As the new Congress ramps up, the steady stream of news on “repealing and replacing” the Affordable Care Act is becoming a deluge. If you are confused, you are not alone. The ACA has lots of intersecting parts, and so changing it is complex. Even experts have trouble staying oriented.
A primer is in order. What are the Republicans proposing to repeal, and with what effect?
To get your bearings, keep in mind the main categories of health insurance coverage in the U.S. There are five: Medicare (the federal “single payer” program that covers roughly 58 million people over 65 years of age), Medicaid (the federal-state matching-funds partnership that covers 68 million children, people of very low income, people with disabilities, and people in nursing homes who have spent down the bulk of their assets), employer-based insurance for 156 million, the non-group market (about 22 million people who have to find insurance on their own), and the Children’s Health Insurance Program (which is another federal-state matching funds program that covers about 8 million children and pregnant women in families of limited income).
Another 18 million are covered by the military or Veteran’s Administration. And 28 million people in our country still have no health insurance at all.
The ACA, and its repeal, affects every one of those segments, but differently.
Repeal hurts Medicare. The ACA puts pressure on costs and rewards quality. It limits the rate of rise of what hospitals get paid and institutes new ways to pay for care that tie payment to quality of care. It tries to wean American doctors and hospitals from “fee-for-service” payment (“the more you do, the more you make”) to “value-based payment” (“the better the patient does, the more you make”). The result should be better care at lower cost, and, indeed, it is. Post-ACA hospital readmission rates fell nearly 20 percent, complication rates fell 21 percent, and the rate of rise of Medicare costs is the lowest in decades. Medicare spending per person went up 7.4 percent per year in the ten years before the ACA, and 1.4 percent per year since the ACA.
In their “repeal” plans, the Trump-Ryan team proposes to end many of the ACA Medicare programs that got those results, like covering preventive care and supporting community-based care to help people stay out of nursing homes. The result for Medicare beneficiaries will be backsliding: higher costs and worse care.
Repeal devastates Medicaid. Prior to the ACA, every state determined its own Medicaid eligibility limits, and states varied a lot. For example, in Alabama, parents with incomes above 13 percent of the federal poverty line are still not eligible for Medicaid, and childless adults aren’t eligible at all (unless disabled or elderly). In Massachusetts both of those groups are eligible up to 133 percent of poverty. The ACA tried to cover more people under Medicaid by standardizing eligibility among states – to 138 percent of the poverty line, with the federal government providing nearly all of the funding for that expansion. The Supreme Court intervened, ruling that states could not be forced to expand eligibility. Nonetheless, as of today, 32 states have expanded. The combination of expansion and better outreach to eligible people has added 17 million Americans to Medicaid and CHIP coverage.
Ryan, Price, Trump, and colleagues propose to take all of that away. They would take away both the federal expansion funds and the legal authority for states that want to expand. Their “replace” proposal, still behind curtains, is probably going to try to change the way all of Medicaid is funded, from the matching program in place since 1965, to “block grants” to states or “per capita” limits, under which the federal government would simply give a fixed amount of money to each state. The intent is to reduce federal Medicaid funding. The caps would be set at levels below what Medicaid is expected to cost, and disparities in coverage among states would be locked in. States would end up holding the bag as, say, needs changed or a recession occurred. Over the next decade, federal Medicaid payments would fall by 1 trillion dollars, and 14.5 million people would lose coverage by 2021.
“If you think your employer-based premiums went up too much under the ACA, just wait until it’s gone to see what the ACA was actually protecting you from.”
Repeal of the ACA hurts employer-based insurance. With tens of millions of people no longer insured via Medicaid expansion and subsidies, hospitals and doctors would find themselves back in the bad-old-days of uncompensated care and inadequate pools to support their free care. There will be nowhere else to turn for resources than to higher premiums for people who do have insurance. The new administration says it would keep many of the popular ACA protections for insured people, such as the abolishing of lifetime limits on coverage and forbidding insurers from denying coverage to people with preexisting conditions. But the math doesn’t work. There is no way to support a viable insurance market with those requirements absent the elements of the ACA that the Republicans want to end ― including the individual mandate. Bottom line: if you think your employer-based premiums went up too much under the ACA, just wait until it’s gone to see what the ACA was actually protecting you from.
Repeal will hurt the non-group market in many ways most of all. Individuals who want insurance but are not in large groups are not attractive customers for insurers; many tend to have worse health and a lot of them are far from wealthy. That’s one reason why the ACA set up the so-called “exchanges,” marketplaces with federal subsidies for people whose incomes are too high for Medicaid eligibility but too low to afford usual insurance on their own. The exchanges did have problems; mainly, their enrollees have turned out to have higher risks than predicted and therefore some individual and small group premiums soared. That is all fixable – California did it, and so did Alaska. But, with repeal of the subsidies, there will be nothing left to fix; the exchanges will implode, leaving over 8 million individuals high and dry.
And, finally, CHIP. This highly successful program has provided coverage for millions of children and pregnant women who have no affordable alternative. It has to be reauthorized later this year, and some Republicans propose to end it.
Add it all up, and, according to the Urban Institute in Washington, ACA repeal will throw 30 million Americans off of health insurance. And it’s not just the poor who will suffer. Repeal will harm almost every category of insured population in this nation. It will unleash unprecedented increases in insurance rates and worsen benefits for most people with insurance. Repealing the ACA without a clear, cogent, politically viable, and effective alternative – a “replace” that works – is not responsible.