Healthcare legislative ­action to watch in 2016

January 25, 2016

It’s typically best not to expect too much legislative activity in the last two years of a president’s term. But Congress can surprise, as it did in the flurry of legislation enacted before lawmakers went home for the holidays in 2015.

Tevi Troy, PhDIt’s typically best not to expect too much legislative activity in the last two years of a president’s term. But Congress can surprise, as it did in the flurry of legislation enacted before lawmakers went home for the holidays in 2015.  Late-breaking developments in December included two-year delays to the tax on so-called Cadillac (high-value) health plans and on the medical device tax, both of which were part of the Affordable Care Act (ACA)

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So while it’s safest to assume that 2016 will be quiet on the healthcare legislative front, there could always be some surprises. These surprises would stem from the fact that even a lame duck President Obama still wants much from Congress. He can only achieve these goals by cutting deals with the GOP in both houses.

Furthermore, the fact that Obama was willing to allow changes to the ACA for the first time means that a legislative pathway may be open for additional reforms to the law if they are married to his other priorities.

So the possibility of some changes on the healthcare front remains. The tax on medical devices, even with the delay, remains unpopular, and is even opposed by some Democrats from states with large numbers of medical device companies. Given the bipartisan opposition to the tax, and the general popularity of getting rid of taxes in an election year, this 2.3% tax on medical equipment could be facing permanent elimination.

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Similarly, while the excise tax on high-value health plans was postponed for two years, it still looms large for employers come 2020. Most cannot wait until then to make the changes required  to remain beneath the tax’s thresholds. Given that the tax remains an issue of bipartisan concern, we could see movement towards permanent repeal, although the 2015 delay makes any move on the tax less likely during 2016.  

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One final development  to watch for is some kind of grand bargain on the federal budget. The national debt has grown by about $8 trillion since President Obama took office, and he is unlikely to want this to be his legacy. 

In addition, new Speaker of the House Paul Ryan (R-Wisconsin) has long expressed concerns about the national debt. If the two were to reach agreement on a major debt reduction package, it would certainly include changes affecting the nation’s healthcare system, possibly including raising  the Medicare eligibility age and additional means testing for recipients.

Behind all of these possible changes lie larger strategic concerns. Republicans must decide if they are willing to make changes to the ACA, given their continuing desire for full repeal of the legislation and their unwillingness to take any steps to make the law more palatable until that happens.

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President Obama, meanwhile will be reluctant to make any changes to his signature achievement. Should both parties stay in their respective corners–the most likely scenario–2016 could see little change in healthcare policy. But a coalescence of interests on issues of bipartisan concern could allow some changes to make their way through the process.