Republican Replacement Plans Will Leave Millions in the Cold Six years after the enactment of the Affordable Care Act, public opinion remains deeply divided. But a post-election poll finds that nearly half of Americans would like to keep or expand the A.C.A., only a quarter want it repealed and replaced. Many Americans remain confused about what the A.C.A. is and does, but there is broad recognition that it has gone far toward accomplishing its goals. The central task of the A.C.A. was to make health insurance available to Americans with pre-existing conditions and to make coverage affordable to low- and moderate-income Americans. Americans in fact no longer are denied coverage because they are sick or have their coverage cut off when they reach an arbitrary dollar limit. A lower percentage of Americans are uninsured than at any previous time, and the level of Americans struggling with medical bills has dropped dramatically. Fixed-dollar tax credits would fall far short of the assistance lower-income Americans now helped by the A.C.A. would need to purchase coverage. There is, of course, still work to be done, premiums and cost-sharing are too high for many and some marketplace enrollees have a limited choice of insurers, but we are heading in the right direction. The Republicans in Congress and Tom Price, President-elect Donald Trump's pick to head the Department of Health and Human Services, promise instead an about face. They would repeal the A.C.A., or as much of it as they can reach through the budget reconciliation process. Simple repeal would leave millions of Americans uninsured, so they promise a replacement. But their proposals to replace fall far short. Republicans would replace the A.C.A.’s ban on health status underwriting and pre-existing condition exclusions, as well as its individual mandate, with a continuous coverage guarantee and high-risk pools. An individual who had insurance coverage and kept it with no significant breaks in coverage could not be rejected or charged more for coverage because of a pre-existing condition. But if individuals were initially uninsured or if they had to drop coverage because of financial hardship, they may face a penalty when they seek coverage significantly greater than the repealed individual mandate penalty. People with pre-existing conditions may instead be offered coverage segregated into high-risk pools. High-risk pools, which cover individuals denied coverage at standard rates because of health problems, existed in 35 states prior to the A.C.A. They offered limited coverage, subject often to high deductibles, low dollar limits and pre-existing condition exclusions, and had high premiums. Enrollment was small. The Commonwealth Fund estimates that it could cost $178 billion a year to fund high-risk pools to cover individuals with chronic conditions who were uninsured before the A.C.A., yet the Price plan offers $1 billion a year. Republican plans generally offer fixed-dollar tax credits, perhaps age-adjusted, to help with affordability. These would fall far short of the assistance many lower-income Americans now helped by the A.C.A. would need to purchase coverage. Even if the tax credits made very high deductible coverage available, health care itself would remain unaffordable. Health Savings Accounts, offered by Republican plans, are worthless to Americans who lack excess income to save and do not need tax shelters. Republican replacement plans may help higher-income Americans, but will leave millions helped by the A.C.A. in the cold.

Washington’s Role in Our Health Care Choices Is a Problem The Affordable Care Act failed to deliver what it promised. Enrollment in its state-based marketplaces fell well short of initial projections and stalled. Insurance premiums there spiked significantly higher in recent years. Many participating private insurers incurred substantial losses and started looking for the exit. These marketplaces increasingly operate like poorly structured, but very expensive and inefficient, pools of higher risk individuals without other insurance alternatives.



Most A.C.A. coverage gains were limited to individuals heavily subsidized by taxpayers or pushed into expanded Medicaid coverage. The average Medicaid benefit costs of adult enrollees newly eligible under the A.C.A. ended up about 49 percent higher than estimated costs for similar Medicaid adults enrolled before the expansion. These and other storylines peddled by A.C.A. advocates about saving money through insurance expansion just did not check out. Criticisms of the A.C.A. extend well beyond those issues. More fundamentally, opponents are rightly skeptical of the federal government's growing role in their personal health care choices. Medicaid will be reshaped at the state level through waivers and allotments that provide both more predictable budgets and greater flexibility and innovation. The most consistent source of strong reactions against the law involves its individual mandate to purchase government-approved coverage. In reality, this mandate never worked as imagined. It was riddled with exceptions (at least 12 million individuals claimed them). It was enforced weakly and imposed only modest penalties. Up to 7.5 million individuals chose to pay them last year rather than purchase more expensive coverage that they did not want or could not afford.



Republicans will need to deliver something else that works better, while avoiding overpromises and disruption of care. Some sort of “repeal” of many portions of the A.C.A. is important – done, of course, in a manner that improves, not worsens, people's lives.



The structure and nature of taxpayer subsidies will change, but not much in their aggregate amount. For example, tax credits for insurance premiums in the individual market will become more broadly allocated, simplified and flatter -- in age-adjusted, rather than income-sensitive, amounts. Within the individual insurance market, people with costly pre-existing conditions will gain and maintain protections against coverage exclusions or higher premiums, as long as they maintain “continuous” eligible coverage, an approach that already operates effectively across the employer-based group insurance market. This will replace the individual mandate, by operating as a positive incentive, rather than a negative burden, to become and remain insured. As mandated coverage requirements are loosened, willing buyers will be able to find willing sellers who can match their preferences and resources. More adequately funded high-risk pools (annual costs likely closer to $8 billion to $10 billion) and community-level safety net providers still must be supported to protect the most vulnerable Americans from falling through the cracks as broader liberalization of health care markets unfolds.



A big part of the changes ahead involve relocating the level at which key decisions in health care are made. For example, expanded access to tax-advantaged Health Savings Accounts can help personalize health care decisions. Medicaid will be substantially reshaped at the state level through waivers and per-capita allotments that provide both more predictable budgets and greater flexibility and innovation.



All of these and other less-Washington-centric reforms will happen, later if not sooner, because they have to. Otherwise, the latest governing majority soon will become a minority.

States Have Failed for Decades to Find Help for the Uninsured No one contends that the Affordable Care Act was the final cure to the ills of our health care system, but its contributions have been substantial. Tom argues that most of the coverage gains have been among families covered through marketplace subsidies or the Medicaid expansions. But the uninsured the A.C.A. was intended to cover overwhelmingly have low or moderate incomes. One would hardly have expected A.C.A. coverage gains to have been primarily among the wealthy (although they would benefit most from Republican proposals for fixed-dollar, instead of means-tested, tax credits and for more generous tax subsidies for health savings accounts, which are primarily funded by taxpayers earning more than $100,000 a year). The wealthy will benefit most from Republican proposals for fixed-dollar, instead of means-tested, tax credits and tax subsidies for health savings accounts. It is true that marketplace enrollment has not yet reached the numbers projected when the A.C.A. was adopted. It has also proved difficult to reach the low-income population eligible for marketplace subsidies — nearly 40 percent of remaining uninsured adults are unaware of the marketplaces and almost half of the availability of financial assistance. But the thought that they would suddenly sign up for coverage — without income-based subsidies — before the door was slammed in their faces by a continuous coverage requirement is risible. The individual mandate tax penalty is still being phased in and it is too early to declare it a failure. A recent study by the Urban Institute projects that 4.3 million Americans would drop coverage were the mandate repealed, seriously impairing the financial stability of individual market insurers. Unless high-risk pools are funded at much higher levels than Tom projects, they will leave seriously ill people without access to coverage or care. And why segregate individuals with costly health needs in underfunded high-risk pool ghettos rather than reinsuring their costs — as Republicans did for the Medicare prescription drug program? A.C.A. repeal will certainly overwhelm the safety net. One recent study projects that repeal of the A.C.A. would impose uncompensated costs on hospitals of $166 billion to $290 billion between 2018 and 2026; another found the total provider uncompensated care burden would increase by $88 billion by 2019. Congress’ 2015 reconciliation bill offered $235 million in Community Health Center funding for two years. Like almost everything in Republican proposals, the numbers just don’t add up. Finally, why turn the task of covering the uninsured back to the states, which failed for decades to find solutions while the uninsured numbers climbed? And how can we pretend to turn health care decisions over to consumers who simply cannot afford health care?

Better Policy Choices Will Address Affordability for Low Incomes The important points about the distribution of A.C.A. coverage gains relative to health and income are that its intricate cross-subsidy rationales were premised on two goals: One, getting a large enough group of younger, healthier, and somewhat higher income individuals to pay more for marketplace coverage than what it is worth to them; and two, enrolling millions of lower income individuals in expanded Medicaid who would be much less expensive to insure than those in the marketplaces. This didn’t work out as planned. The Obama administration learned that it could not coerce, subsidize and tax enough people and businesses to reach its goals. Neither earlier Congressional Budget Office coverage estimates nor those of Tim’s favorite, the Urban Institute, got close to the mark. Other pro-A.C.A. claims in outside studies often were based on mistaken assumptions. It pays to read them with a dose of cautious skepticism. Chronic dissatisfaction with the costs, quality and nature of health care may have far more to do with federal policy mistakes than with health market failure. For a more generous helping of risible reaction, consider the Commonwealth Fund’s outrageous claim that adequately funding high-risk pools could cost $178 billion a year. It tries to inflate the narrow base of early enrollees in the A.C.A.’s Preexisting Condition Insurance Plan, who were few in number but highly expensive per capita, with a more elastic definition of uninsured individuals with “chronic conditions.” More carefully tailored designs for such pools focus their subsidies on the far-smaller number of individuals who are medically uninsurable due to health status, or face less-regulated premiums that would be 50 percent to 100 percent above standard rates. Keep in mind that C.B.O. estimates that the annual cost of all premium assistance subsidies for healthy and less-healthy enrollees in the A.C.A. marketplaces in 2016 was $110 billion! Different policy choices are needed to address problems of affordability for low incomes, and they should extend far beyond premium subsidies alone. Incentives to encourage more labor force participation, higher wages and more robust economic growth; along with increased market pressure to pay less for care that is overpriced and less necessary, would be good starting places. If we can free ourselves of the statistical rabbit holes of exaggerated claims, we might remember that “net” uncompensated care amounts have tended to be far lower than health industry claims. Longevity and long-term health outcomes are shaped far more by factors other than the relative availability or quality of health care. Our chronic dissatisfaction with the costs, quality and nature of health care may have far more to do with federal government policy mistakes than with health market failure.

Fixing Obamacare Is Better Than Repealing It Tom and I will have to disagree as to whether the A.C.A. has failed. Sign-ups for 2017 are running ahead of last year despite constant talk of repeal. We could also argue about why it has fallen short of initial predictions; who, if anyone is to blame; and, obviously, whether the solution is to repeal the law or to fix it. More needs to be done to hold down increases in health care costs and address the social determinants of ill health and poverty, but repealing A.C.A isn't the answer. We agree, however, that the solution to at least part of the problem of making health care more accessible and affordable for lower income Americans is economic growth, and, I would argue, a more equitable distribution of the benefits of that growth. We would certainly agree that more needs to be done to hold down constant increases in the cost of health care, and perhaps that more needs to be done to address the social determinants of ill health and poverty. But none of that will happen overnight, and repeal might. Congressional Republicans are talking about repealing the A.C.A. in January. The Congressional Budget Office has just released a report concluding that repeal of the coverage provisions of the A.C.A. would result in 23 million people losing coverage — particularly those with low incomes or in poor health. Tom contends that they can be covered with fixed-dollar tax credits, health savings accounts and high-risk pools. I am skeptical, but in any event it is clear that producing these alternatives would take some time — probably several years. Regulations would have to be written, federal programs and procedures established, and state laws and regulations changed. It is essential that Congress take the time to thoroughly explore the issues raised by this debate and not proceed precipitously until a way forward is clear. Lives are at stake.