Repealing The Affordable Care Act: Preparing For The Consequences & The Journeys That Lie Ahead

On January 13, 2017, Congress Republicans approved a plan to dismantle the Affordable Care Act (ACA).  The plan, which passed 51-48 in the Senate and 227-198 in the House, provides a budget resolution enabling Congress to alter the way the government spends and taxes to enforce provisions of the ACA.  Specifically, the budget resolution is most likely to affect the individual mandate, the amount of subsidies used to pay for private insurance, and the funds used to expand Medicaid coverage.  Although the budget resolution passed in the Senate with a simple majority, an actual bill to replace the entire ACA would require 60 votes.  

Lawmakers share differing opinions as to when a replacement should take place.  Some believe that a replacement should be instituted at the same time  the ACA is repealed. For example, House Speaker Paul Ryan said, “We want to advance repealing this law with its replacement at the same time.”.  Others, however, caution a speedy approach to a replacement, advocating for a more step-by-step approach.  “We need to carefully reform and replace Obamacare, and when it takes effect, we can finally repeal Obamacare. And so we’ve got to get the right sequencing on this,” explained Senator Lamar Alexander who chairs the Senate health committee.  This difference of opinion relates to two factors.  The first is the cost associated with repealing the ACA.  The second is the accessibility to healthcare for over 20 million Americans that have gained healthcare coverage under the ACA. 

Current estimates from the bipartisan Committee for a Responsible Federal Budget indicate that an entire repeal of the ACA would cost $350 billion.  The high cost of replacement is related to the coverage provisions, taxes and fees and Medicare components of the ACA. Coverage provisions relate to the mandates, subsidies, and Medicaid expansion.  While a repeal of those provision may bring in savings from over $1 trillion, much of the savings would be offset with the $250 billion in costs associated with eliminating the individual and employer mandates.  Additionally, the ACA sets forth certain payroll taxes, fees on insurance companies and medical devices, and taxes on high-cost insurance plans. A repeal of the law would thereby reduce revenue, which would harm the federal deficit.  Moreover, the ACA has made certain cuts in Medicare Advantage and increased provider payments in fee-for-service Medicare.  If the past cuts to Medicare Advantage are reversed, this would also lead to an additional $200 billion in costs. Lastly, lawmakers seeking to repeal the ACA would need funding to find an appropriate replacement for the ACA – funding that Congress currently lacks. 

Aside from costs, a repeal of the ACA warrants the question of what will happen to the 20 million people who gained medical insurance due to the ACA.  While the budget resolution repeals the individual mandate and corresponding penalties, it leaves the insurance market reforms intact.  Accordingly, young adults under 26 years old may stay on their parents’ insurance and companies are still unable to deny coverage to those with pre-existing conditions.  The CBO estimated that leaving the insurance market reforms untouched while removing the individual mandate will add 18 million uninsured Americans in the reform’s first year, eventually leading to 32 million uninsured by 2026.  The loss in coverage is a result of eliminating the taxes associated with the individual mandate if a person chooses to not purchase health insurance. Furthermore, some insurers may also drop out of the insurance exchange market anticipating fewer enrollments and higher costs from enrollees who stay in the market after subsidies are reduced.  The rates on the health insurance marketplace would increase 20 to 25% but could reach 50% following the elimination of Medicaid expansion.  Higher premiums are also tied to eliminating the individual mandate – if Americans are not required to purchase health insurance, those that are younger and healthier may not want to purchase insurance.  So, the end result may be a reduction of younger, healthier people seeking health insurance while persons with high-risk for medical costs still seeking coverage.  This leads to making health insurance more expensive and insurers try to offset these costs by charging higher premiums.  

It is important to consider that the CBO report on the budget resolution’s effects on insurance costs and health care access is set in the context of repealing without replacement.  If lawmakers are able to establish a sufficient replacement package, then perhaps the effects on healthcare costs and access would change. So far, the policies​ lawmakers have proposed involve providing tax credits to purchase health insurance, subsidies for states with high-risk pools, continuing the protection for people with pre-existing conditions who have maintained “continuous coverage,” and allowing insurance companies to sell policies across state lines. Nonetheless, these policies are not finalized and may change.  Additionally, there is no indication of whether the protections and subsidies in any replacement package would be comparable to those under the ACA. 

Faizan A. Khan is a third year law student at DePaul University College of Law.  Mr. Khan graduated cum laude from DePaul University with a Bachelor of Arts in Political Science and minor In Economics.  He is currently serving on the DePaul Journal of Health Care Law and will complete his J.D. in May 2017.
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