By a whisker-thin electoral college margin, President-elect Trump assumes office with Republicans in unified control of the presidency, both houses of Congress, and soon a Supreme Court majority. Republican dominance is even greater across the states: thirty-three governorships and thirty-two legislative majorities. Since 2010, Republicans have pledged to “repeal and replace” the Affordable Care Act (ACA). “Repeal and replace” is one of the few clear policy goals that unites President-elect Trump’s campaign with congressional Republicans. Something large is going to happen. Some triumphant Republican “repeal” seems foreordained, and the latest information indicates that they may pass a repeal before settling on a plan to replace.

What will Republicans actually do to replace the ACA? That is another matter. Seldom has a political party combined such comprehensive control over the practical levers of government with such limited public mandate for its policy agenda. President-elect Trump lost the popular vote by more than 2.5 million votes. His net favorability rating stands at minus six, which is about forty-nine points below the net favorability rating of President-elect Barack Obama eight years ago. According to the website, only 35 percent of Americans believe Trump has the temperament for the presidency. Fifty-nine percent “think he is not even somewhat qualified for the job.”

Popular ACA Policies Are at Risk

Americans remain sharply divided on partisan lines regarding their overall assessment of the ACA. One component of ACA—the individual mandate—is unpopular, supported by only 35 percent of Americans. Looking under the hood, almost every other component of ACA commands broad support. A Kaiser Family Foundation post-election survey finds that:

  • 85 percent of Americans support allowing young adults to stay on their parents’ insurance until age 26;
  • 83 percent support eliminating out-of-pocket costs for clinical preventive services;
  • 80 percent support the idea of health insurance marketplaces;
  • 80 percent support giving states the option of expanding Medicaid to cover low-income uninsured people;
  • 69 percent support prohibiting insurers from denying coverage because of a person’s medical history; and
  • 69 percent support raising the ceiling on earnings and capital gains subject to Medicare payroll taxes.

All of these items command strong support among both Democrats and Republicans. For Republicans in Washington, the disparity between their immediate power and long-term political mandate poses huge political risks. They momentarily control the levers required to drastically overhaul the ACA. Their party base and many Republican politicians demand that they do that. Yet precisely this leverage brings opportunities for self-immolating over-reach, particularly if Republicans enact damaging measures on a party-line vote through the reconciliation process.

Seeing the political pain that Democrats endured since 2010 in “owning” the ACA, Republicans are surely wary about similar blowback if they were to severely damage our impossibly complicated $3 trillion medical care political economy, or to generate nightmare headlines by snatching health coverage from millions of people. Remember the trouble President Obama ran into when he said: “If you like your insurance, you can keep it”? That imbroglio involved an estimated 1.9 million people.

As shown below, the ACA has provided health insurance to 20 million people who would otherwise be uninsured. Many of these 20 million live in states and localities that supported Trump.

Map of Participants in Federal Health Marketplace by Zip Code

Note: This figure shows thirty-seven states without state-based marketplaces. It excludes zip codes with fifty or fewer individual enrollees.
Source: U.S. Department of Health & Human Services

Removing such coverage will produce visible human tragedies including medical bankruptcies and denied care to cancer patients. Opponents of universal coverage often assert that uninsured people in dire situations can somehow get needed care, in the emergency room or at safety-net providers if not elsewhere. That is simply not true, even if one ignores the financial burdens of care significantly reduced by ACA.

Thus, we’re in a period of deep uncertainty. Candidate Donald Trump made conciliatory gestures about the value of universal coverage. He has praised some elements of ACA such as protections for individuals with preexisting conditions. Yet Speaker Paul Ryan and other Republicans have proposed much more radical policies. President-elect Donald Trump must somehow reconcile these perspectives.

The ACA included significant tax increases on the affluent, and various tax and cost control measures required to finance expanded coverage. Presumably, these will be quickly repealed in January. When one combines this with payments, Republicans may need to provide insurers, these revenue-depleting measures will propel calls for further service cuts in the name of deficit reduction. As Nicholas Bagley observes, this revenue loss will make Republican “replace” options more difficult. Yet these components are the politically and legislatively easiest to remove in a quick reconciliation bill.

Trump’s Health Care Team Hints at His Health Care Agenda

What do Trump’s appointments telegraph about the fate of the ACA? Last week, we got two giant clues, as President-elect Trump selected key personnel to lead his health policy effort.

Seema Verma, his selection to run CMS (the Centers for Medicare and Medicaid Services), is the sort of private-sector technocrat one would expect to see in any Republican administration. She assisted Indiana and other states to negotiate Medicaid waivers with the Obama administration.

Her appointment suggests that the Trump administration will grant broad latitude to states that wish to enact Medicaid policies opposed by liberals and the Obama administration. Such policies might include co-payments for emergency department visits, even work requirements. Such policies would bring real human consequences for low-income Americans, but would resemble a normal political outcome one might expect under Marco Rubio or John Kasich as president. Perhaps Verma can even negotiate politically dignified Medicaid expansions in Texas, Florida, and other states that have currently left three million poor people without health coverage.

Congressman Tom Price, MD (R-GA), has been selected as the next Secretary of Health and Human Services. Source: Flickr.
Congressman Tom Price, MD (R-GA), has been selected as the next Secretary of Health and Human Services. Source: Flickr.

Verma’s likely future boss sends a more troubling signal. Congressman Tom Price, MD (R-GA), has been selected as the next Secretary of Health and Human Services. Like many early Trump supporters, Price is an extremely conservative figure identified with the Tea Party.

Price’s Solutions Would Take Health Security Back Decades

Representative Price has proposed his own “repeal and replace” options to overturn the ACA. These stand out among Republican plans for the stringency with which it would restrict care. The Congressional Budget Office (CBO) estimates that Price’s hallmark effort, HR3672, would have reduced health insurance coverage by 22 million people. Price’s bill would have also raised premiums and lead to a sicker insurance pool in the nongroup market.

Ironically, Price’s and other Republican proposals specifically disadvantage older working-class voters, a demographic that helped to decide the 2016 election.

Ironically, Price’s and other Republican proposals specifically disadvantage older working-class voters, a demographic that helped to decide the 2016 election. A key feature of GOP repeal and replace plans is to make insurance more attractive to the young and healthy people by allowing higher premiums for older people and by limiting the scope of essential health benefits. Combine that with less generous financial help to older people with modest incomes, and you have a system that provides significantly less support for near-retirees with diabetes and other health problems.

Price’s proposed revision of the ACA is a “repeal” not “repeal and replace” measure. Indeed, these proposals might create a worse system than existed before the ACA, because they combine a hodgepodge of incomplete consumer protections, regulatory relief, and limited tax credits without the mechanisms that the ACA introduced to stabilize the market.

It is easy to forget the dysfunctional state of discriminatory individual marketplace before the ACA. Forty-seven percent of individuals with health problems were denied coverage or charged higher premiums. Nearly three-quarters of those who shopped for a plan on the individual market did not find one they could afford, and half of those who did buy coverage spent more than 10 percent of their income on it. As Tim Jost and I argued in our own analysis of ACA, state marketplaces need stronger subsidies and a stronger individual mandate. Republicans seek to do the opposite, which threatens to recreate the unstable individual markets that largely failed in states such as New York before ACA’s passage.

Price and other Republicans have proposed one partial solution to this challenge: moving the most costly patients into high-risk pools, with proposed funding on the order of $1 billion per year. Unfortunately, the track record of high-risk pools is extremely poor. Before the ACA, thirty-five states implemented high-risk pools. Almost all of these efforts were significantly under-funded, and thus imposed punishing premiums, waiting lists, and coverage gaps. For example, many of these pools denied insurance for pre-existing conditions for six to twelve months—defeating the purpose of this insurance for many who came to plans as a refuge. Indeed the ACA itself included $5 billion for a transitional, highly troubled high risk pool intended to assist the most needy patients before the new marketplaces and ACA’s Medicaid expansion came fully into effect.

Before the ACA, more than four million Americans were diagnosed with serious health conditions such as cancer or heart failure and were also uninsured. As of 2008, high-risk-pool participants required public subsidies of between $6,000 and $7,000 per patient to meet basic coverage standards. Adjusting for medical care inflation, this implies that high risk pools for these individuals requires public subsidies on the order of $35 billion annually. Price and other Republicans’ proposed high-risk pools come with accompanying proposed funding of between $1 billion and $25 billion annually, amounts sufficient to cover perhaps 100,000 people. That’s not a serious proposal to address the challenges facing more than a tiny minority of Americans who live with costly preexisting conditions.

Will Repealing the ACA before Replacing It Work?

Republicans might try to elide these difficulties by officially “repealing” the ACA this January on a party line vote through the reconciliation process, and then postponing their “replace” option (oddly enough) until after the 2018 midterms. This strategy brings three huge problems.

First, any viable “replace” option will either snatch coverage from millions of people, or will bear embarrassing resemblance to ACA. Any approach that retains near-universal coverage must necessarily include some combination of four elements: (a) incentives or requirements for individuals to obtain coverage; (b) financial subsidies for people who can’t otherwise afford such coverage; (c) some requirement for what that coverage includes when people actually get sick; and (d) meaningful protections for people with preexisting conditions. We’ve seen that combination before. If there were an easy and popular way to do these things without imposing an individual mandate or providing large public subsidies, Democrats would have done that eight years ago.

Second, Republicans will damage the health care financing system in their initial “repeal” effort by curbing ACA’s financing. Nicholas Bagley notes that prior Republican reconciliation bills included a $346 billion tax cut over ten years, all of which goes to people with annual incomes exceeding $200,000.

Third, a “repeal” vote absent a clear accompanying “replace” introduces fundamental uncertainty into state marketplaces already struggling to attract sufficient numbers of insurers. In a remarkable conversation with Vox’s Sarah Kliff, industry consultant Robert Laszewski identified some of the most important challenges, suggesting that “Republicans are being awfully naïve” to believe marketplaces can avoid collapse under a “repeal and delay” policy: “The Trump administration will have put it in a death spiral.”

Chaos in the Health Care Marketplace

Given this unsure future for the ACA, insurers still must decide now whether to invest billions of dollars in the components of the system. The same is true of hospitals and other organizations contemplating huge investments in diverse integrated care arrangements that depend on the ACA. That’s hard to do when one can’t predict the basic outline of federal policy. Laszewski describes one nonprofit client who continued “under heavy political pressure” to offer a marketplace plan: “They stayed in 2017 under the presumption that Clinton would come and fix the things that needed to get fixed. Now we’ve got repeal.”

Given this unsure future for the ACA, insurers still must decide now whether to invest billions of dollars in the components of the system.

Laszewski’s comments are noteworthy given his position as one of ACA’s most persistent critics. They are also noteworthy given his assessment that the only way forward for Republicans is to immediately reverse course, to provide the same subsidies to marketplace insurers that Republicans loudly opposed and labeled “bailouts.” Leading up to the 2016 campaign, Republicans enacted legislation to cut risk corridor and reinsurance payments that covered insurers’ losses and protected them against key financial uncertainties in state marketplaces.

As intended, these measures helped to induce some insurers to raise premiums or to exit the marketplaces. States’ refusal to embrace ACA’s Medicaid expansion also worsened the marketplace risk-pool, providing a pool of complex low-income consumers with pent-up demand for a wide range of health services. When Democrats owned the consequences, it was good politics to cut subsidies to fragile state marketplaces. There was even a small political fight in the Republican primaries over whether Marco Rubio took too much credit for this. It’s no longer such good politics now that Republicans themselves own the consequences.

Then there is the ACA’s most successful component: Medicaid expansion, which covers about 12 million newly insured people and is working extremely well in the states that have embraced it. The expansion is being pursued most aggressively in deep-blue states. It is also working well in Republican-led states such as Ohio and New Jersey. Republican governors including Vice President-elect Pence enjoy considerable latitude to shape Medicaid policy, and have reached difficult but durable bipartisan negotiated settlements with the Obama administration.

Rolling back the Medicaid expansion would impose huge expenses on states, cities and counties, and safety-net providers. States benefit from a generous federal match now declining from 100 percent on the way to 90 percent. Moreover, many safety-net providers that treat expansion recipients are public-sector entities or receive significant major state subsidies. House Republicans have pledged to substantially reduce these federal matching rates.

The human impact of Medicaid expansion is remarkable.

The human impact of Medicaid expansion is remarkable. A recent New York Times story describes how the ACA fundamentally altered care for gunshot victims:

Some of my patients would be missing their skulls three months after the injury and have to wear helmets,” said Dr. Michael Ajluni, a traumatic brain injury specialist at the Rehabilitation Institute of Michigan in Detroit. “Now they can get their skulls back in place.”

Officials at urban hospitals across the country estimated that before the health law, more than half of their gunshot patients were uninsured. Obligated under federal law, hospitals provided hundreds of millions of dollars in unreimbursed services. Trauma surgeons called in favors for scarce charity openings with specialists, but more often grudgingly sent uninsured patients home, knowing they were unlikely to receive essential follow-up care.

Patients needing bowel diversion surgery, for example, a common necessity for those shot in the abdomen that should be surgically reversed after the intestines heal, instead walked around for months or even years with temporary colostomy bags because many hospitals would not treat them without health insurance.

“I felt deeply ashamed of that,” said Dr. Marie Crandall, a former trauma surgeon at Northwestern Memorial Hospital in Chicago, remembering shooting victims whose colostomies she was unauthorized to reverse.

The risks involved in reversing such policies are obvious, and bring equally obvious political risks. Price has proposed replacing Medicaid expansion and financial supports for marketplace coverage with refundable tax credits. These tax credits are far less generous for low-income individuals and families than are provided under the ACA, and thus would substantially limit available health coverage.

Ryan has pledged to convert Medicaid into a block grant, which would substantially decline over time relative to current projections. He would also replace the ACA’s Medicaid expansion with refundable tax credits. Since the lion’s share of Medicaid spending serves the aged and the disabled, the block grant debate concerns a broader retrenchment of American social insurance that goes well beyond ACA.

The Bigger Health Care Picture

Congressional Republicans would also retrench American health care in ways that go beyond the ACA. Most controversially, they would alter Medicare by turning it into a premium support program, a measure sometimes referred to as Medicare privatization. Commercial insurers already play an important role in Medicare, most prominently through Medicare Advantage, which allows recipients to purchase private plans if they so choose. Price and Ryan would go beyond the current model by shifting the risk for Medicare cost growth from the government to individual recipients. Democrats have pledged to resist these proposals, which are both unpopular and which differ sharply from Trump’s campaign rhetoric. Moderate Democrats such as Indiana Senator Joe Donnelly have announced that they will oppose selection of Representative Price, given their concerns with Medicare policy.

Trump won an unexpected victory, which provided an unexpected opportunity to dismantle one pillar of the Obama legacy. That opportunity brings big risks, too. Some commentators suggest that Republican efforts to bend the health care system to their liking resemble the dog who chased the car and finally caught it on November 8. But that analogy isn’t quite right. Perhaps the better analogy is the bear who chased a car: the bear will likely regret catching up, but the car won’t escape unscathed, either.

CORRECTION: An earlier version of this article incorrectly spelled Seema Verma’s last name with an “n” rather than an “m.” It had been updated accordingly.