On January 20, 2017, President Trump signed an executive order to begin the process of repealing the Affordable Care Act (“ACA”) and to “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act.” Sound vague to you? If so, you are not alone. Both Trump and Republicans in Congress have vowed to immediately “repeal and replace” the law, but neither has offered any semblance of what a replacement would look like, much less whether that replacement would be beneficial and sustainable.
Trump’s executive order is the first step in a direction that could leave approximately 20 million Americans without health insurance coverage. Hallmarks of the ACA currently include allowing young adults to stay on their parents’ health insurance policies until age 26, prohibiting insurers from discriminating against those with preexisting conditions, prohibiting lifetime dollar limits on coverage, providing free preventative care visits, providing a health care marketplace in which to purchase affordable insurance, and more. The ACA also implemented a tax penalty for those who do not purchase health insurance and provided health insurance subsidies to purchasers based on income levels. Repealing one or more of these provisions has the potential to leave Americans sicker and in significant debt. For instance, after repeal, an insurer may have free reign to charge astronomical premiums or refuse to cover someone with a preexisting condition such as cancer.
The Congressional Budget Office (“CBO”) recently evaluated the consequences of repealing the ACA. Specifically, the CBO analyzed a bill that sought to repeal portions of the ACA. The Restoring Americans’ Healthcare Freedom Reconciliation Act, introduced in 2015, sought to eliminate tax penalties for those that did not purchase health insurance and employers who did not offer employees health insurance meeting specific standards (i.e., the “individual mandate” and “employer mandate”). The bill also would have eliminated Medicaid expansion and subsidies to those who purchased insurance through the ACA-implemented health care marketplace. But the bill would have left in place certain requirements, including those that mandate insurers provide certain benefits and levels of coverage; prohibit discrimination in coverage or premiums for enrollees with preexisting conditions; and adjust premiums only on the basis of age, use of tobacco, and location. Based on these factors, the CBO determined the following:
- Upon enactment, but prior to eliminating Medicaid expansion and subsidies, 18 million people would be uninsured and insurance premiums would increase by 20 to 25 percent.
- After eliminating Medicaid expansion and subsidies, 27 million would be uninsured a year after enactment of the bill (with that number increasing to 32 million by 2026). Insurance premiums would also increase by 50 percent and double by 2026.
All this assumes that a potential repeal of the ACA leaves in place insurance market reforms. But Congress seems unlikely to limit a repeal to only the proposed changes in H.R. 3762. On January 23rd, Senators Bill Cassidy and Susan Collins unveiled a proposal to leave ACA participation up to the states in the form of the Patient Freedom Act of 2017. Although the proposal would keep in place caps on lifetime limits, prohibitions on preexisting condition exclusions, and the option for children to stay on their parents’ plans until age 26, the proposal would repeal the individual mandate, the employer mandate, and benefit mandates requiring insurers to include a certain level of coverage. Under the proposal, states may choose from one of three options:
- Option 1 – States may reimplement the ACA, keeping its mandates and requirements, and continue to receive “federal premium tax credits, cost-sharing subsidies, and Medicaid dollars,” as long as the subsidies “do not exceed the contributions that would have been made under Option 2.”
- Option 2 – States may enact a new market-based system while still protecting those with preexisting conditions. A state may receive funding equal to 95 percent of federal premium tax credits and cost-sharing subsidies and federal matching for Medicaid expansion. Funding would be available as “beneficiary grants or advanceable, refundable tax credits,” but must be deposited directly into a patient’s Roth Health Savings Account.
- Option 3 – States may “design and regulate insurance markets that work for their specific populations.”
The problem with these options is that states are free to select from an array of options, without taking into account how their decisions will affect health care costs nationally. This lack of foresight could trigger the same (or more profound) concerns present in the CBO’s scenario.
Apart from the Cassidy-Collins proposal, a repeal of the ACA has dire repercussions for the Department of Veterans Affairs (“VA”). A combination of Trump’s federal hiring freeze and ACA repeal could overwhelm the VA with an influx of veterans who typically obtain health care from providers other than the VA. Specifically, a health policy researcher at Rand Corp. reported that 3 million veterans enrolled in the VA obtain healthcare from their employer, ACA exchanges, or elsewhere. If ACA repeal drives these veterans to obtain health care from the VA, the VA may have trouble providing both efficient and accessible care, especially in light of fewer VA providers due to Trump’s hiring freeze.
Considering the CBO’s analysis, the uncertainty of states keeping ACA mandates in place under the Cassidy-Collins proposal, and the likely strain on the VA, the number of Americans without access to health care and the price of health insurance may skyrocket and well surpass what the CBO projected. And the Cassidy-Collins proposal is just that – a proposal. What Congress actually plans to enact in place of the ACA is largely unknown. But one thing is certain, if Congress repeals more than what H.R. 3762 proposed, we may be in for a long, sick ride.
1. 42 U.S.C. § 18001 et seq. (2016).
7. Restoring Americans’ Healthcare Freedom Reconciliation Act, H.R. 3762, 114th Cong. (2015).
11. See https://www.nytimes.com/2017/01/23/us/politics/senate-affordable-care-act-bill-cassidy-susan-collins-trump.html?_r=0; http://www.cassidy.senate.gov/imo/media/doc/One%20Pager%20(1.20.17)%20(002).pdf.