Repeal of ACA without adequate replacement will drive severe disruptions beyond insurance
Iseems that any post-election discussion of healthcare in the U.S. inevitably leads to the certainty that t President Donald Trump will ask Congress to quickly repeal and replace the Affordable Care Act, better known as Obamacare. Some in Congress have suggested repealing first and then passing a replacement bill at a future date.
More than 22 million Americans, including hundreds of thousands in our home state of New York, could lose their health insurance if Obamacare is repealed without an appropriate replacement plan. Repealing without a simultaneous replacement plan will also cause severe market disruptions, because what insurance company will want to stay in a program that has been repealed?
But the consequences of repealing the ACA extend far beyond the individual insurance market. Repeal could also have enormous implications for state budgets and hospital payments. Jeopardizing any one of these important things is troublesome enough, but harming all three simultaneously would severely strain the nation’s healthcare delivery system.
For states like New York that expanded Medicaid coverage (as other states red and blue alike have done), the ACA provides enhanced federal Medicaid matching rates for adults with incomes up to 138% of the federal poverty level. The Urban Institute estimates that if New York reverted to pre-ACA Medicaid eligibility levels, its Medicaid spending would increase by nearly $2 billion in 2021. That amount would spike even higher if New York chose, post-repeal, to keep its ACA expansion population covered.
Losing billions in federal healthcare funding will require hard decisions. If New York and other states make the benevolent but financially challenging choice to keep individuals covered, they may be forced to raise taxes or cut healthcare provider rates to pay for it.
Then there’s the hospital community. The American Hospital Association estimates that stripping more than 22 million people of their health insurance would reduce hospitals’ net income by $165.8 billion over 10 years—a staggering sum by any measure. And hospitals are already a leaking ship heading into a stormy sea. In New York alone, some 30 hospitals are so financially distressed that they’re on a state “watch list” and in danger of closing. And many more incur significant losses every year. Repeal will only make it worse.
While various repeal plans eliminate the ACA contributions paid by medical-device makers and insurance companies, they do not repeal the ACA’s many Medicare cuts to hospitals meant to help fund the coverage expansions, including multiple “pay for performance” penalties that disproportionately affect teaching and safety net hospitals.
By measuring the impact of repeal not just on individuals, but also on state budgets and hospital payments, we see how truly vexing any repeal attempt will be, and that unintended consequences lurk around every corner.
The ACA is an extremely complex law with myriad interconnected parts. Repealing it is akin to dismantling a large piece of heavy machinery with dozens of individual parts. Unless you label each individual part, understand each part’s function, and know exactly where each part goes when you put everything back, the re-assembled machine won’t function properly.
There is no question that Obamacare has its flaws, and that longterm improvements should be explored in a thoughtful, bipartisan fashion. But we urge the Trump administration and Congress to not let the perfect be the enemy of the good—and the ACA has plenty of good in it.
Dismantling the ACA without a replacement that guarantees coverage for all Americans who currently have it would be an enormous step backwards. And unless the stated intention of “repeal and replace” is to severely weaken the nation’s entire healthcare delivery infrastructure, a dismantling that also harms state budgets and worsens hospital payments would be catastrophic.
Dr. Kenneth Davis, left, is president and CEO of Mount Sinai Health System in New York City. Kenneth Raske is president and CEO of the Greater New York Hospital Association.