ACA Repeal: What’s Behind Those Dire CBO Numbers

By Susan Rupe

As many as 32 million Americans losing their health coverage. Premiums doubling in less than 10 years.

This week’s Congressional Budget Office report painted a dire picture of what would happen if a Republican bill Congress passed last year to repeal the Affordable Care Act had become a reality. This report was released on the heels of last week’s Senate vote for an ACA repeal resolution and the House vote to begin the repeal process on the health care law.

But what’s really going to happen? Are all those people going to lose their coverage?

Republicans say no because they plan on offering a new replacement. But, the CBO and analysts say yes if an examination goes by the plan that Congress did pass in 2016.

That's the measure Timothy S. Jost, Washington and Lee University law professor and health care expert, said the CBO used.

“The CBO said that if Congress repealed the ACA using the procedure they used two years ago, eventually 32 million people will lose their coverage,” Jost said. “Basically, what (the CBO) said is if you repeal without a replacement, the individual market essentially disappears – and that’s 20 million people. And with Medicaid expansions going away, a lot of people would lose their Medicaid coverage. So that’s kind of the baseline – repeal without a replacement is 32 million without coverage.”

But if a replacement plan would be put in place, the number of uninsured would depend on how the replacement is structured, Jost added. “But I haven’t seen any realistic estimates that would not result in at least some people losing their coverage.”

In testimony this week before a Senate panel, Rep. Tom Price, R-Ga., President-elect Donald Trump’s nominee to head the Department of Health and Human Services, emphasized that "Nobody's interested in pulling the rug out from anybody." Trump himself said over the weekend that he has a plan aimed at what he called “insurance for everyone.”

The CBO’s numbers were based on an ACA repeal without a replacement plan in effect because no replacement was offered in 2016, said Joel Ario, managing director of Manatt Health. Ario previously served as director of the Office of Health Insurance Exchanges at the U.S. Department of Health & Human Services, where he worked closely with states to develop the regulatory framework for the health insurance exchanges.

“We don’t know what we’re looking at as far as replacement. All we know is what would happen with repeal,” Ario said.

What about those who would lose coverage? What would happen to them?

Jost said a repeal without a replacement could lead to a resurgence of lower-cost coverage known as mini-meds – cheap, bare bones, no frills health policies.

“You could cover everyone with a mini-med policy that provided $5,000 in coverage,” he said. “You could get everybody covered in a policy that had a $5,000 deductible and a $10,000 annual limit and didn’t cover anything but hospitalization and physician services. So it really isn’t just a question about how many people you get covered but what the coverage looks like.”

“You can buy short-term policies, indemnity policies, cancer policies – it’s coverage that doesn’t qualify as meeting the requirement of the individual mandate so there’s not as big a market for it as there used to be. And you still would have to pay the penalty for not having coverage. But it’s out there and I imagine if they repeal the individual mandate, the market for that stuff would explode.

“The other thing is that you could probably cover 80 percent of the population fairly inexpensively if you excluded the 20 percent who are very sick. We all know that 5 percent of the population accounts for 50 percent of the health care costs. So if you exclude the top 5 or 10 percent – which is what the health insurers used to do in the individual market - you can get everyone else covered fairly cheaply.”

Jost said he believes any replacement plan that has been proposed so far will result in fewer people being covered and with less generous coverage.

What Would Replace Look Like?

The Republicans in Congress have been saying it will take some time to figure out a replacement, Ario said. “They’ve been talking about a series of bills. Now they’re talking about potentially doing repeal and replace together. Trump said he wants repeal and replace to happen simultaneously or close together. So there’s the notion that replacement should come very close to repeal if not at the same time.”

But one of the fundamental issues regarding replacement – how the new tax credits should be constructed – has not been agreed upon by Congress, Ario noted. “Some bills say the tax credits should be available to anyone without regard to income on the individual side. That would mean that they would be smaller credits.”

It’s also likely that a replacement plan would involve what Ario described as a “skinnying down” of benefits. “This would mean allowing for the sale of policies that have fewer benefits in them. For some people that might be OK if they don’t need to use a lot of services but for others it might not be that attractive to buy a policy that doesn’t cover what they need.”

Repeal and delay could take time

Any decision to repeal the Affordable Care Act would not mean an immediate end to the law.

“What’s probably going to happen is that the Republicans will proceed with some kind of repeal and delay strategy where they will claim to have repealed the ACA but they will try to keep enough of it alive so that the insurance markets don’t collapse,” Jost predicted. “And they will have to take some steps to stabilize the market so that it doesn’t collapse. Continuing the cost sharing reduction payments and the reinsurance payments for 2016 would be steps to rebuild confidence in the market. And then we’ll see what they come up with. There’s a fairly common set of proposals out there – offer some kind of tax credits, no exclusions for pre-existing conditions, establishing high risk pools – but getting rid of the individual and employer mandates, probably moving Medicaid to a block grant. So we’ll just see.”

Ario noted that the 2016 repeal effort set forth a two-year delay on implementing that repeal, giving Congress time to come up with a replacement.

“If they are going to have a delay this time, they can’t wait until the end of the delay period to enact a bill because it will take some time to implement the replacement,” he said. “Remember that under the current bill, it was passed in March 2010 and wasn’t ready to implement until the fall of 2013.

“The health laws are very complicated and if you pull on one string it tends to unravel the whole bundle if you haven’t thought through all the consequences.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].