The Affordable Care Act: Past, Present and Future with William Schultz

On March 23, William B. Schultz, former general counsel of the U.S. Department of Health and Human Services (2011-2016), discussed the complicated politics surrounding the Affordable Care Act and possible policy options for the next phase of the law’s evolution. Speaking at Harvard Law School exactly seven years after the Affordable Care Act (ACA) became law, Schultz outlined the legal and political dimensions of healthcare reform that have made it a perennially divisive issue. Harvard Law School Professor Einer Elhauge, founding director of the Petrie-Flom Center for Health Law Policy, Biotechnology and Bioethics, moderated the talk.

According to Schultz, although Medicaid and Medicare were successfully enacted in 1965, “healthcare reform really didn’t have legs” until 1993, when President Bill Clinton made it a priority. After a long process, Clinton’s 500-member task force, headed by Hillary Clinton, developed a bill featuring an employer mandate, with others purchasing coverage through government subsidies. Major business groups opposed the plan and by the summer of 1994, the bill was stalled, and ultimately died. According to Schultz, when the ’94 midterms came around, Clinton paid the price. He lost the Democratic majority in the Senate, which he never regained, and in the House, which Democrats hadn’t lost for 40 years. Schultz said: “Even though healthcare didn’t cost Clinton the presidency, it crippled him. He became unable to pass any major legislation unless he had more Republican than Democratic support.”

With this historical backdrop, Schultz said many were surprised that President Obama chose to make healthcare his second priority in 2009, after the fiscal stimulus packages. According to Schultz, many senior staffers strongly advised the President against this politically costly move.

To avoid the Clinton Administration’s experience, Schultz recalled that Obama made a deal with every interest group that opposed Clinton: drug companies, insurance companies, hospitals. He said, “The House passed a fairly generous bill, the Senate passed a less favorable bill, and the path to the President’s signature seemed clear.” After Republican Scott Brown won the January 2010 special election in Massachusetts to fill Ted Kennedy’s Senate seat, Democrats lost their supermajority in the Senate and couldn’t get a conference report to reconcile the bills through. Schultz said, “Lawmakers got around this obstacle by passing the Senate bill through the House without any changes to eliminate the need for a second Senate vote, with the plan to make any improvements through the budget reconciliation process. And that’s how the ACA was born.”

This unconventional legislative process generated healthcare reform in theory, but the task of implementation was still ahead. Schulz identified some major hurdles to implementing the ACA that he believes hurt the bill’s popularity and created much of the divisiveness that surrounds it today. First, he said, “on the day of enactment, thirteen state attorneys general, which eventually became twenty-six, filed a legal challenge to the ACA’s mandate and Medicaid provisions, arguing that they were unconstitutional. When the case reached the Supreme Court, the government’s arguments got terrible reviews. Pundits described the case as a train wreck for the government and predicted defeat. But this was the greatest example of the experts being wrong.” The Obama Administration prevailed in the case, NFIB v. Sebelius, in a 5-4 vote.

Despite this victory, more troubles awaited the ACA and the Department of Heath and Human Services, tasked with implementing it. Schultz recalled being in HHS during early rollout efforts in January 2014. “The enrollment website rollout was a disaster: nobody could sign up for two months. Congress decided not to fund the government until ACA implementation was prevented, so we were in the middle of a government shutdown. This was one of the unhappiest times I’ve spent in government. We didn’t know if it could be fixed at all. The botched rollout contributed to the already deep unpopularity of the bill. In the end, the site got up and eight million people enrolled during the first year. The ACA has exceeded all projections. It was a success in the end, but it was a great embarrassment for the Secretary and the President, and it became fodder for congressional hearings.” Although enrollment figures indicate that 20-22 million people purchased health insurance under the ACA, Republicans campaigned on a platform of repealing the law, with considerable success in both houses of Congress. For Schultz, the rocky early stages of implementation were a factor in this trend.

On the GOP’s current proposals to “repeal and replace” the ACA, Schultz noted that, given Republican control of the White House and both houses of Congress, repeal is likely a matter of time. However, he said, “the politics for the president and for Congress are very, very tricky. President Trump chose to make repealing the ACA his number one priority. It’s front and center on his agenda. And yet, repeal of healthcare is going to anger voters who are going to lose their healthcare, including many Trump voters, while failure to repeal will anger conservatives who have listened to seven years of Republican campaigning on repealing the ACA.”

Although the future of the law remains uncertain, Schultz said that one result seems sure: “Given the history of healthcare reform and its impact on politicians who attempt it, we can be pretty confident that President Trump will regret making the repeal of the Affordable Care Act his signature initiative.”

Schultz is currently a partner at Zuckerman Spader. Prior to joining the firm and his time at HHS, he served as a deputy assistant attorney general at the U.S. Department of Justice, deputy commissioner for policy for the FDA, the counsel to the Subcommittee on Health and the Environment, Committee on Energy and Commerce, U.S. House of Representatives, and an attorney with the Public Citizen Litigation Group. His lecture was sponsored by the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics.