Wellness

Repeal And Displace: The Coming Health Care Train Wreck

Since the passage of the Affordable Care Act in 2010, Republicans have promised to “repeal and replace” President Obama’s signature achievement, but now that they’re in a position to do so, it’s becoming clear they’re unprepared to deliver. Despite six years of Obamacare demagoguery, Republicans still don’t agree on the best way to go about replacing it so now they’re proposing a much riskier strategy: repeal and delay.

Senate Republicans lack the 60 votes needed to fully repeal the ACA, or to pass a replacement, and will need some Democratic support to overcome a filibuster. However, through the budget reconciliation process, and a simple majority vote, they can repeal all of the ACA’s funding mechanisms ― effectively destroying it. The purchasing mandate, the premium subsidies, and the Medicaid expansion are all on the chopping block.

Let there be no mistake: this is going to happen. Republicans will be able to claim they have followed through on a major campaign promise on day one, and since the federal dollars wouldn’t actually stop flowing until 2019 or 2020, they would have 2-3 years to come up with a replacement.

However, there are some major problems with this approach.

The purchasing mandate would be repealed immediately, which means many healthy consumers will opt out of health insurance, and seek it only after they’ve suffered a catastrophic illness. Then, they’ll exercise their right to purchase insurance at an affordable rate with their pre-existing condition – a provision of the law that will remain intact. This concept ― known as adverse selection ― would eliminate the ability of insurers to earn a profit virtually overnight. In fact, they would likely lose money if they continued participating in the exchanges.

What does this mean for those who currently purchase insurance through the Affordable Care Act?

There will be a mass exodus of insurers from exchanges with some states having no options at all to offer consumers. The remaining participant pools – disproportionately represented by sick people – will be characterized by ever increasing premiums as more and more consumers are priced out, and the so-called “death spiral” would become a very real threat to the stability of the non-group market.

A recent brief from the Urban Institute estimates if the ACA is repealed, the number of uninsured would more than double rising to 58.7 million in 2019 – a figure even higher than before the ACA passed – as a result of the “near collapse of the non-group insurance market.”

This presents a real quandary for Republicans. Repeal and delay is a risky strategy because it’s likely to throw the existing market into complete disarray in advance of the 2018 mid-term elections where they’re hoping to gain seats in the senate to pass a replacement. If the federal dollars flowing into the exchanges are interrupted for failure to pass an alternative, any market left could cease to exist.

To be clear about what that means: it’s possible there would be no market left to purchase health insurance outside of an employer or government-sponsored plan because insurers would simply refuse to participate. And no one could blame them.

Republicans are aware of the risk. Not a single major organization representing patients, payers, physicians, or hospitals supports their plan to repeal and delay. In a letter to lawmakers in the House, the American Academy of Actuaries warned, “Significant market disruption could result, leading to millions of Americans losing their health insurance.”

Lacking a replacement that will expand coverage as successfully as the ACA, which seems unlikely given the tenets of Speaker Ryan’s “Better Way” plan, I suspect Republicans will get little support from Democrats, who now find themselves – for the first time ever – on the side of the opposition to health care reform. Republicans are betting that the situation will be so dire that Democrats will have to sign-on to whatever proposal they put forward, but unless that proposal is an extension of the ACA, I wouldn’t count on it. Did Republicans forget how politically advantageous it was for them to universally oppose health care reform, or hasn’t it dawned on them that once they repeal the ACA, they’ll also own every health care problem in this country?

An early victory for the conservative base may play well in the media, but when these same voters – along with millions of others who rely on non-group insurance and the Medicaid expansion – begin losing their coverage, the resulting backlash will be forceful and swift, and it will rest squarely on the shoulders of Republicans.