructure proposal he spoke of during the presidential campaign, we will see an early test of whether the conservative core of the House Republican conference view the Trump spending proposals as a bridge too far and not what they signed on for when they stood for election. We will likely see similar fissures surrounding immigration reform, trade policy and tax reform to name a few. As is true in all things, the devils are in the details.

We’ve added the chart below as a guidepost for what currently looks to be in the realm of the possible for the President-elect and his Republican colleagues. We would suggest that you “buckle up” as the rhetoric, pace and tweets coming out of Washington are likely to be at break neck speed in the coming months.

Trump Campaign Promises
Don’t need Congress Might need Congress Needs Congress
Approve Keystone XL pipeline Stop funding for “santuctuary cities” Repeal and replace Obamacare
Cancel payment on UN climate programs Renegotiate or withdraw from NAFTA Repeal Dodd Frank
Choose Supreme Court Nominee Impose tarrifs on companies moving overseas Build a wall
Act against foreign trade abuses Deport undocumented immigrants who have commited crimes End Common Core
Freeze Federal hiring   Pass a security bill
Label China a currency manipulator   Cut taxes
Leave Trans-Pacific partnership   Pass an infrastructure bill
Limit federal regulations   Pass an ethics bill
Overturn protections for certain undocumented immigrants   Restrict lobbying by former members of Congress
Propose term limits for Congress   Pass a child care bill
Roll back environmental regulations   Pass a law enforcement bill
Suspend immigration from “terror prone regions”   Confirm a new Justice (Senate only)
Tighten lobbying restrictions on Executive Branch employees   Term limits for Congress

Delivering on 'Obamacare' promises: can vs. will

President-elect Donald Trump repeatedly promised to repeal and replace President Obama’s signature legislation, the Affordable Care Act (ACA), and certainly the Republican Party’s continuing majorities in both chambers of Congress, coupled with an incoming Republican president, have now put the law’s future in serious question. We expect the Republican Congress to grapple with the three questions below that will affect the timing and content of a legislative alternative.

Will there be complete repeal of the ACA on day one? Not possible.

Simply put, the ACA cannot be repealed on Day One because it cannot be undone by unilateral action on the part of the Trump administration. Any repeal of the ACA would require an act of Congress, which means at least 60 votes would have to be secured in the Senate to overcome an expected Democratic filibuster of such a repeal bill.

How much of the ACA will be repealed? Can vs. will

How much of the ACA Congress can repeal might be vastly different from what Congress will repeal. There is a process congressional Republicans can use to take a giant bite out of the ACA early in 2017. Known as “budget reconciliation,” the process allows Congress to make changes that impact certain mandatory federal spending that is outside the annual appropriations process, but the question remains whether they will utilize it. Since Congress has not passed a budget for the current fiscal year (FY17), when the next Congress convenes in January, Republicans could introduce and pass a budget with reconciliation instructions to repeal parts of the ACA.

Parts of the ACA like providing insurance coverage for children to age 26 and prohibiting denials based on preexisting conditions are immensely popular. So the question now becomes whether there 50 senators able to support a process that, while repealing parts of the law, does so without putting an alternative in place.

Timing of the ACA repeal?

Since election night the health care community has debated how much of the ACA will be repealed and how quickly. There are two options. A consensus may build that the repeal and replace process should be slow and deliberate and therefore result in some of the ACA’s structure remaining in place for an unspecified period. Alternatively, President-elect Trump reach out to Democrats to work on ways to improve the ACA without a straight repeal.

If Republicans choose to use reconciliation to both repeal and replace the ACA, wholesale changes will take some time to be developed. If they instead wait to use the Fiscal Year 2018 budget process that would give Republicans time to build a consensus around a proposal to replace the ACA.

What will the Republican replacement look like?

Republican proposals that have been introduced since 2010 can serve as helpful guideposts to what provisions currently enjoy bicameral consensus. And this past summer, the House Republican Conference, led by Speaker Ryan, set out the “Better Way,” a series of proposals on key issues, including health care. When comparing the Better Way roadmap with some of the proposals introduced in the Senate in recent years some consistent themes emerge:

1. Tax credits and portable coverage: bicameral proposals all make available tax credits to individuals to purchase insurance. The Better Way proposal envisions a universal advanceable and refundable tax credit to all individual and families who do not have an offer of health coverage. The credit would not vary based on income level.

2. Insurance reforms: many from ACA remain, including continuous coverage, expanded purchasing options and state-based high risk pools.

3. Strengthened consumer-directed health: current rules governing consumer-directed health plans, like health savings accounts (HSAs) and flexible spending accounts (FSAs), would be modified.

4. Capping the employer exclusion: bicameral proposals cap the tax deductibility of employer-based health coverage in order to cover the cost of the tax credits they offer.

5. Medical malpractice reform: based on successful state laws in California and Texas, proposals include caps on non-economic damages, limitations on attorney’s fees, as well as incentives for states to adopt additional solutions to settle disputes.

6. Medicaid reform: including either capped allotments or state block grants.