The report, from the nonpartisan Urban Institute, predicts that state insurance markets will start to unravel almost immediately and that, as early as next year, the ranks of the uninsured will begin swelling. And if Republicans can’t come up with a replacement, the report says, the number of people without insurance could eventually rise by 20 million to 30 million people.
Both predictions represent worst-case scenarios. But the findings echo warnings that experts and industry groups have been making with increasing urgency ― that taking the health care law off the books quickly is likely to destabilize insurance markets and that even a conservative “replacement” for Obamacare is likely to result in a combination of many more uninsured and weaker insurance coverage on the whole.
Needless to say, this is not the kind of outcome that President-elect Donald Trump promised when he said he’d replace Obamacare with “great health care at lower costs” ― or what House Speaker Paul Ryan implied just this week, when he vowed that Republicans would ensure that “no one is worse off” during the transition to a new system.
How did the Urban Institute researchers come by their conclusions? They started by assuming that Republicans pass a bill similar to the measure Republicans passed last year, one that President Barack Obama vetoed. That bill would have stripped out the Affordable Care Act’s funding but allowed the Medicaid expansion and private subsidies for private insurance to remain in place through January 2018.
Republicans have vowed that the new effort at repeal would contain a similar continuation of coverage assistance, although now the extension would go through 2019 or even 2020. That extension is supposed to guarantee coverage for the more than 20 million people who now depend on Obamacare for insurance while giving Republicans time to craft a replacement. And this replacement, Republican leaders frequently say, will provide comparable or even better coverage for lower costs.
The report from the Urban Institute basically calls those promises worthless.
A big problem for the short term, the researchers warn, is that insurers aren’t likely to keep offering coverage for a market that’s going to vanish in two or three years. Many insurers have been losing money, sometimes big money, on their Obamacare plans. But some were making money and most had decided it was worth sticking around for the possibility of future profits. If the markets won’t exist past 2018 or 2019, then those profits will never materialize.
Another, potentially bigger problem is that the repeal-and-delay bill is likely to eliminate Obamacare’s individual mandate right away. The mandate is a penalty for people who don’t get health insurance. And without that mandate in place, the Urban Institute researchers warn, healthy people will be less likely to buy coverage, causing more insurers to lose money and inducing still more of them to leave the markets altogether.
Within a year, the institute’s researchers predict, deterioration in the markets will add more than 4 million people to the ranks of the uninsured. And it will only be a matter of time, the researchers warn, before most if not all carriers exit the markets altogether ― rather than stick around and try to insure a population so weighted toward people in poor health that it’s impossible to cover costs.
And that’s just the short-term prognosis. Once the two- or three-year transition period is over, the Urban Institute’s researchers project, the loss of subsidized private coverage and expanded Medicaid will cause the number of uninsured Americans to increase by 22.5 million ― essentially wiping out the coverage progress of the last few years. Even more could lose coverage, the report says, depending on what other changes Republicans make to the rules for insurance.
This is basically the same conclusion that the Congressional Budget Office reached when it analyzed last year’s repeal effort ― although the Urban Institute researchers provided some details on who these people are. Among other things, the researchers found, the vast majority would be from families with at least one household member who is working. A similar percentage would be people without a college degree.
The assumption running through these calculations is that Republicans never come together on a “replacement.” This is a plausible assumption. After six years of promising to coalesce around an alternative to Obamacare, House Republicans have managed only to agree on a set of principles, as opposed to actual legislation. And Senate Republicans haven’t even gotten that far.
The political reality is that crafting any alternative is bound to be difficult after a repeal bill passes, because a large contingent of Republicans opposes any significant role for the federal government in health care ― and, once a repeal bill eliminates Obamacare’s funding, this contingent (and to some extent all Republicans) will be reluctant to approve the new taxes necessary to finance serious coverage expansions.
Not coincidentally, the plans now circulating among conservative intellectuals and likely to form the basis of eventual legislation would all result in higher numbers of uninsured Americans, much weaker guarantees of insurance availability and benefits, or some combination of those factors.
These plans would also produce results that many conservatives would cheer. They would mean less government spending and lower taxes. Insurers could go back to offering bare-bones plans at bargain-basement prices. Prices for young and healthy consumers would come down, and the highly unpopular individual mandate would go away.
But the price of these gains would be many more people struggling with medical bills. The final numbers might not be as extreme as the ones in the Urban Institute report, but the change would be dramatic, far more than Republicans are willing to admit.