Congressional Republicans, led by House Speaker Paul Ryan, are about to walk into their own Obamacare propeller. As we’ve discussed for several months now, the Trump administration and the Republicans continue to quietly and desperately formulate a way to repeal and replace the increasingly popular Affordable Care Act (otherwise known as “Obamacare”), even though there’s no way to do it without stripping away health care from millions of Americans.
Further scrambling the GOP’s repeal mission is the reality that many individual sections of the law are inextricably linked to other sections. For example, Republicans are determined to repeal the least popular aspect of the law: the individual mandate. But the mandate happens to be linked to the law’s most popular section: covering patients with pre-existing conditions. The insurance lobby accepted the latter solely because of the former — the mandate that forces everyone to buy insurance during annual open enrollment windows. Insurers have rightfully noted that repealing the mandate allows customers to buy insurance only when they’re sick or injured and then drop coverage when they’ve recovered, thus scamming the system.
Nevertheless, the Republicans have unveiled their new plan for replacing Obamacare, and it’s just about what we’ve expected. Simply put, poor people will be screwed and millions will lose their insurance coverage. Here’s how it’ll go down.
Obamacare is, in fact, two separate laws: the Patient Protection and Affordable Care Act as well as the Health Care and Education Reconciliation Act. The second act is the key to the Republican plan. Since it pertains specifically to budgetary concerns, it was passed using reconciliation — requiring merely a 51-vote Senate majority rather than a filibuster-proof supermajority, which was how the ACA was passed. The Republican plan is to repeal the Health Care and Education Reconciliation Act while leaving the ACA intact. Sounds like good news, right? Wrong.
The Health Care and Education Reconciliation Act contains all of the budget-related measures linked to the ACA, including the individual mandate tax penalties, the expansion of Medicaid, the federal subsidies for lower-income Americans, the closure of the Medicare Part D “doughnut hole,” a Medicare tax increase on Americans earning more than $250,000 and so on.
The landscape becomes more complicated when we discover that the Student Aid and Fiscal Responsibility Act was also attached to the Health Care and Education Reconciliation Act as a rider. This third piece of the ACA puzzle encompasses major student-loan reforms, including the expansion of Pell grants as well as the implementation of President Barack Obama’s plan for eliminating private banks from the federal student aid program, effectively reducing student loan debt while also cutting the deficit by billions.
If the Republicans repeal rather than amend the Health Care and Education Reconciliation Act via reconciliation, all those provisions will effectively be killed. The Medicare Part D doughnut hole will reopen, forcing seniors to pay for prescriptions out-of-pocket or to go without. Student loan reforms will disappear, magnifying student loan debt. The subsidies for insurance premiums will disappear too, as will full reimbursements to doctors for Medicare patients.
The Republicans will replace the repealed Health Care and Education Reconciliation Act with the following:
1. The white paper released last week indicates that, yes, the Medicaid expansion will be repealed. That means more than an estimated 9 million newly insured lower-income Americans will lose their health care.
2. Making matters worse for poor people, regardless of whether they’re in the Medicaid expansion group or their income is below the original poverty line, federal funding for Medicaid will disappear and be replaced with “block grants,” letting governors and state legislators use the cash for anything they want. Maybe they’ll spend it on Medicaid, or maybe they won’t.
3. Subsidies will shift from being based on income (which makes sense) to age. This makes sense when it comes to older, sicker Americans. But if you’re young and you’re poor, your subsidy will be much lower than when it was based on financial means. But if you’re wealthier and older, you will make out like a bandit.
4. The GOP plan expands the use of health savings accounts. That's great, if you have the extra cash on top of your other bills and premiums to sock it away for deductibles and the like. Oh, and they’ll be tied to the stock market. What could possibly go wrong? That aside, health savings accounts work out nicely if you’re rich and you’re seeking to reduce your tax burden. The rest of us don’t get to play.
5. Individual mandate penalties will vanish, leaving a massive unanswered question: What will happen to people with pre-existing conditions? If insurers are still required to cover people with pre-existing conditions, as compelled by the ACA side of the law, chaos will certainly ensue.
The GOP plan calls for shoddy “high-risk pools” that have proved to be ineffectual. In the past, "catastrophic" plans were actively marketed to risky customers. The deductibles were enormous, making it almost useless to pay for coverage. Even with such coverage, an insured person was likely to pile up massive medical debts anyway; patients were forced to cover punitive out of pocket expenses before any insurance coverage kicked in.
The good news is that the Obamacare marketplaces and the Healthcare.gov site will continue to exist, at least for now. All of the pro-consumer regulations included within the ACA will continue as well. But we still don’t know whether the Republicans and the Trump White House will target the ACA regulations, too, attaching various amendments to other bills that will gradually kill off the ACA by a thousand cuts.
Needless to say, the entire landscape could change when the legislative process begins, factoring into the mix Trump’s berserker style as well as an increasingly anxious health care lobby and thousands of angry pro-Obamacare protesters, disrupting the repeal wherever and whenever they can. Stay tuned — and get ready for a brawl.