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Assume Obamacare Is Repealed. What Then?

| December 27, 2016

paul ryan obamacare

Paul Ryan gets to try it his way. But with what money? (DonkeyHotey)

Leading Republicans have vowed that even if they repeal most of the Affordable Care Act early in 2017, a replacement will not hurt those currently receiving benefits.


Republicans will seek to ensure that “no one is worse off,” said House Speaker Paul Ryan, R-Wis., in an interview with a Wisconsin newspaper earlier this month. “The purpose here is to bring relief to people who are suffering from Obamacare so that they can get something better.”

But that may be difficult for one big reason — Republicans have also pledged to repeal the taxes that Democrats used to pay for their health law. Without that funding, Republicans will have far less money to spend on whatever they opt for as a replacement.

“It will be hard to have comparable coverage if they start with less money,” Gail Wilensky, a health economist who ran the Medicare and Medicaid programs under President George H.W. Bush, said in an interview.

“Repealing all the ACA’s taxes as part of repeal and delay only makes a true replacement harder,” wrote Loren Adler and Paul Ginsburg of the Brookings Institution in a white paper out this week. It “would make it much more difficult to achieve a sustainable replacement plan that provides meaningful coverage without increasing deficits.”

The health law’s subsidies to individuals buying insurance and the Medicaid expansion are funded by two big pots of money.

The first is a series of taxes, including levies on individuals with incomes greater than $200,000, health insurers, makers of medical devices, brand-name drugmakers, people who use tanning salons, and employer plans that are so generous they trigger the much-maligned “Cadillac Tax.” Some of those measures have not yet taken effect.

However, the Congressional Budget Office estimated in early 2016 that repealing those provisions would reduce taxes by an estimated $1 trillion over the decade from 2016-2025.

The other big pot of money that funds the benefits in the health law comes from reductions in federal spending for Medicare (and to a lesser extent, Medicaid). Those include trims in the scheduled payments to hospitals, insurance companies and other health care providers, as well as increased premiums for higher-income Medicare beneficiaries.

CBO estimated in 2015 that cancelling the cuts would boost federal spending by $879 billion from 2016 to 2025.

The GOP, in the partial repeal bill that passed in January and was vetoed by President Barack Obama, proposed to cancel the tax increases in the health law, as well as the health premium subsidies and Medicaid expansion. But it would have kept the Medicare and Medicaid payment reductions. Because the benefits that would be repealed cost more than the revenue being lost through the repeal of the taxes, the result would have been net savings to the federal government — to the tune of about $317.5 billion over 10 years, said CBO.

But those savings — even if Republicans could find a way to apply them to a new bill — would not be enough to fund the broad expansion of coverage offered under the ACA.

If Republicans follow that playbook again, their plans for replacement could be hampered because they will still lose access to tax revenues. That means they cannot fund equivalent benefits unless they find some other source of revenue.

Some analysts fear those dollars may come from still more cuts to Medicare and Medicaid.

“Medicare and Medicaid face fundamental threats, perhaps the most since they were established in the 1960s,” said Edwin Park of the liberal Center on Budget and Policy Priorities, in a webinar last week.

Republicans in the House, however, have identified one other potential source of funding. “Our plan caps the open-ended tax break on employer-based premiums,” said their proposal, called “A Better Way.”

House Republicans say that would be preferable to the Cadillac Tax in the ACA, which is scheduled to go into effect in 2020 and taxes only the most generous plans.

But health policy analysts say ending the employer tax break could be even more controversial.

Capping the amount of health benefits that workers can accept tax-free “would reduce incentives for employers to continue to offer coverage,” said Georgetown University’s Sabrina Corlette.

James Klein, president of the American Benefits Council, which represents large employers, said they would look on such a proposal as potentially more damaging to the future of employer-provided insurance than the Cadillac Tax, which his group has lobbied hard against.

“This is not a time one wants to disrupt the employer marketplace,” said Klein in an interview. “It seems perplexing to think that if the ACA is going to be repealed, either in large part or altogether, it would be succeeded by a proposal imposing a tax on people who get health coverage from their employer.”

Wilensky said that as an economist, getting rid of the tax exclusion for employer-provided health insurance would put her “and all the other economists in seventh heaven.” Economists have argued for years that having the tax code favor benefits over cash wages encourages overly generous insurance and overuse of health services.

But at the same time, she added, “I am painfully aware of how unpopular my most favored change would be.”

Republicans will have one other option if and when they try to replace the ACA’s benefits — not paying for them at all, thus adding to the federal deficit.

While that sounds unlikely for a party dedicated to fiscal responsibility, it wouldn’t be unprecedented. In 2003 the huge Medicare prescription drug law was passed by a Republican Congress — with no specified funding to pay for the benefits.

–Julie Rovner, Kaiser Health News

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22 Responses for “Assume Obamacare Is Repealed. What Then?”

  1. South Florida says:

    Any health insurance cheaper than Obama insurance.

  2. Duncan says:

    I think you mean some other health insurance plans are cheaper than plans that meet the standards established by Obamacare. Of course they are, they most likely don’t offer as much. My previous health plan was 1/3 of what my Obamacare plan costs. However, if I was so unfortunate to get cancer, my previous plan would have stop paying when costs exceeded a certain amount. Preexisting condition coverage; no way with my old plan. I could not even find coverage for my Son who has Autism before Obamacare.

    Just pointing out two main differences that make it worth the extra money for me. I like the idea that plans need to conform to a set of standards that benefit the majority. It’s so much easier to know what you are paying for now with Obamacare.

    I think Obamacare is expensive, definitely needs tweaking and does need to offer more lower cost options. It should also be required that Health Insurance Companies that profit off of Medicare and Medicaid not be allowed to simply not participate in Obamacare while still grabbing profits from Medicare and Medicaid. To totally repeal Obamacare without a replacement is just a political sound bite.

  3. Pogo says:

    “…Health Insurance Companies that profit off of Medicare and Medicaid not be allowed to simply not participate in Obamacare while still grabbing profits from Medicare and Medicaid…”

    Single best comment I’ve ever read on this site. One of the best comments on the ACA on any site.

    The Republicans are alone on the back of a starving, sick tiger. They deserve everything they get.

  4. Lin says:

    Lots of info here.

    I can’t understand why it is ok to rob from Medicare to help fund Ocare. Medicare premiums went up also. The numbers never added up. If we need to reform healthcare programs fine — but acknowledge the intent to take from some to subsidize others. And the some that are taken from cannot always afford it.

  5. Katie Semore says:

    Duncan, how dare you talk reasonableness about something good created by the left!

  6. The Ghost of America says:

    I can’t wait for obamacare to be wiped out, social security to be slapped down, and medicare and medicaid to get the axe. It’ll be even better if they repeal the minimum wage.

  7. Ben Hogarth says:

    Try informing the Republican voters about how the Obamacare amendment which requires all Americans to have health insurance or pay a penalty was actually a Republican amendment will make them go crazy…

    Believe me! I have silenced a many critics with that fact.

    The single amendment in the whole of Obamacare that spurred outrage and condemnation for the entire bill passing was actually a Republican addition. Go figure.

  8. Common Sense says:

    The facts are:
    No, you can’t get cheaper insurance outside the AHCA.
    Yes, it needs tweaking and changing.
    Since its inception Republicans have not been able to come up with a better alternative.
    Republicans want to do away with it so the can fund the “huge” tax cuts for the wealthy. They don’t care about the rest of Americans.

    Welcome to Trump’s AmeriKa.

  9. brian says:

    obamacare was a miracle for me!! if you are above medicaid and still low income you will be in trouble without obamacare..if they repeal it, it will me back to the emergency room and let the govt pick up the tab!!

  10. Geezer says:

    I say we go back to horse and buggy and bring back blood-letting.
    Wooden false teeth are cool.

    I’m gonna party like it’s 1699!

  11. Sherry says:

    Consider the possibility that IF the loopholes were closed or flat tax implemented, and the billionaires could not hide their their money in secret (offshore) accounts. . . their payment of a” fair share” of federal taxes would take care of funding the costs associated with good healthcare for ALL, and much more.

    Instead, you have elected a president who has said he is smart to NOT pay taxes, and who plans on massive tax cuts for his wealthy friends as well!

  12. OMG says:

    OH it’s real simple. Make Medicare a premium based insurance.with premiums based in your income. And leave the private market alone.

    That is EXACTLY what LYIN OBAMA and his CRONIES should have done

  13. Anonymous says:

    I have never in the 55 years of living felt that I actually hated anyone, (that is someone who has or could have a direct influence on me or mine, leaving out those such as Hitler, bin Laden, etc.) until now, I really feel hatred for Trump. While it may not be right for me to feel this way, there is a reason that he makes me feel this way. I believe it is a matter of gut instinct and knowing what is right and what is wrong.

  14. Duncan says:

    Obamacare was created to provide health insurance options for everyone and to encourage those that can afford health insurance to buy it, rather than relying on the tax payers to flip the bill when they get seriously injured. After all, healthcare bills are the number one cause for claiming bankruptcy.

    Obamacare is certainly not perfect and will continually need to be tweaked as would any program of its magnitude. However, ignoring the problem and letting it fester is certainly not a good solution. Even Republicans know they need to replace it with something comparable. I would suggest Republicans want to repeal it rather than revise it so that Democrats are not credited for trying to solve the healthcare problem – IMHO.

  15. Mike says:

    The government needs to leave Medicare alone, no reductions not any increases in user cost. Obamacare cost me $410 a month more than the coverage I had with my employer to get the same coverage and same deductible. Obama is not the great answer to healthcare. The great answer to healthcare is going after the insurance companies and the doctors and hospitals that provide medical services. The government needs to force them to operate on acceptable guidelines and stop over charging for drugs and services. I had a Tylenol cost me $10.00 a pill, something is wrong with that. Its like the US military paying $20.00 for a 4″ x 1/2 bolt. People on here think they know all things, but we do not have a clue what this new president is going to do. Sure people can talk about out of their butts but until he does something we are all just babbling idiots waiting for some carrot to drop so we can jump up and write something,. I think the man is a buffoon but at least he’s not a wacko all about me politician like everyone in Congress.

    To fix Obamacare is to make it work correctly Adjust the rates to affordable payments with in line deductibles and make these out of control insurance companies and hospitals accountable for services and charges.

  16. Pogo says:

    @Duncan

    Bingo

    Democrats are trying to solve problems. The Republicans are the problem. Now that they have no excuses, maybe some fools will figure out who really farted.

    Trump is naked as a Jaybird; but Conway, Fox, Drudge, and the noise machine just lie about his great new clothes. His followers are so dim they ignore the fact his entire campaign was based on repaying loans he made to himself with their contributions – just like his phony charities. Self funded? Can’t be bought?
    Give me a goddamn break! Drain the swamp? Now there is only the swamp.

    Now his cabinet and every action are absolute nightmares. And all his former rivals have sold their so-called souls to Trump – no honor; no dignity, no courage – just shameless greed. When questioned, they run out the clock with long winded answers to a question that wasn’t asked; change the subject (Usually with some what-about-what-so-so-did routine. For some strange reason they’ve quit bleating about so-called situational ethics. Now it’s their excuse for everything Trump and they do and say.) Or lie. Period.

    Trump voters – Jesus Christ! Wake up!

  17. Eric Robinson says:

    There were many issues from the start, plans that were working should have been left in place. Remember Obama’s words “If you like your plan you can keep it” “if you like your doctor you can keep him ( or her ) “, this turned out to be total BS. People that don’t have kids have to pay for pediatric dental, 60 year olds have to pay for embedded maternity coverage, the list goes on and on. So aspects were good, getting rid of the pre-existing condition clauses for example, but overall it simply layered costs and solved some issues that didn’t need to be solved, rather than an approach to fix where the problems were.

    I sold health insurance for many years ( up until just 2014 ) worked with hundreds of employers and thousands of employees, I was a consultant for a large hospital org, that put together networks, politicians didn’t consult doctors, providers, insurance experts the democrats simply pushed Obamacare ( good and bad ) through as politicians instead of taking the time to get it right, they used it as a political tool and we are reaping huge problems

  18. RayD says:

    Hillary lost. Time to move on from it. New ideas and new policy coming. Lets see what they come with.

  19. Anonymous says:

    Obamacare does NOT rob from Medicare. That is a lie. And it is a lie that the cynical used well in this past election to pull the wool over the eyes of the ignorant, fearful and selfish.

  20. Kim says:

    There’s just something wrong with a bunch of rich guys who have free, full, healthcare deciding how the 98% live (or die).

  21. Percy's mother says:

    Yes, Pogo, please wake up!! Disconnect from the electronics and obtain some clarity. I agree, you should wake up.

  22. Sherry says:

    Pogo. . . you are “right on”! They are never going to “repeal” Obamacare. . . they just want to STEAL the credit for it! They are just going to tweak it to remove the “mandate” that everyone buy health insurance. A “mandate”, by the way, that the Republicans insisted on, to begin with. . . take a read:

    When today’s Republicans rage against the individual mandate in the Affordable Care Act, it’s useful to recall this was their idea as well.

    In 1989, Stuart M. Butler of the conservative Heritage Foundation came up with a plan that would “mandate all households to obtain adequate insurance.”

    Insurance companies loved Butler’s plan so much it found its way into several bills introduced by Republican lawmakers in 1993. Among the supporters were Senators Orrin Hatch (R-UT) and Charles Grassley (R-IA). Both now oppose the mandate under the Affordable Care Act. Newt Gingrich, who became Speaker of the House in 1995, was also a big proponent.

    Romney’s heathcare plan in Massachusetts included the same mandate to purchase private insurance. “We got the idea of an individual mandate from [Newt Gingrich] and [Newt] got it from the Heritage Foundation,” said Romney, who thought the mandate “essential for bringing the health care costs down for everyone and getting everyone the health insurance they need.”

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