Republicans have pitched Obamacare “repeal and delay” — the idea of quickly repealing the Affordable Care Act, but leaving it in place for three years as they craft a replacement — as the path they’re most likely to pursue. But one key health care expert threw cold water on that idea: “It will be a death spiral. The Trump administration will have put it in a death spiral.”

Robert Laszewski is president of Health Policy and Strategy Associates, a Washington, DC-based consulting firm that works closely with many health insurers. During the botched Healthcare.gov launch, he provided some of the clearest and most accurate commentary about what was happening behind the scenes with health insurance plans.

Laszewski doesn’t hide his point of view: He’s no fan of the Affordable Care Act. But he sees the Republicans’ new Obamacare strategy — to repeal the law, but leave it in place for three years as they work to create a replacement plan — as an absolutely terrible way to fix it.

“The problem is when you have an insurance market, and the new administration declares it DOA, it will go into death throes,” Laszewski says.

Laszewski argues that the one way to stabilize the insurance market — to ensure that health insurers don’t flee — is for the federal government to guarantee to cover their losses. But the politics of that aren’t easy: This would mean reestablishing an Obamacare program that Republicans have previously branded a “bailout for insurance companies.”

Laszewski has spent the past few weeks consulting with health insurance plans, presenting at their board meetings, and hearing how they think about the future of Obamacare. We spoke Thursday morning about the Republicans’ repeal and delay plan, and what a Trump administration would need to do to make it work.

Sarah Kliff

So let’s start with this new Politico article that came out this morning, where congressional Republicans say they want to pass a repeal bill early this year but delay implementation for three years so they can come up with a replacement plan.

What do you think of it?

Robert Laszewski

My first reaction to that article was the Republicans are being awfully naive. They seem to be ignoring the risks in the transition period, particularly because they need insurance companies to provide insurance during the transition.

Unless we have some miracle, and the exchanges become profitable, why would they stay around for two years? I think Republicans are overlooking this. Medicaid would be fine in the transition; states will continue taking that funding. But for the exchanges, having the subsidies in place isn’t enough. It helps the customer, but why should the insurance company stick around?

Sarah Kliff

So let’s say Republicans do go this route. In February or March, they pass a repeal bill and set a deadline for January 2020 to come up with a replacement. Walk me through what you think happens next.

Robert Laszewski

The insurers are supposed to submit rates for 2018 in May or June, and have their rates approved. Then they need to sign their contracts in September for a November enrollment period.

Whether insurers will participate, I think we won’t get clarity on until September. In the meantime, you’ve already got a market that is spiraling. You’ve got an exchange where insurers have been losing money already. Why should insurance companies continue to subsidize Obamacare for Republicans? And we’re not talking $2 million in losses, we’re talking hundreds of millions.

I’ve got these small state plans I advise, and they’re losing more than $100 million this year. They don’t have the money to stay in. One plan’s board director told me recently that under heavy political pressure, they decided to stay in at 2017. And this is a nonprofit plan, not a big Wall Street one. They stayed in for 2017 under the presumption that Clinton would come and fix the things that need to get fixed.

Now we’ve got repeal. Generally speaking, many of these leaders in the industry are optimistic over the five-year timeline. But the question is, over the next few years, how do you get there? I think you’ll have a lot of plans decide not to participate or participate with extraordinary high rates.

Sarah Kliff

So do you think these plans will file rates in May? How will they decide whether to stay in or quit?

Robert Laszewski

Think about a plan like North Carolina Blue Cross Blue Shield, which is not a client of mine. They decided to stay in 2017, and the CEO admitted openly it was a very hard decision. They’ve lost $400 million so far. That’s what he said before Trump won. That plan can’t continue to lose that kind of money in a market that is closing.

My guess is plans will file provisional rates in May, because it’s not a commitment. When it comes to contract signing in September, if Congress is deadlocked and hasn’t come up with the replacement yet, many will have no choice but to say, “I’m not participating,” or ram through extraordinarily high rates so they can guarantee they won’t lose money.

This doesn’t necessarily hurt low-income people because they’re subsidized, and only have to pay a certain percent of their income.

Sarah Kliff

It hurts them if no carriers will sell in their area, though.

Robert Laszewski

That’s true. And if carriers do stay in, you also have to think about the half of the individual market that isn’t subsidized. The people who are higher income, their premiums will spike, and it won’t be a great situation. And one of the ironies of this is that these are the people who generally would be more likely to support Trump and Republicans.

Sarah Kliff

So let’s say you’re in the Trump administration. You want to stabilize the marketplaces because you fear the political blowback of their collapse, and millions losing coverage. Can you do that — and how do you do that?

Robert Laszewski

What you do is subsidize the carriers. You reactivate some of the policies that were meant to stabilize the marketplace in the early years, the three R’s. [Risk adjustment, reinsurance, and risk corridors, all programs that subsidize insurance carriers that have significant losses. You can read an explainer on them here.]

But these are the things that Republicans have hated. This is what they call an insurance company bailout. But keeping them around is the only way to maintain a viable market. The problem is when you have an insurance market and the new administration declares it DOA, it will go into death throes. It will be a death spiral. The Trump administration will have put it in a death spiral. The only way to fix that is if you subsidize the market. If you just subsidize the consumers, that doesn’t do any good if you don’t subsidize the carriers.

Sarah Kliff

But this means reviving a policy that, like you said, Republicans hate. Like they’ve passed bills that cut the three R’s programs. They have restricted Obamacare’s ability to subsidize insurers who lose money.

Robert Laszewski

What they have to do, and I don’t think they’ll do, is take the defunding bill they use to repeal Obamacare and reestablish the risk corridors and reinsurance fund. They have to do it inside the budget bill; otherwise they’ll need 60 votes.

I think what they have do is reestablish one of the parts of Obamacare that Republicans have hated the most, the so-called insurance company bailout, because if they don’t, they’re going to have a catastrophic result come 2018.

Sarah Kliff

Do they have to do this soon? If insurer bids come in the spring, I’d imagine you’d want to have it done by them.

Robert Laszewski

To have an orderly transition, I think Republicans need to reimplement the risk corridors by February or March. That is the only chance they have. I don’t think there is a single Republican member of Congress who has thought about this. I’m reading all these quotes and they’re completely blind to the fiasco on the individual market that they’re about to create.

There are tens of millions of Americans who rely on the Affordable Care Act for health insurance coverage — who aren’t quite sure what the 2016 election, and Republicans’ promises of repeal, mean for them.

We’re launching a Facebook group for those people to talk about their shared experience. We want this to be a place where Vox readers in this situation can share their stories. From time to time, we’ll ask this group questions about their experiences — some of which might lead to stories. If you’d like to request to join the community, use this link.

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