The promise to “repeal and replace” the Affordable Care Act has been a staple of the Republican Party platform virtually since the law’s enactment in 2010.
Now it looks like it might happen. President-elect Donald Trump picked up the theme in his campaign, promising “on Day One of the Trump administration” to “ask Congress to immediately deliver a full repeal of Obamacare.” He pledged to supplant it with “something terrific.”
This promise is about to come face-to-face with reality. Repealing many Obamacare provisions isn’t possible without the assent of congressional Democrats. Perhaps more important, dismantling key elements of the law risks leaving the U.S. healthcare system in chaos — certainly in worse shape than it was even before the Affordable Care Act was passed. As my colleague David Lazarus observes, at stake is coverage for approximately 20 million Americans and the cost of coverage for many more.
Starting in January, when it assumes control of the White House and both chambers of Congress, the GOP will be “it” on healthcare. The party will own every change made to the law and take the blame for every consequence of its actions, so it will be well-advised to tread carefully.
Trump on Thursday took a shot at putting meat on the bones of his “something terrific” pledge, posting a healthcare policy outline on his president-elect website. Interestingly, the outline replaces the “Day One” promise with a commitment to “work with Congress to repeal the ACA and replace it,” which sounds like a longer timeline.
The outline includes several traditional GOP shibboleths, such as returning “the historic role in regulating health insurance to the states” (though under the ACA, they still have considerable authority); expanding the availability of tax-exempt health savings accounts, a provision that benefits the rich and is virtually worthless to low-income households that don’t pay much federal income tax; and allowing the sale of policies across state lines, which would launch a race to the bottom as insurers established themselves in states with the most minimal consumer protections.
Trump also put in a pitch for reestablishing high-risk pools, public insurers which would enroll customers with especially costly healthcare needs. Trump called this “a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage.”
The truth is almost exactly the opposite. As we explained in April, when high-risk pools were being promoted by House Speaker Paul Ryan (R-Wis.), the only thing these pools have been proven to be in the 35 states that tried them before the ACA is a failure. The pools were never adequately funded, which prompted states either to place caps on enrollments or saddle members with sky-high, unaffordable premiums.
Conservative economist James Capretta estimated in 2010 that a high-risk program would need $15 billion to $20 billion a year to cover 4 million enrollees -- and he was in favor of the idea. What are the chances that such a program would succeed in the budget-cutting environment sure to prevail under a Trump White House and GOP Congress?
Trump also tosses in pledges to protect “human life from conception to natural death,” which doesn’t sound good for abortion rights or end-of-life planning, and to “modernize Medicare,” which sounds like a warning for seniors to hold on to their wallets.
Many provisions of the Affordable Care Act are better appreciated by the public than GOP rhetoric would have one believe. Repealing them won’t necessarily be a crowd-pleaser. Jeffrey Young of the Huffington Post points to Kentucky, where right-winger Matt Bevin rode into the governor’s mansion on a platform of unadorned Obamacare hate and a promise to dismantle it, root and branch.
The problem is that Obamacare had worked spectacularly well in Kentucky, reducing its uninsured rate to 7.5%, from 20.4%, thanks to Medicaid expansion and an efficient state-run exchange, Kynect. The law’s provisions were broadly popular, even if Obamacare’s image was widely abominated.
As a result, Bevin has made mostly cosmetic changes to the law. He scrapped the Kynect brand and transferred some of its duties to the federal government, but left in place its role of enrolling Kentuckians in health plans and has kept its Medicaid expansion in place. As Young observes, if that’s the worst “a tea party Republican ushered into office by a wide margin in a conservative state can do to Obamacare,” the challenge of repeal on a national scale becomes evident.
The GOP’s biggest problem may be that much of the increase in healthcare costs that the party blamed on Obamacare, including rising premiums and deductibles, actually has little to do with its provisions and stem from broader trends.
Republicans “made the public think Obamacare caused all the trouble,” former Medicare official Don Berwick told Kaiser Health News. “That's absolutely wrong. They could repeal it tomorrow and costs would continue to go up.” If the GOP executes broad changes in the law but can’t quell the cost trends, it will be blamed for the failure.
More than political risk stands in the way. Numerous provisions of the Affordable Care Act are subject to filibuster in the Senate, which the GOP doesn’t have 60 votes to avoid. According to healthcare expert Timothy Jost, an emeritus law professor at Washington and Lee University, those may be safe from repeal. As it happens, they include many consumer-protection reforms that are very popular, including the ban on exclusions or higher premiums for preexisting conditions, and caps on annual and lifetime benefits.
Other provisions involve government spending, so they’re subject to budget reconciliation legislation that requires only a majority vote in the Senate. Jost observes that the Republicans passed a reconciliation bill in 2015 that might serve as a model for 2017. Vetoed by President Obama, it would have repealed tax subsidies for premiums and — for very low-income Americans — for deductibles and co-pays; Medicaid expansion, which covers low-income adults in states that chose to participate; taxes levied to fund elements of the law; and the widely detested individual and business mandates. But reconciliation is a multi-step process that can’t be done on Day One.
Reconciliation faces other potholes. That’s because the Affordable Care Act has many interlinked moving parts, and removing some of them could make the entire machine grind to a halt, raising costs and throwing the system into turmoil for millions of Americans who didn’t even know they were exposed. Removing the mandates but leaving in place the ban on exclusions for preexisting conditions will cause torrents of red ink for insurance companies. Repealing Medicaid expansion will drive up costs for hospitals, which have seen welcome relief from the burden of providing uncompensated care for uninsured patients.
Moreover, there appears to be a poison pill that would be triggered by repeal of the cost-sharing subsidies, which are available to individual policies with income less than 250% of the federal poverty line ($60,750 for a family of four next year) and received currently by nearly 7 million people.
As explained by Charles Gaba of ACASignups.net, the contracts reached by the federal government with insurers in states using the federal exchange, healthcare.gov, allow them to immediately cancel their policies if the cost-sharing subsidies are overturned.
A challenge by House Republicans to the legality of the government’s payments for those subsidies is currently being pondered by a federal court. Theoretically, President Trump could end the payments by fiat on Day One of his administration. This could mean the immediate cancellation of as many as 7 million policies, purely by GOP action.
Gaba reports that the cancellations are subject to state laws, and it’s unclear how many states would require the policies to remain in force through the year. Nicholas Bagley of the University of Michigan reckons that in states that allow health plans to pull out of the market if the cost-sharing payments cease, “the collapse of the individual market could occur very quickly. Millions of people would be pitched off their insurance, leaving them with no other options.” That’s just a hint of the complexities of repeal.
Even without repeal, Trump could throw a wrench into the Affordable Care Act by sheer administrative starvation — though making the law less efficient might not count as turning it into “something terrific.”
Trump could abandon Obama administration efforts to enroll customers in Affordable Care Act plans or to keep insurers in the marketplace. “If a Trump administration simply stopped implementing or enforcing certain regulatory requirements, there might be little that could be done about it,” Jost observed. “Just a change in leadership in the agencies implementing the ACA will cause months of disruption.”
What about “replace”? Republican alternatives have been sketchy, and their potential for maintaining coverage for the 20 million Americans receiving coverage via Obamacare dubious. As for Trump’s campaign healthcare plan, in addition to the features ported over to his president-elect website, these include eliminating the individual mandate, which would drive lots of insurers out of the individual market, and block-granting Medicaid to the states, which would merely be an invitation to many state governments to cut Medicaid benefits.
Trump also would make premiums tax deductible for individuals, as they are for corporations and those receiving healthcare through their employers. That’s a good idea, but it’s also of limited use for working-class and low-income households.
Here’s a concise rundown of what can and can’t be done in repealing Obamacare:
Low-hanging fruit: Say goodbye to Obamacare’s medical device tax and “Cadillac” tax on high-quality healthplans such as those sponsored by big employers and many large unions. Repeal of both has bipartisan support; last year, with Obama’s assent, Congress deferred the Cadillac tax to 2020, from 2018. Also likely to go is the Independent Payment Advisory Board, or IPAB, which was given authority to trim Medicare spending if it rose faster than a given benchmark. The IPAB has never gone into effect, but conservatives detest it and only healthcare wonks care much about it.
Possible, but not so simple: Trump might be able to eliminate by administrative order some mandated minimum benefits, such as pregnancy and maternity care, mental health services and emergency services. Trump and Congress could also encourage more bare-bones or catastrophic plans, which would carry lower premiums but provide lower benefits.
Politically safe, probably: The ban on exclusions for pre-existing conditions, though Republicans may impose a condition requiring continuous coverage, that is, no lapse in coverage for some period of time. This could be legislated, but leaves open the question of how to care for those who drop coverage temporarily because of economic reversals. Also probably safe: The right to keep children on parents’ employer plans up to the age of 26, and bans on annual and lifetime benefit limits.
Legislative limbo: The Child Health Insurance Program, or CHIP, comes up for reauthorization next year. The program covers about 8 million children in low-income households who would lose their benefits if the program is allowed to die. But CHIP is associated with Hillary Clinton, who is widely credited with a “pivotal” role in its creation. If Trump and the Republicans really want to draw a sharp line between them and Clinton, this is the place to do it — with 8 million kids as collateral damage.
So, good luck, GOP. Until now, the party has not paid serious attention to the U.S. healthcare system and all its ills, because it chose the course of sniping from the sidelines and obstructing problem-solving efforts by federal agencies. Now it is the government, and the risks and rewards of healthcare policy are in its possession. Republicans could make things better by careful policymaking, or immeasurably worse by maintaining its ideological opposition to “Obamacare” without thinking too hard about the consequences. Let’s see how they do.
2:36 p.m.: This post has been updated with details from the Trump Administration’s healthcare website.