If there weren’t so much at stake, one would be amused at the spectacle of Republican politicians writhing as they try to make good on their ideological promise to “repeal and replace” Obamacare without ruining the lives of millions of their own constituents.
In the few short weeks since the GOP added control of the White House to its existing control of both houses of Congress, the GOP has been grappling with the recognition that taking potshots at the Affordable Care Act and weakening its consumer protection provisions is no longer just a parlor game, but actions that could have genuine consequences.
Not only are they conceding that conjuring up a replacement for the ACA will take much longer than they promised — years, even — but they’re also talking about reinstating provisions of the law that they undermined during their six-year campaign to hobble it. They’re forced to acknowledge that America’s pre-ACA system of health insurance for individuals was so awful that they can’t justify returning to it.
Many proposals the GOP has offered as replacements end up looking very much like Obamacare, though with more costs shifted to consumers. A repeal bill passed by the Republican House in February would have eliminated the mandate that all individuals have coverage, the subsidies that made it affordable, and $346 billion in taxes (over 10 years) that funded Obamacare but hit wealthy taxpayers. This would certainly have destroyed the ACA, but it was easy for the GOP to pass, because it was 100% certain to be vetoed by President Obama. Such symbolic votes can’t be taken any more.
Let’s examine some aspects of the new reality.
1. There aren’t actually many alternatives to the ACA mandates. The one ACA provision that shows up in every GOP proposal calls for protection of customers with pre-existing medical conditions. This was a prime category of insurer abuse before the ACA: Individuals with injury or illness in their histories were routinely denied coverage, or offered plans with stratospheric premiums or that excluded their condition. Insurers routinely investigated customers who fell sick, looking for undisclosed past conditions that justified rescinding the policies just when they were needed.
What Republicans have discovered is that retaining the ban on exclusion for pre-existing conditions means retaining other provisions that they’ve campaigned against. The only way to require insurers to cover all applicants regardless of health status is to force everybody into the pool, healthy or sick, young or old. The ACA did so via the individual mandate, which imposed a tax or fee on individuals without coverage.
The mandate is immensely unpopular, but necessary medicine often is. GOP alternative plans use a different means to achieve the same end: “continuous coverage,” meaning that pre-existing conditions must be covered without premium increases if the consumer has maintained insurance without a significant lapse. Some healthcare wonks, including Andrew Sprung of Xpostfactoid, argue that there isn’t enough difference in these two coercive methods for ACA supporters to draw a line in the sand over, but that’s questionable. By its nature, a continuous coverage rule is less flexible than the individual mandate. It overlooks the fact that the main reason for coverage lapses is that customers don’t have the money for insurance. That makes adequate subsidies for the purchase of insurance even more important — but the GOP plans typically cut back on subsidies, as Sprung himself has reported: He calculates that the repeal-and-replace proposal from Rep. Tom Price (R-Ga.), who Donald Trump has nominated as secretary of Health and Human Services, would cut the subsidy effectively in half.
2. Repeal-and-delay will drive insurers out of the system, raising prices. Some Republicans are hoping to finesse their dilemma by repealing as much of the ACA as they can without inspiring a Democratic filibuster in the Senate, but deferring its effectiveness for several years. The idea is to make good on their campaign promise, but give themselves time to craft a workable solution.
“We’re talking about a three-year transition now that we actually have a president who’s likely to sign the repeal into the law,” Senate Majority Whip John Cornyn (R-Texas) told Politico. “People are being understandably cautious, to make sure nobody’s dropped through the cracks.”
The problem with this is that it injects uncertainty into the survival of the individual insurance marketplaces. Insurance companies hate that. Big insurers who have stayed in the market say they’ve done so because they’re confident that the insurance pool will eventually stabilize, so that the risk profile of the customer pool and therefore the proper level of premiums will become more predictable and therefore profitable.
Putting off replacement for three years or even more eliminates that certainty. There will be little reason for the remaining insurers not to follow such big firms as Aetna and UnitedHealth out of the exchanges. That means less competition and higher prices. If the GOP really wanted to subject the exchanges to a “death spiral” of ever-rising premiums and therefore an ever-sicker customer base, this is the way to do it.
Consequently, congressional Republicans are talking with the insurance lobby about ways to moderate the risk, according to The Hill. That brings us to the next point.