Repealing ACA Without Replacement Could Destroy Exchanges, Conservative Says

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By Sara Hansard

Dec. 1 — Republicans should work to get some Democratic agreement on a plan to replace Obamacare rather than just repeal the health-care law without an alternative, a conservative health-care scholar said Dec. 1.

Congressional Republican leadership is talking about moving quickly in 2017 to repeal budget-related items in the Affordable Care Act, American Enterprise Institute (AEI) scholar James Capretta said at a briefing. Such targets for repeal include subsidies for low- and moderate-income people to buy health insurance, the law’s Medicaid expansion, the individual and employer mandates to buy and provide health insurance, as well as taxes imposed under the 2010 law.

But “if you move forward with a repeal bill like that, the exchanges are already somewhat unstable financially,” and insurers may not be willing to participate in them, he said. Capretta’s group, the AEI, is a free-market-oriented research organization that has been critical of the ACA.

How congressional Republicans and President-elect Donald Trump will make good on their promise to repeal and replace the ACA is the question of the day. Republicans are discussing repeal of major provisions of the law in early 2017, but delaying the impact for two years. Some Republicans are betting Senate Democrats from states that voted for Trump, who are probably needed to get Senate approval of a replacement plan, will be willing to agree to a replacement over the next two years.

But Capretta argued that if the 20 million people who have gained coverage under the law are faced with higher premiums or the loss of coverage, Republicans could end up having to reinstate a law much like the ACA in the long run.

`Positive Vision’ Needed

Republicans “have to put forward some kind of positive vision to make sure people can get health insurance,” Capretta said. If Republicans try to delay a replacement plan for two years, “the odds are you won’t come up with anything credible or workable,” and millions of people could lose their health insurance, he said.

Congressional Republicans have promised repeatedly since the ACA was enacted that they will repeal and replace it, Gail Wilensky, a past administrator of what is now the Centers for Medicare & Medicaid Services, told Bloomberg BNA Dec. 1. Wilensky is a senior fellow with the humanitarian assistance organization Project Hope.

“Crafting a package that can effectively replace the ACA would be much better if you could include nonfunding elements that relate to the insurance,” Wilensky said. However, she added, “I fear the political pressure to show something will overwhelm the policy preference for packaging it together.”

A reconciliation bill that only includes provisions related to the budget can be passed in the Senate with a majority vote, and Republicans are expected to have a 52-48 majority in 2017. Legislation passed in the House and Senate in late 2015 is expected to be the template for Republican action early in 2017. The legislation was vetoed by President Barack Obama.

But other changes to the health-care law being contemplated by Republicans are likely to need a 60-vote majority to be passed under the rules of the Senate.

Ryan’s Idea a `Good Plan.’

The Better Way health care plan put forward by House Speaker Paul Ryan (R-Wis.) is “a good plan,” Capretta said. “It’s got the elements there that are clear and pretty straight-forward about how you’ve got to move forward.”

If Republicans could “rally around that,” put it into legislative form and get a cost estimate, “that’s the way to go,” Capretta said.

But Capretta fears “there isn’t unanimity among Republicans about that plan” because it includes refundable tax credits to replace the ACA’s subsidies for public health insurance exchange plans. Financial assistance comparable to the tax break that people get for employer-paid health coverage needs to be provided for people who don’t get employer coverage, Capretta said. He estimated the tax credits need to be about $5,000 on average for families or $2,500 for individuals.

Opposition to Tax Credits

Some conservatives argue the tax credits are a new entitlement “with a different label on it,” Capretta said. “They have to get over that.” People with incomes in the range of $20,000 to $30,000 a year without access to an employer plan can’t afford health insurance without assistance from the federal government, he said.

In addition, there needs to be a requirement that people have continuous coverage in order to keep Trump’s pledge guaranteeing that people with pre-existing conditions could get health insurance without paying a penalty, Capretta said. Without some incentive for people to keep health insurance, people could wait until they get sick to buy coverage, which would lead to higher costs and premiums.

Under a continuous coverage requirement, if people stay insured and they move from employer coverage to the individual market they would not be penalized based on health conditions, Capretta said. But if people leave the health insurance market and try to buy coverage later, “you do have to have some kind of a way of assessing that so that people don’t game the system,” he said.

The ACA’s exchanges provide a good structure for delivering health insurance, Capretta said. “The design of [an] online portal for selecting insurance, and having it fairly transparent and clear, and then having a subsidy attached to it that can go to the person’s selection was actually a pretty big innovation, frankly,” he said.

“I would not just throw it overboard,” Capretta said. But it shouldn’t be a monopoly, he added. “Let’s allow the private sector to participate more fulsomely” and expand choices. “That infrastructure is useful, and it could be good for a GOP-type plan as well as the ACA.”

To contact the reporter on this story: Sara Hansard at

To contact the editor responsible for this story: Kendra Casey Plank at

For More Information

Information on the AEI briefing is at

Information on the Better Way health care plan is at

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