What comes after Obamacare?
Over the next few months Republicans are expected to repeal President Barack Obama’s signature legislation, the Affordable Care Act (ACA). How this plays out is unknown because there are two pathways by which the law can be repealed. First, the law can be repealed or significantly changed by the passage of a bill that the new president can sign into law. Second, it can be significantly changed through the budget reconciliation process, which requires a simple majority vote in the Senate and prohibits a filibuster. Further complicating matters is that we don’t know what exactly the Republicans will propose as a replacement, so the timing of the repeal may be tied to the introduction of a new reform bill.
Regarding the first option, Senate Democrats will filibuster any bill that would repeal the ACA. The Republicans will have to find enough votes from Democratic senators to break the filibuster, and that is unlikely. The second option is more arcane to the general public and requires only a simple majority vote in both houses. This action would repeal those parts of the ACA that are linked to the federal budget. The House Republicans have tried to repeal the ACA more than 60 times, and the Senate only once — and that was under the budget reconciliation process. If the Senate’s version of the bill that passed last year is the model going forward, one can expect premium subsidies to end as well as halting expansion of Medicaid programs to cover the previously uninsured.
Complicating the issue still further is the fact that the ACA changed Medicare by reducing reimbursements to health care providers and hospitals over time, closing and eventually eliminating the coverage gap under the Medicare Part D prescription drug program and initiating programs to eliminate Medicare fraud and abuse. In effect, the ACA’s modification of Medicare added years of fiscal stability to the law. It is important to remember that the ACA is fundamentally a tax- and deficit-reduction law, and any significant tinkering of the law via the budget reconciliation process has potentially profound untoward externalities in corporate and personal tax liability.
It would be helpful to know more exactly what President-elect Donald Trump’s actual positions are on what would replace the ACA. From what little is known, he would embrace a market-based solution including removing barriers to interstate marketing of health plans, increasing reliance on health savings accounts that would accrue from one year to the next, and removing federal oversight of the Medicaid program by awarding block grants to the states to run whatever programs they elect to offer. His initial comments post-election might signal a willingness to keep seminal provisions of the act such as prohibiting discrimination on the basis of pre-existing medical conditions and allowing the continuation of coverage of adult children under their parents’ health plans to age 26. It is less clear what his positions toward Medicare are — it would appear that he wants to protect entitlements, and that position puts him into direct conflict with House Speaker Paul Ryan, who favors cutbacks to Medicare and Social Security that include even privatization.
The bottom line is the ACA extended coverage to about 20 million people who were previously uninsured. Eliminating their coverage will require a transition period, and the effect will be felt hardest by those receiving premium subsidies. It will also have a major impact on health care institutions and medical providers that have changed their business models to account for the ACA. For states like Maryland that expanded Medicaid to reduce the numbers of uninsured citizens, the impact on the state budget may be severe depending on how the governor and legislature react to decreased federal funding and its negative financial impact on hospitals, clinics and other medical care providers.
As of last year, the Department of Health and Human Services reported that the percentage of Maryland residents who are uninsured dropped from 12.9 percent to 7.8 percent and that the state has received almost $200 million in funds related to the ACA’s implementation. These figures alone show the financial impact of changing or repealing and replacing the current law. It is time for campaign slogans to be retired and serious discussions to begin on the future of health reform in the U.S.