What’s Ahead for the Affordable Care Act Under Trump?

Caitlin Dekker of National Advocates for Pregnant Women participates in a rally outside Congressman Dan Donovan’s (R. New York) office in support of the Affordable Care Act (ACA). Defunding the ACA could destabilize the insurance industry and result in 30 million people losing health care coverage, say experts. Photo by Thomas Altfather Good

With Republican control of the White House beginning on January 20, 2017, congressional Republicans are wasting no time moving to repeal the Affordable Care Act (ACA), also known as Obamacare.

“What got all the media attention were the battle plans, tweets, speeches, and interviews by Republicans touting their intentions to repeal, if not replace, the ACA quickly—and from Democrats vowing not to roll over,” says John Kingsdale, associate professor of the practice of health law, policy, and management at Boston University’s School of Public Health (SPH). Under then-Governor Mitt Romney, Kingsdale organized and led the Massachusetts Health Connector, the model for health insurance exchanges under national health reform.

In the first weeks of January 2017, the wheels to repeal began turning, using a process called budget reconciliation. “It’s not clear that even members of Congress know what they are doing,” says Wendy Mariner, SPH Edward R. Utley Professor of health law.

BU Research spoke with Mariner and Kingsdale about the process, the fate of the ACA, and what to expect as a result.

BU Research: First of all, could you help us understand what Congress did—and didn’t—do in the first week of January?

Mariner: Many Republicans were elected after promising to “repeal and replace” the ACA, and at the start of January, they focused on repeal. A Republican majority authorized the relevant committees to prepare a reconciliation bill to repeal ACA provisions that impose taxes or authorize federal spending on tax credits and subsidies. Reconciliation bills are laws that affect federal revenues, spending, and debt limit, and they can be passed by a simple majority of 51 in the Senate, so that Democrats, with only 48 Senate seats, could not stop passage.

It would also prohibit federal funding for Planned Parenthood, even though federal funding is already prohibited for abortions that are unnecessary to save the woman’s life or in the case of rape and incest.

Kingsdale: This process can be used over the next several months to defund Obamacare, but not to replace it. Hence the term for this legislative maneuver: “repeal and delay.” Replacement would be delayed until sometime after the legislation passes to defund the ACA.

What effect will this have?

Mariner: A major drawback of “repeal and delay” is insurance industry opposition. The industry needs predictability, and not knowing what laws may apply in a year or two is likely to destabilize the insurance market. Insurers need to decide whether to offer marketplace policies for 2018 in April 2017. This means that Congress only has a few months to let the industry know what the rules will be. In the absence of firm promises, many insurers may raise premiums dramatically to protect themselves from possible losses or drop out of the market entirely. That would leave millions of Americans unable to afford to buy private coverage, which would be a public health disaster for lower-income Americans.

Kingsdale: Unless the replacement creates a stable, viable insurance market, insurers will desert the individual marketplace, leaving millions of enrollees stranded. In this event, the ACA would explode in Republicans’ hands.

What might replacement look like?

Mariner: If and when Congress will replace the ACA is an open question. “Replace” has always been a sound bite, not a policy. A true replacement would accomplish the ACA’s goals of near-universal comprehensive coverage at affordable rates—using different policies and methods. But, Congress cannot enact Republican policies without a dramatic rise in health insurance premiums (or insurers exiting the market) that will force 20 to 30 million people out of the insured population, which could provoke a severe backlash, even among Trump supporters. Continuing subsidies for low-income people or encouraging states to create high-risk pools could be rejected by those opposed to federal spending. An alternative replacement would be something like Medicare for all, which is anathema to most Republicans. So, the Republican leadership is touting “repeal and delay.” They hope to repeal the ACA’s financial parts, such as the individual mandate, the employer “mandate,” the tax credits and subsidies to enable people to buy policies on the exchanges/marketplaces and federal funding for the Medicaid expansion, but delay the effective date for a year or two. By then, they hope to have a credible plan for replacement.

“Hope” is the operative word here. Informed Republicans probably know that their preferred policy of reliance on the voluntary commercial insurance market cannot achieve near-universal insurance coverage at affordable prices without mandates and subsidies. Taking away the ACA’s financial subsidy provisions appeals to Republicans who oppose federal spending, but doing so is like removing the wrong stick from a pile of pick-up sticks—the whole pile will collapse.

What happens if there is no replacement?

Mariner: If no replacement can be enacted, then we could return to the days of 18 percent of the population without insurance. The Urban Institute estimates that the number is likely to be higher than before the ACA, with 30 million losing coverage, since insurers are not likely to cover those with pre-existing conditions without much higher premiums. Small employers who no longer receive tax credits for offering insurance may drop their programs. Medium and large employers may see rising premiums and shift more costs to employees. Health care providers would be expected to provide more uncompensated care without much federal or state funding, jeopardizing the financial stability of many hospitals, especially safety-net hospitals.

If the ACA is repealed, what will happen here in Massachusetts?

Kingsdale: We in Massachusetts are unique in having much of the legislative framework in place to continue our own reforms from 2006, on which the ACA was modeled. That is, we have enacted our own insurance market reforms, mandates, subsidies, etcetera, and importantly, we have a state tax penalty in place for enforcing the individual mandate. Some of our market reforms and subsidies are actually “tighter” or more progressive than the ACA itself.

However, the big challenge for continuing coverage after repeal in any state, no matter how “blue,” would be the loss of federal funding: Without the huge federal subsidies that flow through the ACA, it would be a big stretch for Massachusetts to reinstitute the coverage expansions occasioned by our model legislation of 2006. Those reforms were 50 percent funded by a generous Medicaid waiver that no longer provides funding for this expansion.

The country may see just how expensive health care can get. Massachusetts already has among the highest health care costs in the country and is struggling to keep the rate of increase within manageable bounds. In the absence of federal constraints on Medicare payments, larger employers and health insurance plans may press for narrower networks and more limited plan benefits to the extent that they can negotiate with powerful providers.

How do you see this repeal process ultimately playing out?

Mariner: The Republicans are in a difficult position. They don’t want to be hit with the “Pottery Barn Rule”: you break it, you own it. But their policies rely on a voluntary insurance market with voluntary paying buyers. This has never and will never achieve universal (or near-universal) coverage, because millions of Americans cannot afford to buy. They want to reduce federal spending, but universal coverage requires government to pay for low-income Americans one way or another. They want to reduce health care costs, but private coverage is more expensive than government benefit programs and they don’t want to limit provider fees.

Kingsdale: The big questions are when and whether the Republicans can use repeal and delay to strong-arm some moderate Democratic senators into overcoming a filibuster to support some drastically reduced version of replacement, or the Democrats can effectively use the filibuster to force Republicans to choose between taking the blame for disrupting coverage for 30 million Americans, or claiming to repeal the ACA while really accomplishing something far less extreme, to merely “rename and reform” Obamacare.

The outcome of this epic political battle could range from one extreme to the other. The political fallout from either substantive outcome could be equally extreme, ranging from a crushing embarrassment for Republicans—either for failing to repeal the ACA or for taking the blame for an insurance meltdown brought about by “repeal and delay”—to a big political victory from forcing Democrats to vote for major reductions in coverage, or from claiming that more modest reforms constitute “repeal and replace.”

Mariner: Democrats might decide to cooperate on some elements of reform in the future, but their current opposition to repeal mirrors Senate Majority Leader Mitch McConnell’s policy of opposing any bill proposed by President Obama or the Democrats. That may turn out to be politically advantageous for Democrats. But, if Congress enacts repeal without a real replacement, it will be scoring political points at the expense of American lives.