This is part nine in an ongoing series regarding changes in health care that may take place—and actual changes that do take place—with the Trump administration. The likely implementation issues to be encountered for both potential and actual changes are described, based on detailed methods of analysis. The emphasis is on what these shifts mean for legal practices and how attorneys may prepare in the most effective ways.

On May 4, 2017, a revised bill for the American Health Care Act (AHCA)—referred to as Trumpcare— narrowly passed the U.S. House of Representatives. This version of the GOP’s proposal to “repeal and replace” the Affordable Care Act (ACA)—or Obamacare—faces an uncertain future in the Senate.

Parts one to eight of this series have provided background regarding the AHCA. In brief, this revised health plan involves removal of ACA mandates for individuals and employers; smaller tax credits used to replace the subsidies provided through the ACA Exchanges; phasing out of expanded Medicaid; conversion of classical Medicaid to state block grants; and—as an amendment—the introduction of waiver programs that may be used by states to change many ACA features, such as the treatment of pre-existing conditions and definitions of essential health benefits.

The compromise amendment in the AHCA that brought about its passage in the House (by 217 to 213) is intended to allow states more flexibility—through waivers—to modify the extensive ACA regulations.

One of the big drivers of higher premium costs and high deductibles has been the ability of individuals to purchase insurance after they become ill, then to take advantage of community rating (with everyone treated equally) to spread the costs of care for their medical conditions.

The AHCA amendment allows states to modify their health care plans so that guaranteed protection from pre-existing conditions requires that coverage be kept in effect. States making such changes would have to set up federally-subsidized high risk pools to provide first-year coverage for those not having prior-year coverage in effect.

For the first year, individuals would obtain insurance through such a pool, with higher premiums; then after the first year, guaranteed renewal would allow individuals to shift into community-rated plans. Purchasers would be incentivized to keep coverage in effect.

The process of developing the AHCA is in early stages; the Senate is expected to rewrite what passed in the House. A conference committee and both houses of Congress must then approve the final version. If a final version of the AHCA is passed, then extensive regulations must be developed by the Department of Health and Human Services (HHS) to implement the statutes.

So long as the details of what a final plan might even look like are largely unknown, there is no way to realistically debate the impact that the AHCA may have on operations of the health care system. However, basic insights may be gained by focusing on the big picture: the AHCA is intended to sharply reduce the incoming flow of funds (from taxes, individual payments, and employer payments) to pay for health care services (through insurance company payments, public payments, and out-of-pocket expenses).

What is clear is that, by design, the AHCA will alter the system to reduce funds available to pay for care, so that states and providers will have to find ways to adapt. The intent is to encourage changes in access and services that will allow adequate care to be provided even with the reduction in health care funding.

As previously noted in this series, individuals may be expected to react to any changes in access and subsidies, while providers may be expected to react to any reductions in the funds available to them. As described in part one of this series, we have developed procedures to estimate such reactions and how they are likely to affect program implementation. Given the scale of reductions in health care expenses being sought (of perhaps as much as $1 trillion over 10 years), such reactions are likely to be strong and broad based. The financial impact on older adults may be particularly important (as discussed in part eight).

The actual outcome of any AHCA-based law is likely to be strongly reshaped by the reactions of those being affected. So far, the estimates of the likely impact of such a law have failed to adequately address how individual and organizational reactions will reshape any intended or expected outcomes.

This post was written by Ferd H. Mitchell and Cheryl C. Mitchell, Thomson Reuters authors and attorney partners at Mitchell Law Office in Spokane, Wash. They are active in elder law and health law practice areas and have been working together on programs and activities on behalf of the elderly and in health care for more than 25 years. During their studies, they have visited and evaluated the health care systems of Japan and several countries in Europe to learn how the needs of the elderly are assessed and met in other countries, and they have been better able to understand the U.S. health care system and related care issues from these visits. More about the lessons learned from the ACA and issues involved in health program changes may be found in the 2017 edition of the authors’ book, Legal Practice Implications of Changes in the Affordable Care Act, Medicare and Medicaid, published by Thomson Reuters. More about these methods of analysis may be found in Mitchell & Mitchell, Adaptive Administration, published by Taylor and Francis. Follow the links below to read previous installments from this series:

Part One

Part Two

Part Three

Part Four

Part Five

Part Six

Part Seven

Part Eight

The views and opinions expressed in this post are those of its authors alone.

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