What to expect from the coming Republican attacks on health care

November 29, 2016

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Ben Palmquist is the Campaign Manager for National Economics and Social Rights Initiative (NESRI). He supports grassroots Healthcare Is a Human Right campaigns for statewide universal, publicly financed healthcare. Ben holds a Masters of Urban and Regional Planning from UCLA and a B.A. in Urban Studies from Stanford University.

Ben Palmquist
Ben Palmquist

Hard-right Republicans have taken over all branches of government, and since the election President-Elect Donald Trump, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell have all said that health care will be a major target in January.

The agenda the party is rallying around is truly unprecedented. Never before in history have ideological extremists held such sweeping control of government and had the power to repeal laws, dismantle and privatize public programs, and revoke fundamental civil and human rights. On the campaign trail, Trump was not fully in alignment with Ryan, so it is uncertain just what we should expect, but there is every reason to expect a truly catastrophic defunding and privatization of Medicaid that could force 30 million people out of the program, a dismantling of the Affordable Care Act (ACA) that could take insurance away from another 22 million people, and a privatization of Medicare that would drastically limit health care access for seniors. The gravity of this would be enormous: taking comprehensive health care access away from people would literally kill tens of thousands of people every year.

While what Republicans will do exactly is unclear, they have released nine health care plans over the last four years. The following is a list of key conclusions that are emerging about the direction things are likely headed, with links to further reading on each topic.

The ACA as we know it will likely be dead within a year

halloween-1591907_1280Donald Trump and Republicans in Congress have pledged repeatedly in the last year that they will repeal Obamacare. While they seem to now be backing off their calls for full repeal, they don’t actually need to repeal the law in order to destroy it. We should expect the ACA as we know it―marketplaces, subsidies, and Medicaid expansion―to be gone within a year or two.

The 2017 insurance marketplaces will be up and running before Trump takes office, leaving them intact for the year, but the Trump administration will be able to easily shut down the insurance marketplaces on January 1, 2018. It has three options:

  1. Repeal: Republicans have a majority in the Senate, but not the supermajority they would need to overcome a Democratic filibuster to repeal the ACA. There is speculation that Republicans will eliminate the filibuster, in which case they could repeal Obamacare with a simple majority vote. There is no indication yet whether or not they will do this.
  2. Executive (in)action: Even if the ACA remains law, President Trump will have the authority to tank the ACA marketplaces. He can stop paying subsidies to insurance companies on day one in office. If this happens, insurance companies (at least in states on the federal exchange) could cancel people’s plans and withdraw from the marketplaces as soon as January or February. Even if he continues making payments through next year in order to avoid immediately kicking people off insurance and angering the public, it seems unlikely that Trump would continue paying subsidies in 2018. Alternatively, he could let the ACA marketplaces slowly fall apart under their own weight. The marketplaces have been in the news in recent months for enormous rate hikes, 22% nationwide. The Obama administration has worked to keep them profitable for insurance companies by doing active outreach and enrollment to bring more young, healthy people into the exchanges. The Trump administration will almost certainly stop this active enrollment, which could allow the marketplaces to simply fall apart under their own weight. We can also expect Trump to stop fighting the lawsuits defending the ACA and the legality of its subsidies.
  3. Congressional budget reconciliation: Congress can easily use the budget reconciliation process to withdraw funding for the ACA. In fact, they did this in January, but President Obama vetoed their bill. While budget reconciliation only allows Congress to touch funding (not, for example, the requirement that insurers cover people with pre-existing conditions), Congressional Republicans could use this process to abolish insurance subsidies and thus the ACA marketplaces, end federal funding for Medicaid expansion, end the individual and employer mandates, and more. But Republicans surely realize that if they take all of these measures next year, pushing tens of millions of people off of Medicaid and ACA plans, before they have an alternative private insurance setup in place, they will face enormous public outrage. This means it is likely they will phase in deforms that slowly choke off federal funding over several years, making the effects of the cuts less visible in the short term.

We don’t know yet what Republicans will decide to do, but they have full power to pursue any or all of these options.

Read more on what Trump and Congress can do:

But Republicans will struggle to replace the ACA

While Republicans have the ability to tank the ACA on day one, replacing it is harder. To avoid public backlash, they won’t want to kick tens of millions of people off of Medicaid and ACA plans before they have put an alternative in place, so we should expect them to sustain the marketplaces and Medicaid expansion (where it has happened already) for a year or two.

Trump said two days after the election that he would leave two provisions of the ACA untouched: the requirements that children can stay on their parents’ insurance up to the age of 26 and that insurers must cover people with pre-existing conditions. Both of these restraints on the insurance market are popular with the public, and they are both written into the ACA in a way that they could only be revoked through a full repeal.

Maintaining the protection for pre-existing conditions presents Republicans with a challenge. Whereas universal, publicly financed health care systems bring everyone together to pay for all health care costs as a society, for-profit insurance systems face a problem because people with medical needs are simply not profitable. The ACA dealt with this by using subsidies, mandates, and tax penalties to push younger and healthier people into insurance plans to offset high-cost patients who were already enrolled, but as we saw during this year’s nationwide rate hikes, that approach was rife with problems. Republicans have pledged to preserve the protection for pre-existing conditions but do away with the mandate, so how will they protect insurance companies’ profitability?

Looking at Ryan’s plan, it appears that Republicans will do at least four things to maintain the profitability of insurance corporations. First, they will cut some people with pre-existing conditions off of insurance by allowing insurance companies to charge higher rates to anyone with a lapse in coverage, which will particularly affect low-wage workers, people with disabilities and chronic illnesses, women, people with incarceration records, and others who have limited access to steady full-time employment with health insurance. Second, they will reintroduce high-risk pools, a failed policy that segregates people with the most medical needs in an underfunded public program. Third, they will cut the essential health benefits mandated by the ACA to allow insurance companies to offer plans with less coverage. Fourth, they will raise the limit on what insurance companies are allowed to charge the elderly. They may also simply allow insurers to deny plans to sick people altogether. Each measure would protect corporate profits by restricting a vulnerable community’s access to care.

Read more on why Republicans will need years to replace the ACA:

Medicaid will face an all-out assault

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Republicans will almost certainly halt the expansion of Medicaid in states that haven’t yet expanded, and they have the power to revoke expansion where it has already occurred, though it is more likely that they will seek to force states to “voluntarily” roll back Medicaid over time by choking off federal funding. Republican plans propose slashing Medicaid funding by either providing funding to states in annual lump sums (block grants) or giving them per-person payments.

Either payment method would slash the funds that states get (somewhere on the order of roughly 25% to 40%). This would force states to come up with new money, cut already low provider payments, charge prohibitive premiums, copays, and deductibles, cut Medicaid benefits, or cut people out of Medicaid altogether. An estimated 20 million to 30 million people would lose Medicaid within ten years, and states would face an especially strong incentive to cut care for seniors and people with disabilities, who need care the most. Republicans also plan to allow states to make people pay premiums, cap and cut enrollment, and introduce job requirements, behavioral incentives, and other demeaning requirements for enrollees that ignore the challenges poor and working class people face
​SOURCE: The Washington Post.

Read more on Medicaid:

Beyond tanking the ACA and Medicaid, Republicans’ agenda

Health Affairs Blog published an excellent article last year summarizing the eight Republican health care plans that were published between 2012 and 2015. Earlier this year, Speaker Ryan also released his own plan, key elements of which are summarized here. Though these nine plans differ on some elements, overall they put forward a vision different health care system and an entirely different conception of the role of government in American society.

Taken together, the Republican plans advocate an ideologically driven set of policies that shrink government at every opportunity, introduce market competition where it has never existed before, cut reproductive and other rights, and force “personal responsibility” measures that treat poverty as a personal choice and would deprive tens of millions of people who are structurally barred access to full-time employment and living wages from realizing their fundamental right to health care. These plans are shockingly devoid of acknowledgment of the human toll that comes with slashing Medicaid funding, including pushing tens of millions of people into uninsurance, driving up households’ health care costs, pushing millions of people into poor health, and literally killing tens of thousands of people by choking off access to health care and financial security.

In addition to repealing the ACA, other key proposals these plans put forward include:

  1. Privatizing Medicare and raising the eligibility age: Republicans want to largely privatize Medicare by expanding Medicare Advantage, allowing private insurance plans to compete with Medicare, creating loopholes to allow both patients and doctors to opt out of Medicare, abolishing the independent board that advises the government on payment rates, and perhaps even transforming Medicare from a publicly funded system into one that is privately financed through premiums. They also want to raise the eligibility age by two years, a move that would especially hurt seniors with low-incomes, who are precisely the people who most need Medicare and who are already on Medicare for fewer years because poor people have lower life expectancies.
  2. Revoke reproductive rights: Before the Supreme Court ever gets to the point of considering whether to overturn Roe v. Wade, Congress and the Trump White House could drastically revoke women’s and trans people’s reproductive rights. We should expect Republicans to eliminate the provision of birth control without copays and deductibles, cut off all federal money for abortions, cut funding for other reproductive care, allow insurers, hospitals, and other institutions and providers to eliminate abortion coverage and care, and allow states to take similar measures, such as cutting all abortion providers out of Medicaid. We should also expect an all-out assault on Planned Parenthood.
  3. Open up unrestrained profiteering: Republicans plan to open up unprecedented free-market profiteering in the health care system by allowing insurance companies to offer plans across state lines (opening up a race to the bottom in which insurers move shop to the states with the least regulations), reintroducing high-risk pools that protect insurance industry profits by segregating people with the most medical needs in one publicly backed insurance pool that gets inadequate funding, creating private insurance exchanges, approving drug, hospital, and insurance company mergers, and slashing regulations that protect patients, provider, and public health and safety by, for example, “restructuring” the Food and Drug Administration, presumably to fast track approval of drugs and medical devices without adequate study.
  4. Requiring continuous coverage: Ryan’s plan, for example, would protect people against higher rates, plan cancellations, and other actions by insurance companies only if people maintain continuous insurance coverage. This would hurt people who face structural barriers to full-time employment and thus to employer-sponsored insurance, including low-wage and part-time workers, women, poor people, and people who have been incarcerated, among other communities.
  5. Introducing tax schemes that help the wealthy: In addition to broader tax reforms that would further redistribute income to the wealthiest in society, Republicans would expand the use of health savings accounts and allow people to treat health insurance premiums as tax credits or even tax deductions when they file taxes. Taken together, all of these moves would benefit those with higher incomes the most.
  6. Cutting medical malpractice protections: Republicans plan to change how medical malpractice works, following a model that Florida’s Supreme Court declared unconstitutional by limiting non-economic damages that most harm people with low incomes who may face great pain and suffering but cannot prove high levels of lost wages.

Read more:

Don’t expect any action on drug prices

During his campaign Trump proposed allowing Medicare to negotiate drug prices, but that language has been dropped from his new platform, bringing Trump in line with Republican Party Orthodoxy. Pharmaceutical stocks soared after Trump’s election (while insurance and hospital stocks went down because of uncertainty about the ACA marketplaces and subsidies).

Republicans have full control but also face full responsibility

Republicans have sweeping power to reshape the health care system. Though they seem to have no moral qualms about cutting tens of millions of people’s health care access, they must realize there would be enormous political fallout if they do too much too soon. If they torpedo the ACA marketplaces or implement draconian Medicaid cuts before a replacement private insurance system is in place, tens of millions of people would suddenly be left uninsured and the public backlash would be enormous. We should expect Republicans, then, to implement a series of slow changes that will play out over the coming years.

Ben Palmquist, NESRI

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