Hospitals Issue Dire Warnings About Repealing Obamacare Without A Backup Plan

WASHINGTON ― The hospital industry has a warning for President-elect Donald Trump and congressional leaders: Eliminating the Affordable Care Act without first crafting a “replacement” would create major hardships throughout the health care system.

Hospitals traded billions of dollars in Medicare and Medicaid payment cuts for expanded health coverage under the Affordable Care Act, reasoning it would be good for hospital finances to have fewer uninsured patients who don’t pay for their care. Congressional Republicans are leaning toward a plan that would repeal the law early next year, but delay enacting a new system for up to three years.

That won’t work, according to two influential hospital lobbying groups.

The American Hospital Association and the Federation of American Hospitals laid out their concerns in letters sent Tuesday to Trump, Vice President-elect Mike Pence, House Speaker Paul Ryan (R-Wis.), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Mitch McConnell (R-Ky.) and Sen. Chuck Schumer (D-N.Y.), who will become minority leader next year.

These groups are demanding that legislation repealing the law and creating an alternative pass simultaneously, or that Congress and the incoming Trump administration restore the funding cuts from the law.

Hospitals will be seriously threatened if neither action occurs, Tom Nickels, executive vice president for government relations and public policy, said Tuesday during a conference call with reporters.

“Repealing the ACA while leaving its Medicare and Medicaid cuts in place will have huge implications for hospitals and the patients they serve,” Nickels said. “Loses of the magnitude that we’re going to discuss cannot be sustained and will adversely impact patients access to care, decimate hospitals’ and health systems’ ability to provide services, weaken local economies that hospitals sustain and grow, and result in massive job losses.”

Hospital companies hold uncommonly large sway over lawmakers because the facilities they operate are vital elements of the infrastructure and economy of virtually every community in the United States. They are major employers and have a physical presence in every congressional district in the country. 

This early and public admonition against the preferred GOP strategy to handle Obamacare repeal underscores how complex and messy the project promises to be, even though Republican leaders are trying to quickly fulfill a promise they’ve been making to voters since the Affordable Care Act became law in 2010.

Health care companies and others will lobby aggressively to protect their interests, which currently have a lot of overlap with those of the people who stand to lose their health coverage as a result of Affordable Care Act repeal.

And Republicans themselves have not fully united behind the “repeal and delay” strategy. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-Tenn.), for example, is cautioning his colleagues against undoing Obamacare without a new plan. On the other hand, the conservative House Freedom Caucus wants GOP leaders to eradicate Obamacare even faster.

Democrats in Congress and Obamacare supporters have vowed to fight repeal, and other segments of the health care industry have expressed concern about the ramifications of repeal without a clear path to a new system ― particularly since the GOP plans that have circulated to date would not cover as many Americans, despite Republican claims otherwise, and the party has never coalesced around a unified approach to health care reform.

Repeal would eliminate health coverage for an estimated 22 million people, and vague promises of an eventual successor to Obamacare will be of little consolation to powerful health care interests ― ranging from hospitals to physicians to health insurance companies to drug makers ― facing years of uncertainty about what might follow.

The two associations commissioned an analysis of the Affordable Care Act repeal legislation that President Barack Obama vetoed in January ― which is seen as the model for how Congress will proceed in 2017 ― and found that hospitals stand to lose more than half a trillion dollars between 2018 and 2026.

The consulting firm Dobson DeVano & Associates conducted the estimates, based in part on the Congressional Budget Office’s evaluation of the repeal legislation.

The CBO estimates that 24 million more people would be uninsured under that bill by 2026 and that the total number of Americans without health coverage that year would reach 50 million. At the end of last year, the uninsured rate fell to 8.9 percent ― an all-time low ― and 28.4 million lacked coverage, according to the Centers for Disease Control and Prevention.

Broader health coverage and a lower uninsured rate have long been priorities for the hospital industry, which shoulders the financial burden when uncovered patients receive treatments and don’t pay their bills.

The American Hospital Association represents almost 5,000 hospitals, and the Federation of American Hospitals lobbies on behalf of publicly traded chains. Along with trade groups for municipal, children’s, teaching and Catholic hospitals, both endorsed the Affordable Care Act in 2010. 

It would be disruptive to undo the bargain inherent in the Affordable Care Act and force hospitals to contend with another round of sweeping changes after they’ve spent time and money adapting to Obamacare, according to Joann Anderson, the president and CEO of Southeastern Health in Lumberton, North Carolina

“A repeal and replace initiative is frightening,” Anderson said during the press call on Tuesday. “To think about going through another dramatic, sudden, rapid change for an organization that teeters on being able to stay alive and provide services is gut-wrenching. For us to be able to meet the needs of this community, we need to know what the replacement’s going to be.”

The hospital industry is confident lawmakers and the new administration will take their concerns seriously, despite the GOP’s eagerness to overturn the Affordable Care Act, Nickels said.

“People always listen to what the hospitals have to say. I think the story that you heard from Joann will be one repeated to senators and House members between now and when Congress reconvenes in January,” he said. “I think the new administration will also hear these stories”

Tellingly, the hospital groups stop short of insisting that Obamacare repeal-and-replace not result in massive losses of insurance coverage. Instead, they make it clear that they would be willing to accept that outcome as long as their financial concerns are accommodated.

In their letters, the hospital groups even point to legislation authored by Rep. Tom Price (R-Ga.) ― Trump’s pick for secretary of Health and Human Services ― as a potential alternative to a version of the Affordable Care Act repeal bill Obama vetoed.

“It continues to be critical that we protect coverage, but at the same time we have to ensure access to quality hospital care for today and tomorrow,” Chip Kahn, president and CEO of the Federation of American Hospitals, said during the press briefing.

Even achieving that would be difficult for Congress, however. The Affordable Care Act paid for roughly half of the expense of expanding health coverage by reducing spending on Medicare and Medicaid payments to health care providers like hospitals.

As a result, restoring those cuts would show up on the balance books as a major new federal expense. And there’s precedent for leaving the cuts in place for budgetary reasons: The plans Ryan conceived when he chaired the House Budget Committee always retained that lower spending.