There’s bad news and then worse news for some states if the ACA is completely eliminated, according to the Urban Institute. The institute updated one of its studies on the heels of the Trump administration’s decision to go all out to kill the ACA. That study, first released last June, asks what would happen if the ACA were repealed. The answer, in a nutshell: a lot of bad stuff.
On March 25, the Department of Justice filed a notice to the U.S. Court of Appeals for the Fifth Circuit arguing that the entire ACA should be eliminated.
In the case being appealed, Texas v. Azar, Federal Judge Reed O’Connor of the Northern District of Texas had ruled that the ACA is unconstitutional because the individual insurance mandate penalty was no longer in effect. The Trump administration is now agreeing with O’Connor. The ACA has survived several existential legal threats. The Trump administration is hoping that Texas v. Azar finally wields the mortal blow.
If the law is repealed, the uninsured rate would increase by 65%, or 19.9 million people, according to the Urban Institute’s estimates. Federal health care spending would drop by 35% ($134.7 billion), and demand for uncompensated care would climb by 82% ($50.2 billion).
The institute also calculated the state-by-state effects of ACA repeal. States where the number of people without insurance decreased the most under the ACA would, not surprisingly, see the greater increase in their number of uninsured. So, for example, the number of uninsured would increase by 151% in Kentucky, compared with only a 12% increase in South Dakota, a state that has not expanded Medicaid and has had low enrollment in the ACA marketplace.
That’s the bad news. Now for the worse.
The institute looked at the seven states (Arizona, Delaware, Hawaii, Massachusetts, New York, Vermont, and Wisconsin) that had expanded their Medicaid programs before passage of the ACA using Section 1115 waivers.
If the 1115 waiver is not reinstated in those states and the ACA is repealed, then the uninsured rate nationally would increase by 70%, or 21.2 million people.
Federal health care spending would drop by 36.2%, or $141.1 billion. Meanwhile, demand for uncompensated care would climb by 87% ($53.3 billion).
In its conclusion, the institute takes aim at the DOJ’s argument that without the individual mandate penalty, the rest of the ACA cannot be sustained.
The institute said its findings show “that the private nongroup insurance markets continue to function effectively in the first year without the individual mandate in place. Enrollment is down by approximately 3% in 2019, and this may translate into a noticeable increase in the number of people uninsured absent a mandate in some states; however, the decline appears to be modest, and some states are experiencing enrollment increases.”