Republicans are coalescing around a plan to repeal Obamacare — and set up a deadline, three years in the future, to pass a replacement plan.
“We’re talking about a three-year transition now that we actually have a president who’s likely to sign the repeal into the law. People are being, understandably cautious, to make sure nobody’s dropped through the cracks,” Senate Majority Whip John Cornyn (R-TX) told Politico.
The idea, politically, makes sense. Republicans can quickly make good on their promise to repeal Obamacare, and then get to the hard work of actually figuring out what should come next.
But here’s the problem: There would be huge real-world impact of a repeal vote, regardless of when it actually takes effect. A repeal vote would tell the insurers that sell on Obamacare’s marketplaces to get out of the marketplace as soon as possible.
“Insurers have got to put their products together this spring, and we’re right in the middle of killing Obamacare,” says Robert Laszewski, a longtime health insurance consultant. “Are they going to submit proposals to sell in 2018? Why would they stay in the pool?”
The experts I’ve talked to over the past few days argue that a repeal vote would give health insurers good reason to quit the marketplaces — and that could leave 10.4 million Obamacare marketplace enrollees in the lurch.
“If we don’t know what the replacement plan looks like, many insurers might drop out of the marketplace or price very conservatively, charging a lot more because of the risk and uncertainty in the market,” says Topher Spiro, vice president for health policy at the left-leaning Center for American Progress.
Obamacare’s marketplaces need private insurers. Who wants to stay in a marketplace that’s closing down?
Obamacare’s marketplaces depend on private insurers showing up to sell coverage — and even before the threat of repeal, that was a struggle. The marketplace lost many plans this year as the people buying coverage turned out to be sicker and older than insurers initially expected.
Even before the election, Obamacare’s marketplaces were in a difficult place. There were serious discussions about whether they could retain enough insurers to continue to function properly, particularly in rural areas with small populations. Putting an expiration date on the marketplaces will only make insurers more reticent to stay in the market — and more likely to drop out.
Insurers need to make decisions far in advance about whether they’ll sell on the marketplaces. As Spiro pointed out in a recent report, insurers need to tell the government by May 2017 whether they’ll participate in 2018.
So let’s say we’re in May 2017 and Republicans have indeed gone the repeal-and-delay route that Cornyn outlined. They’ve passed a bill that ends Obamacare in January 2020 and are starting to debate replacement plans. Insurance executives can’t wait for legislators to delay repeal when they get close to the deadline — they need to decide this spring whether they want to sell on the Obamacare marketplaces.
“Carriers have to rejigger everything,” Laszewski says. “They have to make decisions very early about whether to be in.”
Insurers won’t know who will sign up for coverage in the face of uncertainty either. But it seems safe to expect that the sickest people, who value their coverage the most, would be the most likely to stick around.
“[Insurers] would not know how enrollees might react to the uncertainty in 2018,” Spiro says. “In general, the sickest ones would be the least likely to drop coverage, resulting in a sicker risk pool.”
Even before Donald Trump’s election, when Obamacare’s future seemed secure, the Obama administration sometimes struggled to get insurers on board. There have been multiple instances where no insurers wanted to sell in certain rural, low-population counties. The Obama administration had to swoop in at the last minute and convince at least one plan to sell.
Again, that was before Trump’s election. So think about what an undesirable business the marketplaces become when you’re given notice that the whole thing will shut down in two years.
There is a way to save Obamacare’s marketplaces, but it’s expensive
A few experts I’ve talked to have floated me the same idea about how a Trump administration could keep insurers in the marketplace: promise to cover any significant losses they might experience in 2018. Make it less risky for insurers to stick around for one more year by getting rid of the financial downside.
“They are going to have to subsidize the carriers in 2018 if they want them to stay around,” says Laszewski.
This wouldn’t be unprecedented: The Affordable Care Act included a reinsurance program that was meant to stabilize the market in its early years. The reinsurance program was funded with $10 billion in 2014, with funding ratcheting down to $5 billion in 2015 and $4 billion this year. The program was temporary, only lasting three years. It limited how much health plans could lose and encouraged health insurers to join an untested market.
This would, obviously, cost money. And it’s hard to see a Trump administration allocating funds to make Obamacare work better. But without any kind of stabilization program, it looks like Obamacare wouldn’t just be status quo in a repeal-and-delay world — it would work a lot worse.
There are tens of millions of Americans who rely on the Affordable Care Act for health insurance coverage — who aren’t quite sure what the 2016 election, and Republicans’ promises of repeal, mean for them.
We’re launching a Facebook group for those people to talk about their shared experience. We want this to be a place where Vox readers in this situation can share their stories. From time to time, we’ll ask this group questions about their experiences — some of which might lead to stories. If you’d like to request to join the community, use this link.
Watch: Repealing Obamacare could change millions of lives