Home Column The perilous costs of repealing the Affordable Care Act

The perilous costs of repealing the Affordable Care Act

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As President-elect Donald Trump finalizes his White House team and maps out his priorities in advance of Inauguration Day, it seems certain that one of his first acts will be to ask Congress to swiftly repeal and replace the Affordable Care Act, better known as Obamacare. Some plans call for repealing it first and then passing a replacement bill down the road.

Repealing without immediately replacing the ACA will create a protracted period of uncertainty – and uncertainty bedevils business decisions.

And immediacy alone isn’t enough. A replacement plan must also adequately address the harmful consequences that repealing the ACA will bring. I believe the three most troubling impacts will be to insurance coverage, state budgets and direct hospital payments, so let’s examine each of them.

Insurance coverage. Thousands of Westchester County residents and 700,000 New Yorkers in total stand to lose their health insurance if the ACA is repealed. That includes 220,000 who gained coverage through Medicaid expansion, 272,000 who buy it through the state’s health insurance exchange with the support of federal subsidies and 320,509 who receive it at low cost through the state’s ACA-created Essential Plan. Nationwide, as many as 22 million Americans could lose their health insurance if the ACA is repealed before an adequate replacement plan is in place.

Repealing without a seamless replacement plan will also cause major insurance market disruptions. The American Academy of Actuaries warms that “repealing major provisions of the ACA would raise immediate concerns that individual market enrollment would decline, causing the risk pools to deteriorate and premiums to become less affordable.”

State budgets. The ACA gives states substantial benefits via enhanced Medicaid rates for adults with incomes up to 138% of the federal poverty level. Repealing New York’s Medicaid expansion and the Essential Plan would dramatically impact the New York state budget. The Urban Institute estimates that if New York reverted to pre-ACA Medicaid eligibility levels, its Medicaid spending would increase by nearly $2 billion in 2021. This loss would be greater if ACA eligibility levels were maintained. New York City and county governments would also suffer from any loss of federal Medicaid funding, and the state could lose an additional $1 billion if the Essential Plan is eliminated. According to state Comptroller Thomas DiNapoli, repealing the ACA without replacing it could ultimately cost the state $5.7 billion annually.

There’s no easy solution to losing billions in federal health care funding. If New York responded to repeal by keeping individuals covered with state-only funds, it may have no choice but to also increase taxes or reduce health care provider rates to pay for it.

Direct hospital payments. Hospitals absorbed huge Medicare cuts to pay for the ACA’s coverage expansion on the theory that they would benefit from reductions in the uninsured population—but repeal plans do not restore these cuts even as coverage is stripped. This puts hospitals in even greater peril than they were before the ACA.

In addition to direct hospital payments, the American Hospital Association estimates that eliminating health insurance from 22 million people would reduce hospitals’ net income by a staggering $165 billion nationwide over 10 years in the form of uncompensated care.

And make no mistake, hospitals are already a leaking ship in a stormy sea. In New York state alone, 27 financially distressed hospitals are on a state “watch list” and in danger of closing and many more bleed red ink every year. Repeal could push some over the edge.

With the consequences of repealing the ACA without an immediate replacement quite clear, let’s revisit the uncertainty that will accompany a delayed replacement plan. Even if the ACA is phased out over two or three years in an effort to minimize its adverse impact, that timeline will diminish the ability of hospital CEOs and other health care executives to make critically important decisions.

That’s literally thousands of health care entities and millions of health care jobs—from hospitals and their workers to medical device makers to drug companies to vendors that launder sheets and towels—that could be disrupted. And given the health care industry’s deep interconnectedness to virtually every other industry, that’s an uncertainty the American economy and the business community simply cannot afford. There is too much at stake.

The ACA is far from perfect and few would disagree that long-term improvements should be thoughtfully explored. But the Trump administration and Congress would be wise to not let the perfect be the enemy of the good—the ACA has ample good in it—and to avoid the vast uncertainty that weakening the nation’s entire health care infrastructure would surely trigger.

As John J. Lynch III, president and CEO of Main Line Health, recently told The New York Times about repealing the ACA, “I’m dreading the unpredictability.”

Kenneth E. Raske is president and CEO of Greater New York Hospital Association, a trade association representing more than 160 member hospitals and health systems in New York, Connecticut, New Jersey and Rhode Island. He can be reached at 212- 506-5401or raske@gnyha.org.

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