The Republicans and President-elect Donald Trump, at least for the moment, have been unable to come up with a “better, more affordable” alternative as they’ve promised.
That’s why the American Medical Association, the nation’s largest medical group, The American Hospital Association (AHA) and the Federation of American Hospitals (FAH) oppose repeal, as do a growing number of Republican governors.
Allowing insurance companies to sell insurance across state lines, as Trump has proposed, simply doesn’t work.
The report, prepared by the Congressional Budget Office, outlines a doomesday scenario if Congress fails to come up with an adequate replacement for the ACA.
At least, 18 million people would lose insurance coverage right off the bat. Premiums would skyrocket for people buying coverage on their own. The report predicts a 20 percent to 25 percent jump in costs without the ACA.
Once Obamacare’s tax credits and Medicaid expansion expire fully, the CBO says, millions more could lose insurance and premiums would jump again.
In all, 32 million more people would be uninsured and premiums would be twice as high compared with rates if Obamacare stayed on the books.
The new report dramatically increases pressure on Republicans to come up with a better plan, something they’ve been unable to do in more than six years. Congress has voted to repeal the ACA more than 60 times, during that time. President Obama vetoed every effort. Trump is unlikely to do so.
The problem is three fold.
A large number of people are too poor to afford health insurance under any circumstances and place a huge burden on emergency rooms and hospitals, the cost of which are paid by taxpayers.
Hospitals across the country are bracing for a financial apocalypse if Congress repeals the ACA. Hospital groups spelled out the details in a new report. It assumes 20 million people lose health insurance coverage.
The most recent Republican repeal without replacement bill, (H.R. 3762), would slam hospitals with $165.8 billion in losses between 2018 and 2026, according to the report. That’s assuming that Medicaid DSH cuts are restored under the bill, which the groups said is “absolutely essential.”
Hospitals would suffer a loss of $289.5 billion in Medicare inflation updates if the payment reductions in the ACA are not restored. Failing to restore the ACA’s Medicare and Medicaid DSH reductions would amount to $102.9 billion in losses, the study said.
Second, a large number of people, mostly but not all elderly, require more health services, or have “pre-existing” conditions. It’s a fact, most people require the lion’s share of medical attention in the last 15 years of their lives.
Per capita lifetime expenditure is $316,600, a third higher for females ($361,200) than males ($268,700). Two-fifths of this difference owes to women’s longer life expectancy, according to the National Institutes of Health.
Nearly one-third of lifetime expenditures is incurred during middle age, and nearly half during the senior years. For survivors to age 85, more than one-third of their lifetime expenditures will accrue in their remaining years.
Third, young people, who are sick far less often, spend very little on health services and may even forego health insurance until the begin a family. Many of these people are in college for an extended period of time without access to health insurance.
The ACA addresses all three of these groups.
First, it has expanded Medicaid and provides subsidies to low-income families to make insurance affordable. In 2014, alone, the ACA cut uncompensated hospital costs by $7 billion, according to the Department of Health and Human Services. Of significance, the ACA provides preventive health services to this group to head off illnesses before they become serious.
The ACA is helping pre-Medicare older people by preventing insurance companies from denying coverage for “pre-existing” conditions and banning life-time caps on coverage.
This greatly benefits people who are laid off from jobs and lose health care coverage, people who work for companies that don’t provide health insurance and people who are older, but too young for Medicare. They can also receive subsidies depending on their income to make insurance affordable.
Young people have proved to be more problematic. They balk at having to buy insurance, or game the ban on “pre-existing conditions” by waiting to buy insurance only when they get sick, knowing they can’t be turned down.
But insurance companies say it’s imperative to have this group participate because they are the “most profitable.” Thus, the ACA imposes a penalty on anyone who refuses to buy insurance, essentially, to help protect insurance company profits.
To help pay for the ACA, the measure also includes a surtax on high-income households.
The ACA has come under fire, mostly because Congress only passed half the intended measures and Republican governors have undermined the program.
The ACA is set up so health exchanges are administered by states. In return, they get an increase in federal funds to cover costs.
If you live in a state that strongly embraces the program like Maryland, California, New York (not surprisingly, mostly Blue states), it’s working pretty well.
But many Republican governors, mostly in red states, have refused to cooperate with the program for political reasons and have refused to accept federal funds. Most notable is Texas, but there are other red states as well.
If you live in a red state, chances are you are unhappy with the law because policies are far more expensive with high deductibles, and fewer alternatives.
Secondly, because insurance companies had no experience with the ACA they did not know how to price their policies.
This resulted in big premium increases as rates were adjusted to reflect actual health care expenditures. But that’s largely a one-time phenomenon. Overall, premium increases have been shrinking.
Third, Republicans killed two key provisions of the ACA that would have improved competition and lowered costs.
They caved to insurance and drug industry lobbyists. They refused to allow a public option and they refused to allow the government to negotiate lower drug prices for Medicare and Medicaid.
As a result, it’s impossible to foster true competition in the health insurance market. Drug costs in the United States remain the highest in the developed world, including three or four times the cost in nearby Canada.
Republican leaders have been quick to criticize the findings of the CBO report.
“This projection is meaningless, as it takes into account no measures to replace the law nor actions that the incoming administration will take to revitalize the individual market that has been decimated by Obamacare,” said AshLee Strong, spokesperson for House Speaker Paul Ryan (R-Wis.).
Even so, a crisis can’t be avoided if the penalty for not carrying insurance ― known as the individual mandate ― is repealed, without also killing wildly popular provision to ban denying coverage for pre-existing conditions.
Fewer people would sign up for employer coverage and fewer would enroll in Medicaid without the mandate in place in an effort game the system and save money.
Republicans are also targeting tax credits and subsidies that help many afford coverage at reasonable costs, which will drive up premiums as well.
Oddly, as much as they say people want to see Obamacare repealed, Republicans are using a backdoor procedure to kill the measure that would avoid a floor vote in the Senate. But they can only eliminate funding and spending, not the law itself without a full vote.
The only real alternative is to move to a single-payor system, which Trump once favored. At the very least adding a public option would also help. But both are anathema to conservatives.
Hopefully, cooler heads will prevail in Congress and the ACA will be improved, not repealed, especially in light of the new report.