“Repeal and replace” is looking pretty scary these days for the millions of Americans who have gotten health insurance coverage through the ACA. It’s also proving to be treacherous political terrain for the Republicans in Congress and President-elect Donald Trump. Turning a rabble-rousing threat and political gesture into government policy ain’t no walk in the park.
An estimate from the nonpartisan Congressional Budget Office (CBO) this week stoked the fears and certainly didn’t make life any easier for the GOP and the new administration.
The CBO analyzed the effects of the repeal-and-replace legislation that President Obama vetoed last year. That bill—which has served as a starting point for the current batch of repeal-and-replace proposals—would eliminate the individual mandate and premium subsides for polices purchased on ACA exchanges but would for the time being leave the ACA’s insurance rules, such as the ban on pre-existing condition exclusions, intact.
Nothing much would happen this year if that bill were enacted; premiums and enrollment are already set. Next year, though, is a different story. The CBO projects that the number of uninsured Americans would increase by 18 million. The main reason is that without the mandate and its financial penalty (this year it’s $695 for an adult), people wouldn’t buy coverage. The CBO also figures that insurers will leave the individual market as enrollment shrinks and those still buying policies will be sicker people who know they need coverage. In other words, we’ll see the dynamics of adverse selection take hold and the beginning of the classic insurance death spiral.
Soothing words have been offered. Rep. Tom Price, the nominee to be HHS secretary, said during his Senate testimony yesterday that “one of the important things that we need to convey to the American people is that nobody’s interested in pulling the rug out from under anybody.”
The man who might be Price’s boss went a step farther in an interview last weekend. President-elect Trump told the Washington Post that he will soon put out a replacement plan that will mean “insurance for everybody.”
Neither Price nor Trump provided any specifics, and news outlets reported yesterday that Trump pulled back some from his “insurance for everybody” bravado.
But knowledgeable Republican health care experts have chimed in. By reading them, you can begin to understand some of the legislative politics of repeal and replace, and how the Republicans may eventually go about replacing the ACA.
Yuval Levin’s 4,600-word piece in the National Review this week, aptly subtitled “A guide for the perplexed,” is a great place to start. Levin, who is editor of National Affairs and who was a domestic policy adviser in the George W. Bush administration, explains that Republicans have adopted a “dual-reconciliation” legislative strategy for undoing the ACA for reasons of political and legislative expediency. Step one is a reconciliation bill (reconciliation bills need only 50 votes in the Senate to pass, so no Democratic support is needed) that will repeal some key aspects of the ACA early this year. Step two will be a more comprehensive bill later this year that would, in effect, be the “replace” of repeal and replace. These two pieces of legislation may be enacted separately but would go into effect at the same time, so repeal and replace would happen together.
Given the CBO estimates and the political heat Republicans are taking for wiping out the ACA without clearer plans for what might come after, the two-step legislative strategy may be tweaked so that—in the words of Utah Sen. Orrin Hatch—the initial reconciliation bill will also include a significant “down payment” on replacement.
And, Levin argues, there is actually fairly broad Republican agreement about the substance of the replacement part of repeal and replace. The ingredients, he says, include leeway and innovation at the state level for extending insurance coverage (auto-enrollment, for example), federal tax credits for buying health insurance (a replacement for the ACA premium subsidies), and protections against pre-existing exclusions for people who maintain continuous coverage.
Levin and other Republican health care experts are also warning against rocking the ACA boat—and the Americans who have gotten health insurance because of it—too fast and too hard.
Smooth out the transition from the ACA, they say. And that seems to be what Price had in mind when he talked about not pulling out the rug from anybody.
The glide path might mean delaying the elimination of the individual mandate, says Levin. Doing so would seem to alter that CBO scenario of a flood of newly uninsured Americans.
Some envision an even milder transition. In a piece published late last year before the repeal-and-replace news was cresting, James C. Capretta, a former top budget official in the George W. Bush administration and resident fellow at the conservative American Enterprise Institute, said it would help stabilize the insurance market if Republicans were to simply grandfather in any ACA coverage. Under Capretta’s proposal, any American with a policy purchased on the ACA exchanges could keep it—and the premium subsidy that helped make it affordable. Capretta also suggested allowing people with coverage because of Medicaid expansion to stay covered even if the GOP replacement lowers income eligibility levels.