Two studies last week provided some numbers to what will happen if Congress repeals the Affordable Care Act without a replacement. According to an analysis by the Urban Institute, if Congress repeals the ACA through the congressional reconciliation process without a replacement plan, at least 29 million people will lose their health insurance coverage. That means that non-elderly people without health insurance will rise from 11 percent to 21 percent. The study examined what would happen if the Congress uses the reconciliation process with the limits it places on legislating. Congress could repeal the tax credits through the insurance exchanges, repeal Medicaid expansion, perhaps repeal the individual mandate as well as some other significant parts of the law.
A second study earlier in the week from the Kaiser Family Foundation provided new information that showed that nearly 9.4 million Americans received close to $33 billion in tax credits that reduce their health insurance premiums. The ACA offsets all or part of health insurance premiums for individuals up to 400 percent of federal poverty level based on a sliding scale. In addition, individuals, up to 133 percent of poverty are covered by Medicaid (if you live in one of 31 states that took the Medicaid option).
The Kaiser Foundation estimated the total amount of tax credits received in each state for 2016, based on the average credit per person and the number of ACA marketplace enrollees receiving credits this year. The five states with the highest premium tax credits at risk of loss if the law is repealed are Alaska, Wyoming, North Carolina, West Virginia and Louisiana. The average monthly subsidies ranging between $362 and $750. Enrollees in these states could lose more than $3.5 million in tax credits with an outright repeal. The states of Florida, California and Texas have the highest volume of enrollees at risk with 3.5 million, receiving nearly $13 million in subsidies. A map by the Foundation allows people to make comparisons by state.
While the think tank and foundation were releasing their numbers the American Hospital Association and the Federation of American Hospitals (FAH) released a study and held a press conference last Tuesday saying that repealing the ACA could cost hospitals $165 billion by the middle of the next decade and trigger “an unprecedented public health crisis.” They released their findings to Congress through a letter and a study by consultants.
Another letter to leadership by the American Academy of Actuaries (AAA) also warned Congress about repealing the individual mandate without a replacement, “Even if the effective date of a repeal is delayed, the threat of a deterioration of the risk pool could lead additional insurers to reconsider their participation in the individual market. Eliminating reimbursements to insurers for cost-sharing reduction (CSR) subsidies could result in insurer losses and solvency challenges, leading insurers to further consider withdrawing from the market.”
The Urban Institute study also discussed the impact on state and local governments and hospitals. Because of the larger number of uninsured, financial pressures on state and local governments and health care providers (hospitals, physicians, pharmaceutical manufacturers, etc.) would increase dramatically. This financial pressure would result from the newly uninsured seeking an additional $1.1 trillion in uncompensated care between 2019 and 2028.
While, Urban, Kaiser, the actuaries and the hospitals released their findings, Heritage Action was providing information on how a repeal could be carried or should be carried out. A memo by the Heritage Foundation affiliate outlined three ways in which the ACA could be repealed by Congress. The proposed approaches did not broach new information or strategies except that they outlined their most desirable outcome as it included not just the repeal of coverage but also all the insurance requirements for companies. Some Republicans, including the President-Elect have said they wish to keep the most popular feature, although that could be a challenge without parts of the ACA that make insurance mandates possible and effective.
Some of the insurance mandates include for example, insurance companies cannot deny coverage because someone has a health condition (i.e. heart disease, diabetes, etc.), insurance companies must assure at least 80 percent of premiums are returned in benefits (loss ratio) and standardized benefits for comparison so that when buying a policy, you are comparing policies that provide the same minimum coverages (platinum, gold, silver, etc.).
Keeping the requirement that insurance companies not deny coverage to anyone with a pre-existing health condition would be difficult without a mandate that people buy health insurance. Without such a mandate, the insurance pool likely will not include the healthy population that makes the pool larger and less costly. A simple mandate would simply result in insurance companies providing coverage that has an unaffordable costly premium.
One strategy by Republican leaders still being discussed is to have a symbolic repeal in early January 2017 but to delay the actual repeal while they think up a new plan. The Urban Institute, perhaps in thinking of such a “repeal and delay” strategy said, “…insurers are unlikely to participate in Marketplaces in 2018—even with tax credits and cost-sharing reductions still in place—if the individual mandate is not enforced starting in 2017. A precipitous drop in insurer participation is even more likely if the cost-sharing assistance is discontinued (as related to the House v. Burwell case) or if some additional financial support to the insurers to offset their increased risk is not provided.”
The fear is that Congress can say we will leave the law in the next years but such an approach would chill either consumer or insurance industry participation.
The Heritage memo is somewhat ironic since the original idea of mandating individuals to buy insurance (instead of companies being mandated to provide it) was a concept by the Heritage Foundation. It was later crafted into a Republican alternative to the Clinton health plan in 1993-94. A bill was introduced by Senator John Chaffee (R-RI) and cosponsored by Republican Minority Leader Robert Dole (R-KS).