2016 Election Synopsis and Impact on O&P

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Note: The reported election results are current as of 9:00 a.m. ET, November 15.

election map

The Republican Party won the presidency and maintains control of the U.S. Congress, with businessman Donald J. Trump (R) winning the election to become the 45th president of the United States. In the congressional races, Republicans maintain control of the Senate with 51 members (the Louisiana race goes to a run-off on December 10), and the House with 238 members. Republicans will soon control both the executive and legislative branches of government for the first time since 2005-2006 in the 109th Congress during the presidency of George W. Bush. (Author’s note: See additional electoral information later in this article.)

The incoming president and 115th Congress promise to bring forth a new policy agenda in many areas, but the coming healthcare policies may have the greatest impact on everyday Americans. President-elect Trump has named healthcare reform as one of his top three priorities. Throughout the presidential campaign, candidate Trump repeatedly stated that he will seek to repeal the Affordable Care Act (ACA). Whether a Republican-led House and Senate will repeal the ACA outright, significantly reform the law, or completely replace the ACA with their vision for healthcare reform remains in question. Thus far, Trump’s vision for action on the ACA borrows heavily from the Republican Party’s platform and House Speaker Paul Ryan’s (R) healthcare blueprint published this summer titled, “A Better Way.” (Editor’s note: To access the document, visit tinyurl.com/h6rt7mn.)

With no more than 52 Republican senators, repealing the ACA will not be an easy task. The 46 Democrats and two Independent senators will likely seek to block a repeal vote, which would require Republicans to have 60 votes to cut off debate and vote to repeal the law. But there is a budget mechanism—known as reconciliation—that would allow a simple majority to repeal the law.

Passage of reconciliation bills requires only 51 votes in the Senate, not the usual 60, to bring a bill to a vote. With a Republican president who has committed to signing an ACA repeal bill, this becomes a distinct pathway to getting rid of what has come to be called Obamacare. However, eliminating insurance coverage for over 30 million Americans is not exactly a winning strategy for the next election in two years, so major efforts will be pursued to replace the ACA with another strategy to help individuals maintain health insurance coverage. Trump has already signaled a willingness to keep the provision that allows young adults up to age 26 to purchase insurance coverage through their parent’s coverage, and to continue to protect those with preexisting conditions.

The stage for health reforms will be set during the transition period leading up to Inauguration Day on January 20, 2017. Trump has named Paula Stannard, an attorney and former deputy general counsel and acting general counsel of the U.S. Department of Health and Human Services (HHS), to be in charge of healthcare reform efforts on his transition team. In addition, Andrew Bremberg, a former staffer to Senate Majority Leader Mitch McConnell Jr. (R-KY), will run health and human services issues during the transition. These individuals are not high-profile healthcare operatives but will soon become well known, particularly in healthcare advocacy circles.

Who will lead HHS under the Trump Administration is another question on which speculation is already rampant. Candidates most often mentioned include Newt Gingrich, former Speaker of the House; former Republican presidential candidate Ben Carson Sr., a retired neurosurgeon; Bobby Jindal, former governor of Louisiana; and Florida Governor Rick Scott (R). There is also speculation that a healthcare business leader could be a logical choice for Trump to make, given his statements on the need to run our country more like a business.

I. President-elect Trump’s Health Care Proposals

The following are some key Trump healthcare proposals.

Affordable Care Act: Trump has stated a desire to repeal the ACA or, more recently, to amend it. A full repeal would have a significant impact on all of healthcare, including O&P. If the ACA were to be eliminated, a large number of proposals would fall in its wake. For instance, the individual and employer mandates would be repealed and the federal subsidies that help individuals afford healthcare coverage would be discontinued. The health insurance marketplaces would likely collapse without the mandate and subsidies. Of course, this assumes that no replacement for the subsidies would be forthcoming, and Republicans have promised to replace the ACA once repealed. Most believe this would come in the form of tax deductibility of health insurance premiums, but the details of this proposal have not yet been made clear.

O&P Benefits: In terms of benefits, the O&P community made significant gains under the ACA in terms of inclusion of O&P coverage without dollar caps in health plans. In fact, the ACA was cited by the New York State Insurance Commissioner recently as the reason that state prohibited the one limb per lifetime restriction, thereby mandating replacements of prosthetic limbs. By repealing the ACA, the category of benefits currently known as rehabilitative services and devices, which forms the basis for coverage of O&P benefits under the essential health benefits package, would no longer exist in law. What that would do to O&P coverage in private insurance is not clear at this point. Most insurers covered O&P care before the ACA, but did so with limitations, dollar caps, and outright exclusions of certain technologies, such as microprocessors. How coverage of O&P benefits will fare under a Trump Administration remains unclear.

Tax Policy and Reimbursement: The medical device tax would also disappear if the ACA were to be repealed in its entirety, which would be a slight net positive for the O&P industry. The reason the impact would be slight is the fact that many companies that manufacture and supply O&P components and supplies are not currently impacted by the medical device tax. There is also speculation that Trump will seek to repeal the Center for Medicare & Medicaid Innovation (CMMI) and the Medicare Independent Payment Advisory Board (IPAB). Repealing IPAB, an unelected board with tremendous power to regulate reimbursement levels under Medicare, may reduce the threat of lesser payment levels in the future. However, Congress is the ultimate decision maker on payment levels and will continue to be in the position to affect O&P reimbursement rates for years to come.

Health Savings Accounts: Trump’s health proposals include heavy reliance on health savings accounts (HSAs) as part of any replacement or reform of the ACA. However, HSAs are not insurance, unless they are coupled with a catastrophic plan with a high deductible. HSAs are accounts to which individuals and employers can contribute for the purpose of paying medical expenses, which have tax benefits, and the funds can roll over from year to year. Proponents claim HSAs make consumers more acutely aware of healthcare costs so they make better healthcare decisions. Critics assert that HSAs cause people to not spend when they should, thereby allowing health conditions to worsen and become much more expensive to treat in the long term. Critics also believe that such plans do not accommodate the needs of high users of healthcare services, such as individuals who have chronic conditions like diabetes, one of the leading causes of limb loss.

Sale of Insurance Across State Lines: Trump also favors allowing the sale of health insurance across state lines. Aspects of this proposal were included in the ACA, but Trump has said he intends to expand this concept. The ability of insurers to sell an insurance product authorized by one state in another state may cause limitations in the breadth of benefit packages, including coverage of O&P care. Under this proposal, a bare-bones health plan authorized in one state could be sold in another state, thereby subverting the mandated benefit laws the legislators in that state created to protect residents’ healthcare access. Proponents of this approach argue that it would lower healthcare costs and administrative expenses.

High Risk Pools: Trump has also signaled a desire to return to state-based high-risk pools to cover those in the insurance system who have catastrophic healthcare costs. These pools may be one way Trump intends to preserve protections for individuals with preexisting conditions. In other words, private insurers might be able to deny services based on preexisting conditions to those who do not maintain continuous coverage, but those who cannot meet this standard may be able to join a high-risk pool. Until more detail emerges from the Trump transition team, much of this is educated speculation.

Medicaid: During the campaign, Trump stated that he supported a proposal to block grant the Medicaid program. This refers to the entitlement nature of Medicaid. By block granting the program, the federal government would devote a certain level of federal funding for Medicaid and send it to each state to administer, with much greater flexibility than under current law. If there were an economic downturn or heightened demand for Medicaid services, the states would have to make up the difference or reduce the scope of the Medicaid program to make ends meet. This proposal is not new. It was included in the Contract With America during the 1990s and has been defeated every time the proposal has begun to gain support. With Republicans in control of the House, Senate, and presidency, the likelihood of success of passing this proposal has dramatically increased.

II. Healthcare Policies from Speaker Ryan’s Blueprint, “A Better Way”

Trump’s relatively sparse set of healthcare proposals has drawn attention toward Ryan and his blueprint for health reform. The ideas contained in this document could serve to influence the Trump Administration’s healthcare agenda. Additional policies in Ryan’s blueprint not expressed above include the following:

Insurance: Insurance-related provisions include capping the insurance tax break on employer-based premiums; making health insurance portable, enabling a beneficiary to take his or her insurance plan from job to job, or through other vocational, educational, and retirement transitions; allowing small businesses to band together to collectively offer health plans; allowing employers to provide self-insurance and stop-loss protections; and allowing employers to provide wellness programs to the extent that they are in compliance with the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

Medicare: Medicare-related provisions include combining Medicare Parts A and B; strengthening Medicare Advantage to promote greater adoption of managed care plans, limiting the administration’s ability to arbitrarily cut Medicare Advantage rates paid to participating health plans; and establishing a value-based insurance design (VBID) for Medicare Advantage that would reward quality and value over the volume of care provided.

Miscellaneous: Other provisions include enacting tort/medical liability reform, including caps on non-economic damage awards, and encouraging state law flexibility; supporting medical innovation by building on the House’s 21st Century Cures Act; and lifting the ban on physician-owned hospitals.

Veterans Healthcare: Trump called for major changes to the way the U.S. Department of Veterans Affairs (VA) does business. While the details of his proposals are not yet known, he has proposed significant spending increases on VA healthcare and is likely inclined to rely more heavily on the private sector in serving the healthcare needs of veterans.

III. Overview of Election Results

President: Trump won the 2016 Presidential election, defeating Hillary Clinton (D) in the Electoral College but not the popular vote. Overall, Trump won 290 electoral votes to Secretary of State Clinton’s 232. (Author’s note: As of this writing, several states are still reporting partial results and vote tallies have not been finalized. Michigan is the only state still not called for one candidate or the other.) The popular vote totaled 61,039,676 votes for Clinton, while Trump received 60,371,193 votes (a difference of 668,483 votes). Some predict that Clinton will eventually have 1.5 to 2 million more votes than Trump when all the absentee ballots are counted.

U.S. Senate: Republicans retain control of the Senate, but lost seats held by Sens. Mark Kirk (R-IL) and Kelly Ayotte (R-NH). At the time of this writing, Republicans maintain a slim majority of 51 seats. Current returns show that Democrats have 46 seats in the next Senate (48 if both Independents align with the Democrats, as they have in the past). The Louisiana Senate race goes to a runoff election scheduled for December 10.

U.S. House of Representatives: As of this writing, the composition of the House stands at 238 Republicans to 193 Democrats. Democrats gained nine seats but lost three, netting them six additional seats. Four House races are still too close to call, with one leaning Republican, one leaning Democrat, and two in Louisiana heading for runoffs.

Gubernatorial Races: Democrats will occupy 15 governorships (a loss of three states) and Republicans will occupy 33 governorships (a gain of three states). North Carolina is yet to be decided, but is currently leaning toward a Democratic win.

Election Impact on Congressional Committee Seats: The four committees of jurisdiction in healthcare in Congress will experience changes in membership. While internal committee leadership appointments and committee appointments have not yet occurred, several current committee members were impacted by the election and are worth noting.

  • In the Senate Committee on Health, Education, Labor and Pensions (HELP), Kirk lost his election while Ranking Member Patty Murray (D-WA) and Sen. Rand Paul (R-KY) retained their seats.
  • Most members of the Senate Committee on Finance retained their seats; Sen. Dan Coats (R-IN) is retiring. Ranking Member Ron Wyden (D-OR), Sen. John Thune (R-SD), Sen. Pat Toomey (R-PA), and Sen. Michael Bennet (D-CO) all retained their seats. Bennet is also a member of the HELP committee, and has led legislation on medical innovation and research. Sen. Richard Burr (R-NC) retained his seat as well, and currently serves on both the Finance and HELP committees. He has been known as a leader on HELP Committee issues.
  • The House healthcare committees—Energy and Commerce, and Ways and Means—experienced several changes related to retirements and close, competitive races. The makeup of both committees will remain unclear until the House holds leadership elections in the coming weeks.
    • On the House Energy and Commerce Committee, Chairman Joe Pitts (R-PA 16) and Rep. Lois Capps (D-CA 24) are retiring, Rep. Ed Whitfield (R-KY 1) resigned his seat in September, and Rep. Renee Ellmers (R-NC 2) lost her primary and will not be returning to Congress. The Ellmers loss is particularly scarring for the O&P profession. She was a very important supporter of the O&P community and sponsored several bills aimed directly at improving O&P care. Ellmers deserves great credit for her work on behalf of the field.
    • On the House Committee on Ways and Means, Reps. Todd Young (R-IN 9) and Charles Boustany (R-LA 3) ran for Senate. Rep. Charles Rangel (D-NY 13) is retiring from Congress, as is Rep. Jim McDermott (D-WA 7).

IV. Preview of the 2017 Congressional Agenda

In addition to the high priority Trump has placed on reforming the healthcare system, several significant healthcare legislative issues may need to be addressed by the 115th Congress, and likely in 2017. Those issues include the need to address funding for Medicaid in Puerto Rico and other U.S. territories, the passage of a chronic care legislative package, and the final passage and agreement on a healthcare innovation package similar to the 21st Century Cures initiative, which reforms the U.S. Food and Drug Administration’s drug approval processes and invests in research as the National Institutes of Health.

Uncertainty remains as to whether the new administration and Congress will endorse and expand private sector concepts such as competitive bidding to other Medicare devices and services, such as O&P. Further, if the State Children’s Health Insurance Program (CHIP) is not reauthorized beyond October 2017, it is unclear what effect this will have on children in need of O&P care under this program. Whatever occurs in the next Congress and administration, the latest developments surrounding these issues will be reported as they break.

Peter W. Thomas, JD, is general counsel for the National Association for the Advancement of Orthotics and Prosthetics (NAAOP). Steve Postal, JD, is the director of health policy at Powers, Pyles, Sutter, & Verville, Washington DC.

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