Repair or Replace?

Just how easy is it to improve the Affordable Care Act?

Published in

Voices of the Revolution

7 min readFeb 14, 2017

On Jan. 13, 2017, the Senate approved a budget reconciliation resolution that, without repealing the ACA outright, has the potential to dismantle it. Budget reconciliation could, among other things, enable elimination of taxes and fees that are used to pay for premiums for low-income individuals. On his first day in office, President Trump signed an executive order granting increased flexibility on standard plan requirements and on penalties associated with the individual mandate. Loosening enforcement in this way further reduces the effectiveness of ACA.

So now comes the hard part for Republicans — replacement. So far, none of the proposed replacement plans meet the President’s goals for health care reform. Delivering on the promises made for healthcare reform might be easier to accomplish by repairing the parts of ACA that most agree need fixing — elements of the state exchanges for individual and small business health insurance.

And, although the Republicans initially wanted to repeal and worry about replacement later, sentiment seems to have shifted to at least partial replacement simultaneous with repeal.

Elements of ACA Replacement Under Discussion

So what are the replacement options currently under consideration? Trump’s promises (see his interview with Washington Post) include providing insurance for all while lowering premiums and deductibles. Other elements in potential replacement plans include:

Continuing to offer coverage up to age 26 under a parent’s policy
Allowing guaranteed issue (i.e., coverage can’t be denied due to pre-existing conditions) by contributing to state high-risk pools
Placing added limitations on enrollment (continuous coverage or up-charge to enroll after a break)
Allowing more variation on premiums charged based on age and gender
Contributing to affordability for patients through tax credits and increased use of health savings accounts
Capping the amount employers can deduct from taxable income for health insurance costs
Enabling sale of policies across state lines
Changing the basis of Medicaid grants to states

Most replacement alternatives also eliminate payments to Planned Parenthood. While the Hyde Amendment already makes it illegal to use federal funds to pay for abortions, the new wrinkle would eliminate payments to Planned Parenthood for family planning, cancer screening in both men and women, and all other women’s health services.

Challenges of Replacement

If the Affordable Care Act is repealed entirely instead of being revised, the effects would be catastrophic.

Loss of Coverage — The Congressional Budget Office estimates that 19 million Americans would initially lose their coverage with the repeal of Obamacare, increasing to 24 million after a few years. It’s not clear how many will have coverage restored in any of the replacements under discussion.

Premium Increases — CBO also estimates premiums for individuals could go up 20% and eventually double. Again, there is not a clear way to avoid the increase in the plans under discussion.

Shrinking Insurance Markets — A continued requirement for guaranteed issue without an individual mandate presents a classic insurance problem. To participate in a market, insurers have to agree to take high-risk individuals without the assurance that there will be enough healthy people to offset the risk. A similar problem arises if healthy insurees are allowed to switch to richer coverage when they get sick.

Increasing the Deficit — Without the taxes and fees included in ACA, the $32.8 billion in tax credits and $93.3 billion for the 32 states that expanded Medicaid will have to come entirely from other sources.

Sales Across State Lines — A good theory but how do insurers compete vs. different state regulations and no standard plan?

Additionally, there are particular problems with the replacements contemplated for women. Increased underwriting might include a return to policies that charge more for women than men. The increased flexibility in plans may include dropping required coverage for family planning or maternity care. Planned Parenthood covers more family planning services than any other source (36%), so elimination of payment to Planned Parenthood will leave a sizable gap in available services.

Some of the complaints about ACA can’t be solved by repeal or replacement.

A recent Commonwealth Survey finds 77% of those in the new ACA marketplaces are satisfied with their coverage. Nonetheless, ACA has been a lightning rod for criticism. Here are some areas of complaint.

Being required to have insurance — including coverage for things we don’t need. The requirement to have insurance is a cornerstone of ACA. The insurance mandate forces healthy individuals into the risk pool to offset those with pre-existing conditions. Republicans are apparently hoping high risk pools and stricter requirements for continued coverage will accomplish the same thing.

Not being able to keep my own doctor: The initial promise that you could keep your own doctor was unrealistic and will likely continue to be undeliverable. All insurance plans, including Medicare, have networks of doctors, hospitals and other service providers who will accept the agreed upon payment. Most plans are constructed to try to discourage using services outside of the network by making it very expensive.

Too few choices — or no choices of providers: Insurers withdraw from markets where they can’t charge enough to make money. So — a number of insurers have withdrawn from the state markets for individual and small business insurance.

Proposals for ACA replacement plans argue they can turn this around by allowing insurers to differentiate more on rates based on age and gender. In other words, women of childbearing age and older individuals might pay more, healthy young people less.

Some of the replacement plans offer a stripped down plan for the young and healthy to address the complaint of having to buy more coverage than they need. The problem here is similar to that of giving people the choice of whether to buy insurance or not. Logically people would buy up to a better plan when they become concerned about becoming sick.

Overall health insurance cost: premiums and overall out of pocket expenses: Since ACA, insurance costs have gone up but, it is argued, at a lower rate than they would have without ACA. To cover the increased risks of newly insured patients in the individual and small business markets,, insurance companies have taken premiums up sharply in the last year.

Whether for increased deductibles or for premiums, the increasing cost of all health insurance — employer paid plans and individual plans, Medicare-reflects the rising cost of health care. This is a complex issue, which will, if anything, be made worse if ACA is repealed outright and uninsured patients are driven back into emergency rooms. If the replacement succeeds in lowering prescription drug costs, reducing administrative costs, or succeeds in rewarding wellness rather than paying for service by service, the rise in costs could be slowed. But ACA was not the cost driver.

Alternatives to Repeal and Replace

Much of the publicity about increased cost has focused on individual and small business insurance offered through the state exchanges. There are alternatives to holding down the cost in these problematic markets. In an August 2016 Wall Street Journal article, economist Robert Litan suggests four ways to use a scalpel rather than a sledgehammer to fix ACA problems.

The pain of high premiums is particularly acute for individuals who don’t quite qualify for Medicaid even when the state has expanded eligibility to 138% of poverty. They could be a sliding scale of income adjusted tax credits.
The federal government could expand the compensation to insurance companies for high-risk pools. This might include rural areas where insurance provider competition has been scarce.
New legislation could improve the quality of the pool being insured by increasing the incentive to healthy young people to get insurance — e.g. keep the individual mandate and add a higher penalty for failing to purchase insurance
Most of the world puts together an insurable mix of risks by offering a single payer option — like Medicare for everyone. Short of that highly challenging political battle, ACA might add a public option in state exchanges as was originally attempted.

In short, there are ways to address some of the complaints about ACA without taking the risk of wiping out the existing plan. We should start by fixing the problems we all agree on, and go on from there.

Written by Lucy Kennedy and edited by Justin Zarb and Katherine Sylwester

Call your Senators and House Representative now and tell them that repealing the Affordable Care Act would hurt millions of Americans.

It takes less than five minutes to call. Look up their numbers now and use the script below to make your voice heard. Set a reminder on your phone to call back every day until Republican leadership agrees to health care for all Americans.

Phone Script

Hello, my name is _______, I live in __(city/town)__, and I’m calling about the Affordable Care Act. Healthcare is a right that every American deserves, and America needs to join the rest of the developed world in providing healthcare to all. Please tell _______ to vote against repealing the Affordable Care Act. Without the Affordable Care Act, millions of Americans would lose health coverage (or tell them about your personal experiences).