Will Republicans Explode the ACA?

Will Republicans Explode the ACA?

Our Thinking / Healthcare /

Will Republicans Explode the ACA?
Calendar07 April 2017

The stalled House ACA repeal and replace effort means the next crucial decision about the ACA’s future will probably be made by the White House. Following the canceled vote on the American Health Care Act (AHCA), the immediate concern on the health reform front is whether President Trump is serious about his threat to let the ACA “explode” – to use his term.

The first – and clearest – signal by the president and congressional Republicans will be whether they continue to fund crucial subsidy payments to insurers – called cost-sharing reductions – that reduce premiums by about $9 billion for millions of the poorest exchange customers. Stopping the payments would virtually guarantee a collapse of exchange markets, causing insurers to flee some markets immediately and nearly all to stay away entirely in 2018, with millions of Americans losing coverage. Employer-sponsored health plans would also feel the repercussions of an individual market collapse as providers would likely look to shift more costs to those plans and employer strategies that rely on the market to provide coverage to part-time workers and pre-Medicare-eligible retirees would need to be reevaluated.

But it appears that GOP sentiment is running toward preserving the subsidies to keep the market stable — an irony given that the House Republicans went to court to stop the Obama White House from spending the money without a congressional appropriation. Last year a federal judge agreed but let the subsidies continue pending an appeal. The parties are scheduled to meet on May 22nd, and the judge could then order Republicans to decide what they want to do. They could withdraw the suit, or the Trump administration could continue providing the subsidies without an appropriation, though that wouldn’t go over well with some conservative Republicans.

The AHCA would have repealed the subsidies in 2020, but Republicans were expected to appropriate funding in the meantime. Now, without the political cover of a repeal and replace effort, it’s not entirely clear that Congress would appropriate the money. Still, some leading House GOP lawmakers believe that the subsidies will be kept in place despite the legal effort to stop them, given the potential political backlash.

If Republicans cut off the payments, Democrats could go to mat over the issue when Congress needs to pass a new government spending bill at the end of the month. That bill will need 60 votes in the Senate, so this has the potential to become a government shutdown issue.

The uncertainty is weighing heavily on health insurers. They have until June 21 to decide whether to participate in the 2018 federally-facilitated marketplaces, and the deadline for participation in some state-run exchanges is even earlier. The clock is ticking.

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