Repealing and replacing Obamacare might not be as simple as Republicans thought
Corrected: The Affordable Care Act has been the white whale for most Republicans ever since President Barack Obama signed it into law in 2010. Congressional Republicans have voted dozens of times to repeal the law they dubbed “Obamacare”—and even engineered a governmental shutdown in 2013 in an effort to try and defund President Obama’s signature domestic accomplishment.
Donald Trump spent a considerable amount of time on the campaign trail attacking the ACA, calling it a “total disaster” and a job killer while promising to repeal it on day one of his presidency. With control of both houses of Congress, as well as the White House, the Republicans finally seem poised to get rid of Obamacare once and for all.
But like the final scene of the 1972 movie The Candidate where Robert Redford’s character wins a race no one thought he would and now faces the realization that he has to govern, the question remains: What do the Republicans do now?
“Repeal and replace” may have worked on the campaign trail, but the GOP is quickly finding out that it might not be as easy in practice. For one thing, there are parts of the law that Trump and many Americans like. When asked during his post-election interview with 60 Minutes whether he’d try and keep the provision banning denial of coverage for people with pre-existing conditions, Trump unequivocally said that he would, calling it “one of the strongest assets” of Obamacare. “Also, with the children living with their parents for an extended period, we’re gonna very much try and keep that,” Trump told 60 Minutes. “Adds cost, but it’s very much something we’re going to try and keep.”
In fact, according to a post-election poll from the Kaiser Family Foundation, only 26 percent want to see the ACA repealed; 17 percent want to keep it but scale it back. The poll found that 30 percent actually want it expanded, and 19 percent want to keep it as is.
Congressional Republicans have also seemed unsure as to what the next step should be. Senate Majority Leader Mitch McConnell has repeatedly promised a quick repeal, and in December, stated that it would be the first thing on the agenda when the new congressional session begins in January, The Hill reports. However, Republicans have sent out mixed messages as to the “replace” portion of the equation.
Senate Majority Whip John Cornyn acknowledged that Republicans are considering a three-year delay so that people won’t lose their coverage or fall through the cracks while Congress drafts a replacement. Influential Senator Lamar Alexander, on the other hand, has said there should be a replacement ready to go before Obamacare is repealed. Meanwhile, many conservative Republicans, especially in the House, are so desperate to repeal Obamacare while they have the votes that they’re willing to worry about the consequences later.
Indeed, the consensus within political and legal circles is that Congress and Trump aren’t simply going to take away health coverage from millions of Americans without providing an alternative. “I’ve always thought that the way they would repeal it is the way Paul Ryan and the GOP did it in 2015, when they got the votes but Obama vetoed it,” says Michael Carvin, a partner at Jones Day who argued against the constitutionality of the Affordable Care Act before the Supreme Court in National Federation of Independent Business v. Sebelius. “They repealed it but put in an 18-month transition period and mapped out the kind of market-based alternative they would use to accomplish having a health care system that’s more affordable and consumer-driven.”
Carvin adds that there’s never been any talk about simply stopping Obamacare and leaving everyone in the lurch. “No one is saying ‘tear down the building and leave nothing in place,’” says Carvin.
Susan Nash, chair of the Health and Welfare Plan Affinity Group at McDermott Will & Emery, agrees, saying that an immediate repeal without a replacement or transition period in place would be chaotic. “You’re not just pulling the rug out from 20 million people who would no longer have health insurance,” Nash says. “There would be a major disruption within the insurance industry, as well as with providers, hospitals, and other systems where people get medical care. Whatever is done has to be done carefully.”
It doesn’t help that the law they’re trying to dismantle is extremely complex and intricate. “I’ve heard, anecdotally, that the Republicans on the Hill that will be writing the bill have been quietly acknowledging that this is a lot more complicated than they thought,” says Jennifer Walsh, director of public affairs with Foley & Lardner.
Julius Hobson, a senior policy analyst with Polsinelli, agrees, pointing out that the law has been in the implementation phase for over six years now—making it extremely difficult for Congress to simply reverse gears and get rid of the system that was being put into place. “Everyone is starting to appreciate how interwoven its parts are,” says Hobson, whose wife chairs the Washington, D.C., Health Benefit Exchange Authority Executive Board. “You can’t just get rid of a few things and expect the rest of the law to work.”
For instance, a repeal would do away with various tax increases that helped pay for Obamacare. However, Walsh and Hobson point out that hospitals and providers have relied on those tax hikes and are worried about the effect a repeal could have on their ability to care for their patients. Larry Vernaglia, chair of Foley’s health care practice, adds that certain reimbursement payments to hospitals would need to be recalibrated if Obamacare were repealed, such as inflation adjustments to Medicare and Medicaid, as well as payments to hospitals that primarily treat indigent patients. “Otherwise it could be a double whammy for hospitals,” says Vernaglia. Hobson says that the revenue issue is so serious that Republicans are even considering leaving in the tax hikes—for now.
The ongoing Obamacare debate could also have a huge effect on Medicare and Medicaid. The Medicaid expansion under Obamacare has been highly controversial, with many states refusing to take the money offered by the federal government to increase health coverage. Medicare has also come under scrutiny since the election. Almost immediately after Trump’s win, House Speaker Paul Ryan announced he would pursue Medicare privatization, a long-held goal of his and other conservatives in the GOP caucus, the Washington Post reported. Several Republicans in the Senate balked, and while Trump has been silent on the matter since his election, he had campaigned on protecting Medicare.
Jennifer Evans, Polsinelli’s Denver managing partner and Medicare/Medicaid specialist, maintains that the two programs are bound together in many ways, and that changing or even eliminating one could irreparably harm the other. “Medicaid pays the premiums for millions for seniors on Medicare,” says Evans. “It’s hard to unravel those two programs completely, and it’s very challenging to convert Medicaid completely into block grant without having a significant effect on seniors that rely on both programs. Right now, it’s uncertain what are the real goals of the incoming President and Congress.”
Then there’s the central problem for Republicans: How do you get healthy young people to buy into the health insurance market if you get rid of the individual mandate? One of the reasons why the individual mandate wasn’t as effective as it could have been, according to Jenifer Healy, senior managing director in Dentons’ Public Policy and Regulation practice, is that the tax penalties for failing to get health care coverage were much lower than the cost of the insurance premiums. Healy, who worked for Republicans in the House and Senate, including Senator Bob Corker, thinks Republicans might have better luck with an incentive-based system.
“Sometimes it’s easier to catch flies with honey as opposed to vinegar,” says Healy, comparing the individual mandate to the latter. Healy notes that several previous plans which have been proposed, including Ryan’s “Better Way” proposal, have been centered around a system of refundable tax credits that are not income-based.
“One way to encourage people—especially the ‘young invincibles’—to buy insurance is to make sure everyone gets some kind of tax credit,” says Healy. “That way, people will have some money so that they can pay for insurance if they don’t have employment.”
However, Emily Wey, a health care partner at Polsinelli, is skeptical that tax credits are the panacea some are claiming them to be. “The thing is, you have to know how to use the tax credit, and there lots of people who don’t know how to work the system that way,” says Wey. “The main criticism is that people might not actually use it to buy insurance at all.”
Healy also says that reducing federal regulations might result in better, more affordable plans. “For instance, pediatric dentistry is one of the 10 essential health benefits in the ACA,” Healy says. “If you’re a 57-year-old man, you don’t really need that. If you don’t have to buy a certain mandated type of coverage, then you can get better plans that suit your needs.”
Healy points to the nomination of Representative Tom Price to be Secretary of Health and Human Services as an indication of what might be coming. “Price is a big fan of portable health insurance—the idea that people should be able to keep their insurance regardless of their employment status,” Healy says. “A lot of people in the GOP think like this. They want to make the individual health care market a viable competitor to employer market.”
But what about Trump’s oft-stated goal of allowing insurance companies to sell across state lines? Wey believes that would help bring prices down, but she and Hobson are blunt about the chances of it actually happening. “Health insurance will never be allowed to be sold across state lines,” says Hobson. “Governors, legislators and state insurance commissioners will fight it tooth-and-nail.”
Updated on Jan. 5 to correct the percentage of Americans who want the ACA repealed to 26 percent.