5 Reasons Why an Immediate Obamacare Repeal May Not Be in the Cards

As we are still reacting to the results of the U.S. presidential election, those of us in healthcare, including myself, are asking themselves THE question: What’s going to happen now to the Patient Protection and Affordable Care Act, a.k.a. Obamacare? Here are my thoughts on what might happen next.

By Boris Rachev, Global Health Economist, CSC

I believe there’s a pretty relentless political logic that’s about to take hold. President-elect Trump has promised that he will repeal and replace Obamacare when he moves into the White House, but making good on this promise may be easier said than done. Here are five reasons why:

  1. President Obama’s 2010 national healthcare reform law extended medical insurance to about 22 million more people by expanding the Medicaid plan for the poor and creating subsidized coverage for individuals. This is a big number, equivalent to roughly one-fifth of the total number of people who voted in the election — enormous political capital for any party to throw away.
  2. Republican lawmakers have already voted more than 50 times to repeal all or part of the law, so there was no lack of trying. My opinion, however, is that it will be difficult for Republicans to coalesce around an alternative to Obamacare when it comes down to the details. The reason is simple: health policy is hard to develop. There are winners and losers, and extending coverage to the uninsured costs a bunch of money; repealing will cost even more.
  3. Republicans have a ready excuse for keeping some popular parts of the law, most of which aren’t subject to reconciliation because they don’t affect spending or revenue. These include rules about pre-existing conditions, lifetime and annual caps, allowing young people to stay on their parents’ insurance, and zero cost-sharing for preventive care.
  4. Every single Republican in office has run on repealing the ACA for the past 6 years. Nevertheless, I believe Republicans will delay the day of reckoning to keep ACA’s political capital. As it is, the reconciliation bill doesn’t kick in until 2018. It would be easy for them to extend that to avoid a collapse of the insurance markets right before the midterm elections. Republicans would then get to take credit for repealing Obamacare without throwing millions off their health insurance plans.
  5. It is not just the people who are being covered who’d be affected by a repeal. Rolling the health law back would create chaos in the healthcare sector for hospitals, insurers, doctors and even some state governments that have started to adjust to life under the ACA. This is not a small concern, given that health care is about one-fifth of the economy.

The Trump administration will also face a tight deadline if it tries to dismantle the insurance exchanges by 2018; many state-based health insurance regulators require insurers to submit plans for the upcoming year by April or May — only a few months into a new administration. Enrollment opened on November 1, 2016, for 2017 coverage and once those plans are purchased, it would be legally difficult for the Trump administration to cancel them before the one-year contracts run out

Without a reform bill, Republicans could just let the ACA lapse, with all the effects and consequences that a massive insurance contraction would entail. And what will happen when the ACA is finally set to lapse? The political scene will look very different in a couple of years, so it’s too early to speculate about that. Republicans might choose to kick the can down the road, delaying the date of the ACA’s demise — an even more plausible scenario from today’s perspective.

It’s safe to say, however, that passing a healthcare reform bill would be even harder in 2018 and beyond. The reconciliation bill does not increase the federal budget deficit, mainly because it retains the Medicare cuts, but paying for a meaningful Obamacare replacement would still require new sources of tax revenue — not a popular idea among Republicans.

All in all, I honestly don’t know what’s going to happen, but it seems to me that a complete repeal of Obama’s Affordable Care Act may not be immediately in the cards. Republican lawmakers hold 52 seats in the Senate — well short of the 60 seats required to overturn it.

Some of the policy experts on the Republican side have already stated that repealing the law and starting over would be very disruptive. Parts of the law have been weakened through legal challenges already. Several of the largest U.S. health insurers have pulled out of the exchanges for individual coverage after losing money on a sicker-than-expected group of patients. Consumers who are not eligible for government subsidies have seen premiums rise sharply, including a projected average increase of 25 percent for 2017.

One thing is for sure —scrapping the law altogether without a clear plan for providing replacement coverage for so many people would be politically risky. In my next blog, I will share my opinion on what a minimum replacement of Obamacare might look like and who the eventual winners and losers might be.

RELATED LINKS

Healthcare 3.0: The target state

“Digital” as a strategic priority for healthcare payers

The role of telemedicine in digital transformation

 

Comments

  1. Excellent OpEd. Very consistent with what is being shared amongst the healthcare leadership in the industry.

    Like

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