Obamacare Repeal without Replacement Will Lead to More Government Control

It’s a terrible idea, but some will push for it anyway.

It cannot be ruled out entirely that Donald Trump will be elected president on November 8. It is therefore only prudent to begin thinking about what might happen if that actually were to occur.

One thing that is fairly certain is that, on November 9, we’d hear loud calls from some quarters for the incoming administration and Congress to move quickly in 2017 on a “clean” repeal of the Affordable Care Act — a.k.a. Obamacare. What people mean by “clean” is that the bill would go as far as possible (within legislative constraints) to repeal the ACA without being encumbered politically by new provisions to replace it.

A dry run of sorts for repeal without replace occurred late last year and earlier this year. GOP leaders in Congress sent to the president a budget reconciliation bill with numerous, discrete ACA repeal/modification provisions. President Obama vetoed the bill in January, and the House failed to override his veto in early February.

Proponents of repeal without replace will argue that, if Trump wins, a Republican Congress should pass the same legislation again in early 2017, which Trump would presumably sign rather than veto. Trump has never confirmed that he would sign such a bill, but he hasn’t said he wouldn’t, either. Given his rhetoric about Obamacare, which has been harsh, it’s probably a safer bet to assume he would sign it than not. But his views on health-care policy are incoherent, uninformed, and subject to change at any time. So anything would be possible.

Regardless of Trump’s inclinations, however, it would be a terrible idea — for substantive and political reasons — for Republicans in Congress to pursue repeal without replace in 2017.

One reason it would be a bad idea is that the legislation Congress sent to the president earlier this year wasn’t really a full repeal bill anyway. It eliminated the ACA’s individual and employer mandates by reducing the penalties for noncompliance to zero, and it repealed numerous, discrete tax and spending increases in the ACA. It also terminated the ACA’s massive Medicaid expansion and subsidies for insurance purchased on the exchanges — but only after 2017.

That was telling. Many Republicans in Congress wanted to say they were repealing the ACA, but they didn’t want to be held responsible for pushing out of coverage people who had become insured because of the new law. The two-year delay in repealing the ACA’s Medicaid expansion and insurance subsidies allowed GOP leaders to claim they weren’t increasing the ranks of the uninsured, given that they planned to pass a replacement plan, with an alternative coverage expansion, before the end of 2017.

The GOP passed its modified repeal bill under the rules of budget reconciliation. The budget reconciliation process provides for expedited consideration of legislation in Congress. This is particularly important in the Senate, where legislation often requires the support of 60 senators to overcome a filibuster. Using the reconciliation process allowed the GOP majority to pass its modified ACA repeal bill without any votes from Democratic senators.

But the use of reconciliation also constrained what lawmakers could put into the bill. In general, budget reconciliation bills are not supposed to include provisions that are mainly regulatory in nature. The GOP’s repeal bill, therefore, did not eliminate the ACA’s extensive regulations of the insurance industry, such as the prohibition against the use of health status in setting premiums or coverage.

It would be far better for the GOP to roll back the ACA while simultaneously securing provisions that move the health system in a more pro-market direction.

The repeal bill’s effective elimination of the individual mandate, coupled with retention of the ACA’s insurance regulations, would lead to a full collapse of the individual-insurance market. The Congressional Budget Office (CBO) estimated that the GOP’s repeal legislation would increase the number of uninsured Americans by at least 22 million people when the Medicaid expansion and insurance subsidies were terminated, but the agency also said the number of uninsured Americans would probably be even higher than that because the insurance market would quickly become dysfunctional. In other words, it would be difficult for anyone to get insurance outside of the employer setting.

If the GOP were to pass this kind of repeal bill, and if a President Trump were to sign it, the debate would quickly turn to what the GOP would do to pick up the pieces. Without a clear replacement plan, the most likely scenario is that the Republicans in Congress would procrastinate, feud among themselves, and then, to prevent a political firestorm, capitulate, at least temporarily, to Democratic demands for reinstatement of the ACA’s Medicaid expansion, insurance subsidies, and individual mandate.

It would be far better for the GOP to roll back the ACA while simultaneously securing provisions that move the health system in a more pro-market direction. For one thing, tying a repeal plan to a replacement is the only way to ensure that Republicans will finally make the difficult decisions necessary to come up with a credible and workable reform plan of their own. It is also possible that that much of this agenda could be included in a well-drafted reconciliation bill because the GOP’s plan to replace key features of the ACA would include many provisions with consequential budgetary effects.

#share#Some Republicans complain that it is impossible to compete with Democrats on extending government subsidies for health insurance and thus also on levels of insurance enrollment, and therefore it is foolish for the GOP to even try. But this is exactly the kind of thinking that brought about the ACA in the first place. Republicans had multiple opportunities over 25 years to put in place a market-based approach to broadening insurance coverage and bringing cost discipline to the health sector, and they failed to do it, mainly out of an aversion to political risk. Without effective reforms, the health-insurance market performed very poorly. More and more Americans found it hard to get affordable coverage because they lacked access to an employer plan or because they’d had a previous health episode that had marked them as a “high risk.” Further, costs rose quickly because of ill-advised government policy and misaligned incentives. These problems festered for years and provided an opening for Democrats to pursue their government-centric vision for reform when they had the chance to do so. This opening came when Barack Obama entered the White House in 2009 and Democrats enjoyed historically large governing majorities in the House and Senate.

RELATED: Obamacare Stumbles On

Most Americans are clearly unhappy with the ACA, but they were also unhappy with the pre-ACA status quo. Like it or not, health insurance is a necessary protection for most Americans (except for those with very high levels of accumulated wealth). That’s because treatment for many cancers and other conditions can run into the hundreds of thousands of dollars. It is not possible for most households to pay for these bills without insurance. So conservatives need to present a plan to voters that demonstrates that everyone in the United States who wants coverage can get it, and we can achieve this without shifting all power and control over the health sector to the federal government.

Most Americans are clearly unhappy with the ACA, but they were also unhappy with the pre-ACA status quo.

Fortunately, the hard work of developing such a plan has already been done. Led by Speaker Paul Ryan, GOP leaders in the House have laid out the general framework of what they would do if given the chance. They released this plan, called “A Better Way,” in June, well after the House had failed to override the president’s veto of the partial-repeal bill. Now that the House leaders have already signaled that this is the kind of plan they would support, it would make little sense for them to put it on the shelf and ignore it if Trump were to win the White House in November. Rather, that would be the moment to move as aggressively as possible to enact as much of their health-reform agenda as they can.

The “Better Way” plan is a very sound starting point. It would move away from the ACA’s rigid governmental regulations and high costs toward a flexible, consumer-driven marketplace. The GOP leaders also proposed extensive and far-reaching reforms of the Medicare and Medicaid programs — reforms that would reduce federal spending and bring much-needed discipline to the broader health system.

This is an agenda that has been decades in the making. If the GOP were to abandon this plan in 2017 and simply pass a repeal-only bill, it would be the biggest missed opportunity by the Republicans in many years — which is saying something.

The Center on Health and Economy has released an analysis of the House GOP plan and found that it would reduce the federal budget deficit by $481 billion over ten years, cut taxes by more than $200 billion over the same period, and increase the number of uninsured Americans by only 4 million compared with the number of uninsured under ACA. The proposal provides an affordable route for every American to secure health insurance if they want it, so the estimated increase in those without insurance would be attributable entirely to people who, for whatever reason, decide to go without coverage.

At this point, it’s not at all clear what kind of replacement plan Donald Trump would support if he were elected president, but it doesn’t matter, because House GOP leaders have already laid out a plan that makes sense. It is highly unlikely that the Trump campaign, or a Trump administration for that matter, would do better.

#related#The ACA has reached a level of instability that will create a legitimate political opening for taking up new legislation if Republicans are in a position to do so next year. Premiums for the insurance products sold on the ACA’s exchanges will go up dramatically in 2017, even as many insurers leave the market because they have lost so much money since 2014. Enrollment in exchange-based insurance plans is concentrated among very-low-income households who qualify for large federal subsidies and those with expensive health conditions. This is too few people to create a stable insurance market.

So there will be an opportunity in 2017 to reform health care consistent with market principles. Pursuing this kind of legislation would be controversial. As usual, some conservatives will advise against embracing any reform because of the political risk. Lawmkaers should ignore this advice. If GOP leaders pass up the chance to pursue a market-based approach to health reform when given the chance, they will have no one to blame but themselves as U.S. health care slides inexorably toward full governmental control in coming years.