(Bloomberg) — The first major act of the unified Republican government in 2017 will be a vote in Congress to begin tearing down Obamacare.
But the euphoria of finally acting on a long-sought goal will quickly give way to the reality that Republicans — and President-elect Donald Trump — have no agreement thus far on how to replace coverage for about 20 million people who gained insurance under the health care law.
“They haven’t come to a consensus in the House and the Senate about the possible replacement plans,” said Douglas Holtz-Eakin, a conservative economist and former adviser to Senator John McCain’s 2008 presidential campaign. “They don’t know Point B.”
Republicans are debating how long to delay implementing the repeal. Aides involved in the deliberations said some parts of the law may be ended quickly, such as its regulations affecting insurer health plans and businesses. Other pieces may be maintained for up to three or four years, such as insurance subsidies and the Medicaid expansion. Some parts of the law may never be repealed, such as the provision letting people under age 26 remain on a parent’s plan.
House conservatives want a two-year fuse for the repeal. Republican leaders prefer at least three years, and there has been discussion of putting it off until after the 2020 elections, staffers said.
In the nearly seven years since the two laws that make up the Affordable Care Act package passed, dozens of comprehensive health care alternatives have been introduced, but none has gotten off the ground. The most developed plan so far is legislation by House Budget Chairman Tom Price of Georgia, Trump’s nominee to run the U.S. Department of Health and Human Services, which he introduced in every Congress since 2009. It had 84 cosponsors in the House.
But that bill — centered on age-based refundable tax credits to buy insurance — didn’t receive a hearing in committee, nor was it included in Price’s budget that was adopted by the House last year.
The ACA includes the Patient Protection and Affordable Care Act of 2010 and the health sections of the Health Care and Education Reconciliation Act of 2010. Many of the earlier Republican Obamacare repeal bills and bill proposals called for repealing all of the ACA, but it’s not clear whether Republicans are still including the many ACA components unrelated to Medicaid and commercial health insurance, such as flu prevention programs and programs that help would-be health care workers pay for their education, in the term ‘Obamacare.’
If Republicans stick together, repeal could happen quickly. The Senate plans to move first on a nonbinding budget resolution instructing committees to draft repeal legislation, with the House approving it next. The resulting proposals would be sent for final votes under a process known as reconciliation, which is used to bypass the 60-vote threshold in the Senate.
Key players tasked with executing the plan will be Senate Finance Chairman Orrin Hatch of Utah and Health Chairman Lamar Alexander of Tennessee, and on the House side, Ways and Means Chairman Kevin Brady of Texas and incoming Energy and Commerce Chairman Greg Walden of Oregon.
Alexander represents the home state of Nashville-based HCA Holdings Inc., a giant hospital company that has benefited from the ACA.
Replace with what?
To cushion the political blow of upending the system, party leaders are putting out a stream of statements portraying Obamacare as collapsing on its own.
But HHS reported that signups reached 6.4 million by the Dec. 19 deadline, an increase of 400,000 over the previous year’s number at this time. Earlier, President Barack Obama said that more than 670,000 Americans signed up for coverage on Dec. 15, “the biggest day ever for Healthcare.gov.”
“The overarching challenge is that the Affordable Care Act is the status quo, and disrupting the status quo in health care is always controversial,” said Larry Levitt, a health policy expert at the Kaiser Family Foundation and former adviser to President Bill Clinton’s health care efforts. “There are so many moving pieces to this effort involving lots of money and lots of interest groups. So piecing together the votes is daunting.”
Trump and House Speaker Paul Ryan of Wisconsin have been vague on what they want to see, but both released blueprints calling for expanding the use of tax-advantaged health savings accounts, allowing the sale of insurance across state lines and turning Medicaid over to states. Republicans are seeking recommendations from governors and industry leaders on what to do.
Translating slogans and white-papers into legislation will create problems. Undoing Obamacare would increase the number of non-seniors who are uninsured by 24 million over a decade, according to the Congressional Budget Office. Republican aides privately acknowledge that would give Democrats a potent political weapon to fight their efforts, but say their focus will be on lowering costs and expanding choice.
Trial and error
Unifying the party may require trial and error, said Rodney Whitlock, a former health policy aide to Republican Senator Chuck Grassley of Iowa, adding that Ryan will be a key figure to watch. He may have to get the Congressional Budget Office to provide estimates for how multiple proposals would affect the budget deficit, Whitlock said.
“That’s the pathway to get his folks to understand the cost and coverage consequences of their policy decisions,” Whitlock said. “That’s not going to be easy, but I don’t see how he gets his conference to consensus without an exercise like that.”
Some Republican aides say they may pursue a replacement through a series of small bills as opposed to one big measure. Leading Republicans such as Senate Majority Whip John Cornyn of Texas have said they want Democratic buy-in on a replacement plan. Breaking a filibuster would require the support of at least eight Democrats.
The ACA commercial health insurance programs continue to be viewed unfavorably by many Americans, but the politics of undoing the law are complicated. A Kaiser Family Foundation poll after the election showed 26 percent want to repeal it, while 17 percent want to scale it back. Nineteen percent want to move forward with implementation and 30 percent want to expand it.
‘Bring it on’
Democrats have made clear they won’t go along with Republican attempts to repeal Obamacare. Some are taunting the GOP as it attempts to write a replacement.
“Bring it on,” incoming Senate Democratic Leader Chuck Schumer of New York said this month. “They don’t know what to do. They’re like the dog that caught the bus.”
Several of the law’s provisions are popular, most notably the regulations prohibiting insurers from denying coverage or raising costs on people with pre-existing conditions. And of the 14 states with the largest percentage of non-elderly people with pre-existing conditions in 2015, Trump carried 12, according to a Kaiser Family Foundation study released last week. He also got one electoral vote in Maine, the 13th state in that group.
Congressional Republican aides say they’re likely to soften those rules by limiting their protections to people who maintain continuous coverage.
“The pre-existing condition provisions in Republican proposals are less protective,” Levitt said. “With fewer protections you could piece together other mechanisms to keep the market stable.”
Trump has proposed high-risk pools to cover sick uninsured people, but financing them will be a challenge. A 2010 estimate in National Affairs by conservative health care experts Tom Miller and James Capretta pegged the cost at $150 billion to $200 billion over a decade to insure up to 4 million people; House Republicans have been reluctant to spend anything close to that.
Republicans are considering setting up a fund to address the cost, perhaps with savings from repealing Obamacare’s subsidies.
The funding challenges are substantial. Repealing the law would increase the deficit by $353 billion over a decade, or $137 billion under favorable macroeconomic assumptions, according to the Congressional Budget Office.
As they chart the path ahead, Republicans are trying to calm fears.
“The new big lie, after ‘if you like your health care plan you can keep can keep it,’ is that 20 million Americans will lose their health care. That’s simply not true,” Brady told reporters Dec. 15. “Republicans will provide an adequate transition period to give people peace of mind that they will have those options available to them as we work through the solutions.”