Obamacare Likely to Be Safe from Supreme Court, Kathleen Sebelius Says

The Supreme Court is set to decide on the vote of the Affordable Care Act, also known as Obamacare, most likely in June as its last decision of the session. The Biden administration recently sent an “unusual” letter to the court urging it to uphold the law.

To get more insights on the groundbreaking law and its potential future as well as what Washington may tackle next in the healthcare space, GLG’s Michael Weissman, Vice President & Healthcare Content Team Leader, spoke with former Secretary of Health and Human Services Kathleen Sebelius. Below are a few select excerpts from their broader discussion.

Can you give us a broad overview of where the Affordable Care Act is now and what shape it may take in the immediate future?

The court did take the case, which suggests that the entire Affordable Care Act could be struck down. But legal scholars, conservative and progressive, seem to agree that this case has little opportunity to be fully successful. The law will turn 11 years old in March of 2021. It provides the framework for not only just the slice of the population dealing with marketplace plans — some 15 million people — but a sizable portion of budgets that come from the federal government dedicated to that health provider. The ACA also has the framework for all the Medicare pricing issues. It impacts every aspect of the healthcare system.

Whether the court does some weird dance around the individual mandate remains to be seen. But you do have a Congress poised to act quickly if there are aspects of the law that need to be immediately replaced. We can also expect quick action to get rid of the various Trump regulations that have caused cuts to the plan. That could include a new open enrollment period for people who lost their health insurance with the economic downturn. Lawmakers can also get rid of some of the more restrictive requirements around Medicaid enrollment, which include waivers about work requirements that arguably are not consistent with the law but have not been challenged.

Do you expect additional states to undertake Medicaid expansion over the course of the next four years?

There will be an effort to try to put back in place the early-year incentives of 100% federal payment for the first couple of years. That could be attractive to some of the remaining states. President Biden has talked about a provision that could be created as part of the marketplace plans where in a state like Kansas eligible Medicaid recipients could be offered a virtually no-cost plan that mirrored Medicaid benefits. So even if the state didn’t allow those benefits to exist, you could do it at the federal level. That probably takes some legislative initiative, but I think they’re exploring all kinds of ways to get Medicaid-eligible individuals in the states that have not yet expanded to be able to experience those benefits.

The Medicare trust is expected to become insolvent potentially at some point during this administration. What might be done to help deal with the issue?

There always are efforts underway in Medicare to look at the trust fund. Insolvency doesn’t mean you declare bankruptcy and walk away, it means that you begin to pay out more than you’re taking in. The Medicare numbers are so significant that if you can take a percentage or two off the top of services or supports, that’s real money. There will be looks at drug plans, hospital costs, and various other areas where expenditures are large. But at the end of the day, Medicare will continue to operate and serve. It is by far the most popular plan in the country.

Do you think the Grassley-Wyden bill or H.R.3 is more likely to be the basis of drug pricing reform?

Medicare negotiation will likely be front and center. That wasn’t in the Grassley-Wyden bill. I think it will be in a future strategy. It’s something that Biden has talked about a lot, that Obama used to put in every single budget we had. It’s been around for a long time and it’s something that the American public understands well. It’s like, “Everybody else can negotiate, why can’t Medicare?”

There also has been a lot of work done by the Biden transition team on a whole series of drug pricing strategies, some of which may cap pricing for some of the newer drug developments or at least give HHS the opportunity to put together a pricing commission looking at biologics and some of the new cancer drugs that are coming out. There certainly will be an effort on generic drugs and looking at just the year-in, year-out increase in generics, and everything from their pricing strategies to pay to play. There’ll likely be efforts looking at pharmacy benefit managers and the regulatory structure around them, which has a lot of bipartisan support. These will all be examined. Others can be amended or gotten rid of, but right now, it’s been throwing everything against the wall and seeing what sticks.

How might any regulatory endeavors impact hospitals and payers?

It’s likely that price transparency rules will go into effect. There’s been a lot of back-and-forth and resistance to that. “Transparency” has been one of the flagship call words that has some bipartisan support. I’m not sure it’s as useful a tool to lowering prices as some people seem to think it is, because it’s hard to act on. Hospital costs are a key portion of the healthcare spend in Medicare, and it isn’t necessarily the number of procedures that have been increased or the number of bed days that have been increased. Prices have increased.

It’s likely that there’ll be a new round of looking, particularly in Centers for Medicare & Medicaid Services through Medicare, on just overall rate issues dealing with hospital services, supports, and beds because there’s no question that is a cost growth area. There are still a lot of issues around surprise billing issues.

There are some complicated rules in place that, frankly, nobody knows how to initiate around. For example, how do you treat uninsured folks? My guess is that will be an opening to look at what’s going on with hospitals treating very expensive patients, how they’re billing people, what insurance companies are doing, and it may open the door through the COVID crisis to look at overall hospital expenditure costs, how they’re being billed, and how insurance companies are dealing with them.

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About Kathleen Sebelius

Kathleen Sebelius is one of America’s foremost experts on national and global health issues, human services, and executive leadership. As CEO of Sebelius Resources LLC, she provides strategic advice to companies, investors, and nonprofit organizations. From April 2009 through June 2014, Sebelius served in President Barack Obama’s Cabinet as the twenty-first Secretary of the Department of Health and Human Services, where she worked to pass and implement the Affordable Care Act. Having served as Governor of Kansas from 2003 to 2009, Sebelius is the only daughter of a governor to be elected governor in American history; her late father, John Gilligan, was Governor of Ohio.

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This healthcare policy article is adapted from the January 22, 2021, GLG webcast “U.S. Healthcare Outlook.” If you would like access to this teleconference or would like to speak with healthcare policy expert Kathleen Sebelius, or any of our more than 900,000 industry experts, contact us.