In the summer of 2013, as state and federal officials readied new insurance marketplaces created through the Affordable Care Act, millions of Americans started getting disquieting notices from their insurers.
Health plans were being canceled because they didn’t comply with the law, often called Obamacare.
Some 4 million people were ultimately told they would lose their plans. The ensuing outrage sparked a political firestorm, seriously eroded public confidence in Obamacare and forced an embarrassed President Obama to change federal regulations so people could keep their coverage.
Yet that tumultuous episode could be dwarfed by what President-elect Donald Trump’s administration and its congressional allies unleash beginning next year. They plan to not only repeal the law but are contemplating changes that are significantly more far-reaching and could disrupt insurance coverage for many more Americans than did the original law.
“There is significant risk of chaos,” warned Ian Morrison, a healthcare consultant who advises health systems nationwide. “If they don’t get this right, a lot of people will suffer.”
Avoiding major instability has become a central focus for senior Republicans scrambling to plot a healthcare strategy since the party’s sweeping election victories, according to GOP lawmakers, current and former congressional staff and health industry officials.
About 11 million Americans, most of whom get government subsidies to offset their insurance premiums, depend on insurance marketplaces created by the health law that Republicans have proposed eliminating.
Another approximately 75 million poor Americans are enrolled in either the Children’s Health Insurance Program or Medicaid, which would be scaled back in most GOP health plans.
And House Speaker Paul Ryan (R-Wis.) has indicated he also wants to overhaul Medicare, which provides coverage to more than 50 million elderly and disabled Americans.
“Any time a party has been out of power … there is an instinct to try to do everything as rapidly as possible and to do it in a way that satisfies their appetite for change,” said former Utah Gov. Mike Leavitt, who served as Health and Human Services secretary under President George W. Bush.
“There is a real need here not to overreach and not to move too fast,” Leavitt cautioned.
Yet across the country, hospitals, doctors, insurers and others are deeply anxious.
“Perhaps Congress can lead us in a direction where we fix the things that are wrong with the ACA, because there are many, and preserve what is good,” said Sheryl Skolnick, research director at investment bank Mizuho Securities USA. “From where I sit, I think it’s a very risky bet.”
“Congress will make sure that the transition is a smooth one for Americans,” said Sen. John Barrasso (R-Wyo.), the leader of the Senate Republican Policy Committee. “People have already faced too much disruption in their healthcare due to Obamacare.”
To reduce potential chaos, congressional Republicans have been discussing a multi-step, multi-year process for repealing and replacing the health law.
They would vote early next year on legislation that would scrap large parts of the law, including the unpopular insurance mandate and funding for insurance subsidies and for Medicaid expansions that 31 states have enacted.
That legislation would delay the effective date of the repeal for a year or two, however, giving Republicans time to develop an alternative.
While this “repeal-and-delay” strategy may not jeopardize coverage immediately for Americans who gained it through the health law, it could seriously destabilize insurance marketplaces.
Many insurers in the marketplaces have been losing money, in large part because consumers who signed up for coverage were sicker than anticipated.
Insurers remained in hopes that the marketplaces would be stabilized by the next administration. But if the marketplaces are being eliminated, many insurers would likely reevaluate, according to industry officials and healthcare experts.
If insurers walk away, millions of consumers would be forced to switch plans or pay big premium hikes, reprising the kind of turmoil that occurred in 2013, but potentially on a larger scale.
Although consumer frustration with premiums and other problems has intensified this year, polls show most marketplace users are satisfied. More than two-thirds rated their coverage as “excellent” or “good” in a nationwide survey this year by the nonprofit Kaiser Family Foundation.
“The markets already were somewhat fragile,” said Larry Levitt, senior vice president of the nonprofit Kaiser Family Foundation. “It was likely going to take a concerted effort ... to put marketplaces in many states on firmer footing.”
The Trump administration could take steps to solidify the marketplaces in the short term, which would likely include bolstering a controversial program to pay insurers that sustained heavy losses on the marketplaces.
But that program is a political lightning rod for Republicans, who accused the Obama administration of giving a bailout to insurance companies.
Congressional Republicans have also attacked the current administration for providing financial assistance to low-income marketplace consumers to help them pay deductibles and co-pays, arguing that that money was not appropriated by Congress.
If the Trump administration stops those payments, as some conservatives have advocated, many more insurers would likely cancel their health plans.
Whether they would return will depend on what kind of replacement Republicans ultimately develop.
GOP officials express confidence that plans they have developed in recent years, including a 37-page blueprint that House Republicans released this summer, give them a strong foundation for enacting replacement.
But that plan – which includes a Medicare overhaul that would shift future beneficiaries into a new system that gives them vouchers to shop for private health plans – would likely extend the disruptions years further.
Trump transition officials have not detailed any of the new administration’s healthcare plans.
“This is an area that is very fraught and very difficult because the policy is complicated,” said Dean Rosen, who served as healthcare advisor to former Senate Majority Leader Bill Frist (R-Tenn).
“It is one thing when you are painting on a blank canvas. It is another when you are taking down someone’s version of the Mona Lisa and trying to put up something that you think is better.”