Trumpcare Gridlock May Be a Boon for Health Care
The GOP's plan to repeal and replace the Affordable Care Act now looks like it might be even worse for hospitals and insurers than many feared, and the market reaction is as you'd expect.
But the bill's growing set of bad reviews may actually be a bonus -- it looks deader than ever in its current form.
The vote math was already tough for the replacement bill, which has been attacked from all along the political spectrum and by both providers and insurers.
The Congressional Budget Office threw the sinking bill an anchor late Monday when it estimated 24 million people would lose insurance under the law by 2026, surpassing even the highest outside estimates. Several GOP senators raised doubts about the bill after the nonpartisan scorekeeper's warning.
So what's next for the health-care industry if (probably when) the replacement plan dies? Gridlock may be the most likely outcome. And for many health-care providers, that may be the best outcome -- though their stocks weren't feeling it Tuesday morning:
The CBO predicted the GOP law would wipe out all of the increased insurance coverage the ACA achieved, and kick a few more people off for good measure. Fourteen million people would become uninsured in 2018 alone, according to its estimates.
That would be bad news for insurers in the ACA's individual markets and worse news for hospitals who would have to treat the uninsured in emergency rooms.
Insurers participating in Medicaid would also suffer under the law, which would slash federal funding for the program by $880 billion through 2026. The CBO's estimated increase in the uninsured rate after 2020 comes in large part from declining Medicaid enrollment. Much of the rest comes because the GOP tax credit is less generous than the ACA's subsidies and is redistributed in a way that would make insurance unaffordable for many old and low-income Americans.
The market may be reacting to such stark numbers. But those same numbers may be enough to sink the GOP plan. That would leave in place the ACA -- which has its own troubles.
President Donald Trump has threatened to let the ACA die if the GOP replacement plan fails. But that death may be slow in coming.
Some parts of the country are seeing the sort of rising premiums and declining competition in individual insurance markets that spell trouble. But most of the people affected are protected by Obamacare subsidies. Premium growth has slowed for most Americans over the past few years.
Insurers could hurt the ACA by fleeing the individual markets. According to an Axios analysis, if a group of key insurers including Anthem Inc. and Centene Corp. leaves the exchanges, then 461,000 people in various local markets could be left without an insurer. About 1 million people would have just one option.
But even in the unlikely scenario that several of the insurers Axios mentions leave at once, a substantial majority of the more than 12 million exchange participants would likely still have two or more insurers in their market.
The markets would be less stable, but a widespread death spiral is likely not in the near-term offing. For what it's worth, the CBO score said it expects the individual market to remain stable under the ACA.
Trump and his party could sit back and watch the ACA flounder. But the political risk of that approach is they might end up taking all the blame for the suffering that would result. That may pressure them to make short-term fixes to keep insurers around, building on a market stabilization rule announced in February.
Both parties working together to shore up the ACA is arguably the best possible outcome for most stakeholders. But that would require the GOP to concede Obamacare isn't quite the monstrosity it has claimed, an unlikely act of political and intellectual bravery.
Republicans could go back to the drawing board on a new replacement plan. But the essential intraparty conflict -- one faction wants to gut the ACA, while others want to keep parts of it intact -- isn't going anywhere. Fixes to appease the hard right, such as ending the Medicaid expansion and killing the bill's tax credits, would result in larger coverage losses, which are unacceptable to moderates.
The most likely result is gridlock, minor changes to the ACA, and an internal GOP health-care fight that could last for months. It sounds messy, and would be.
But if the alternative is the current bill, then many providers and insurers will take it.
To contact the author of this story:
Max Nisen in New York at firstname.lastname@example.org
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Mark Gongloff at email@example.com