Republicans are wrestling with how to repeal and replace ObamaCare. It turns out that legislating is much more complex than campaigning. Still, ObamaCare as we know it is unlikely to be with us much longer.
So what happens after it’s gone? On Friday, we looked at some of the most likely provisions of any ObamaCare replacement. They would expand consumer choices, by expanding the use of health‐savings accounts and allowing the purchase of health insurance across state lines.
Still, there are some people who would face challenges if the law were repealed. This includes those with low incomes and those with pre‐existing health conditions.
ObamaCare did expand the number of Americans with health coverage by some 20 million people. Most of those, however, received coverage not through the program’s subsidies for private insurance but through the expansion of Medicaid.
There is ample evidence to suggest that Medicaid provides little if any benefit. One notable experiment in Oregon found no improvements in health outcomes from Medicaid enrollment. But regardless, repeal of ObamaCare is unlikely to have any short‐term impact on Medicaid.
The same can’t be said for those Americans receiving subsidies to purchase insurance through ObamaCare’s exchanges. Those subsidies will almost certainly be cut back or eliminated, so some people could end up paying for the full cost of their premiums.
Of course, that also means less of a burden for taxpayers overall, since they were picking up the cost of those subsidies. Besides, even with subsidies, the rising cost of premiums under ObamaCare was leaving many Americans struggling to afford insurance.
There will undoubtedly be winners and losers, but by bringing down the cost of insurance, the Republican plans will leave most Americans better off.
The question of pre‐existing conditions is a much tougher nut to crack. Pretty much all the problems with ObamaCare flow from the decision to require insurance to cover people with pre‐existing conditions — that is, people who are already sick — without charging them more than healthy people.
Because insurers will lose money on those sick individuals, the cost has to be offset by enrolling young and healthy individuals, who pay premiums but require few benefits. Since the young and healthy are reluctant to buy insurance on their own, ObamaCare included the unpopular individual mandate in order to force them to do so.
A mandate meant the government had to define what qualified as insurance, hence the minimum benefits package and the elimination of low‐cost catastrophic policies. People who liked their policies found out they couldn’t keep their policies. The dominoes fall.
The number of truly uninsurable people is actually quite small, and will decline further under Republican plans to reduce insurance costs and make it easier for people to keep their coverage if they lose their job.
Still, any replacement plan will have to include some provision to make sure health insurance — or at least health care — is available to people whose medical condition makes them otherwise uninsurable.
Some GOP plans preserve the pre‐existing‐conditions requirements as long as a person maintains continuous coverage, or signs up during a limited open‐enrollment period.
But people would still game the system, jumping to more comprehensive plans or those with the best specialists after they become sick, knowing that insurers could not refuse them or increase their premiums. If Republicans simultaneously eliminate the mandate, this will only accelerate the adverse‐selection death spiral already besetting ObamaCare.
The only workable answer is to take otherwise uninsurable people out of the traditional insurance market altogether and subsidize their coverage separately.
This may be done through the expansion and subsidy of state high‐risk pools, much the way states handle auto insurance for high‐risk drivers. Or sick individuals may be taken out of the insurance system altogether, with their health care paid for through a reformed Medicaid program.
However these changes play out, it’s important to realize that no one is going to have their health insurance suddenly snatched away. Some people may have to get their health care in different ways, and some, who can afford it, may have to pay more.
But the predictions that replacing ObamaCare will mean uninsured Americans dropping dead in the street are worth little more than fake news.