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Immediate Harm Even from “Delayed” Health Reform Repeal, Urban Institute Finds

Congressional Republicans claim that, when they repeal the Affordable Care Act (ACA) early next year, they can avoid hurting consumers by delaying the elimination of its Medicaid expansion and marketplace subsidies for two years or more.  This delay, they say, would ensure that “no one is worse off,” as House Speaker Paul Ryan put it, while Republicans supposedly craft a replacement that will be available before the ACA’s coverage provisions expire.  A new Urban Institute study, however, reveals the immediate and disastrous consequences of this approach.

Specifically, 4.3 million more people would become uninsured and insurers would suffer sizable financial losses in 2017.  That’s because the Republican repeal plan would swiftly trigger a “near ‘death spiral’” in the individual health insurance market that would accelerate during 2018, Urban finds, as insurers withdraw from the market or raise premiums significantly and relatively healthy people drop their coverage. 

Urban estimated what would happen if legislation similar to the Republican budget reconciliation bill that repealed major parts of the ACA (which President Obama vetoed in January) became law.  Urban assumed that the premium tax credits and cost-sharing reductions now available through the ACA’s marketplaces would continue for two years, while the requirement for people to have coverage or pay a penalty (the “individual mandate”) and for employers to offer coverage to their workers or pay a penalty (the “employer mandate”) would end immediately.  Urban assumed that the ACA’s market reforms — such as the guarantee that insurers will offer coverage to people with pre-existing health conditions without charging them higher premiums — remain in place.

Urban concluded that the number of uninsured would immediately rise by 4.3 million in 2017 because there would no longer be an individual mandate that required people to buy coverage.  The “risk pool” — those covered in states’ individual health insurance markets — would worsen right away because healthier people would be likelier to drop their plans.  Consequently, insurers in the individual market stand to lose nearly $10 billion in premium revenue in that year alone as they would have to continue to accept people with pre-existing health conditions, charge them the same as healthier people, and cover the “essential health benefits.”  These insurers, who already endured a volatile transition period as the ACA was implemented, would fall an estimated $3 billion short of covering their costs under this scenario, Urban found.  Many would flee the market.

And that’s just the short-term damage — before Urban accounts for the repeal of the Medicaid expansion and marketplace subsidies after the two-year delay.  By 2019, the number of uninsured would more than double, rising by 29.8 million, Urban estimates, and the number of people enrolled in coverage in the individual market would drop from 19.3 million to 1.6 million. 

The Urban analysis shows the devastating effect of the likely congressional Republican plan that repeals the ACA without replacing it.  Even a “delayed” repeal would have immediate, harmful, and costly consequences for people’s access to coverage and for states’ individual health insurance markets.