Thursday, September 13, 2012

Romney Intends to Repeal “Obamacare” in 2013—Has He Thought Through the Unintended Consequences If He Does?

Romney says he will repeal “Obamacare” if he is elected. Given that this has been part of his platform from the beginning of the campaign he is entitled to do that if he wins.

I did not support passage of the Affordable Care Act (ACA) in 2010 because I saw it as an unaffordable entitlement expansion with no real hope of containing costs.

But the practical reality of killing the Affordable Care Act in 2013 is a different matter.

It took 60 Senate votes to pass the new health care law in the first place. It will take 60 votes to completely repeal it. There is no way Mitt Romney will have 60 Senate votes for repeal in 2013. If the Republicans win the Senate, and that is becoming more and more of an if, they will be lucky to have more than a very few seats above 50.

What Romney could do with a bare Senate majority, and Republican control of the House, is defund the ACA—gut it of its money. The Republicans could do this through the same Senate budget reconciliation rules the Democrats used to pass the final components of the law in the first place.

But that means a couple of very important things.

First, Republicans have a long list of other big budget related issues on their to-do list. Romney’s first budget priorities will almost certainly contain his promises to tackle the deficit and get the economy in order. He says he is going to do this by reforming the tax system, permanently fixing the $1 trillion sequestration issue, and reforming Medicare and Medicaid, while increasing defense spending. And, it is likely the new Congress will have to deal with the expiration of the Bush tax cuts as its first order of business. All of this in one budget season will be a huge lift. It will likely be late in 2013 before the Republicans produce a final budget. Rarely, even in the easiest political times does a budget get completed before December.

The problem with this timing is that the Affordable Care Act is scheduled to go live with the bulk of its provisions on January 1, 2014. Starting on October 1, 2013 people will be able to start signing up for health insurance on the new exchanges so they can receive tens of billions of dollars in annual subsidies in order to purchase health insurance.

Also on January 1, 2014, as many as 15 million new people will be eligible for the ACA’s Medicaid expansion. Complicating this is the Supreme Court decision that makes the Medicaid expansion optional for each state. But every state will have to decide whether they are going to cover their share of the 15 million Americans originally estimated to be eligible for it. While many states are now saying they will not participate, that decision is nowhere near final in any state with the hospital and physician lobby as well as advocates for the poor intent on their state getting the hundreds of billions of dollars in new federal payments the ACA has promised.

Many states are set to have a huge and protracted debate over the Medicaid expansion—often that debate will involve negotiations with the federal government over the terms under which they might be willing to make that expansion. Expanding their programs will require lots of planning and work. If Romney is in the midst of trying to gut the Medicaid money from the ACA during 2013, what are these states supposed to do?

Most employers will be required to provide coverage or pay a fine starting on January 1, 2014. Insurance companies have to get new products ready for the insurance exchanges and fundamentally change their underwriting and pricing to comply with the new insurance market rules on January 1, 2014. Those health plans offering private Medicare plans are due for big cuts in 2013 and 2014 under the ACA. Doctors and hospitals will need to be ready for their own Medicare cuts under the ACA. Many are spending millions of dollars building the new Medicare Accountable Care Organizations (ACOs) to deliver care—they could instantly evaporate if the law is defunded. A growing number of new health insurance co-ops—most often provider driven—have been granted tens or hundreds of millions of dollars each to build new health plans and that money could be instantly gone mid-way through the building process.

The states are expected to have their insurance exchanges ready on October 1, 2013. If they don’t the Department of Health and Human Services (HHS) is supposed to have a back-up exchange ready to go. Will a Romney administration continue to build these back-up exchanges while the law is still on the books?

The Senate's budget reconciliation process is a long and complicated one--you don't just whip it out on January 22nd and quickly pass a bill. So, if Romney is in office with a Republican Senate majority big enough to defund the new health law, what are consumers, employers, insurers, providers, state regulators, and even HHS supposed to do in the meantime?

Romney has also said that if elected he will quickly appoint a Secretary of HHS who will let everyone off the hook through new regulations.

How is he going to do that? The ACA might be unpopular but it is the law of the land. The only way to get rid of it is to repeal it—or to legally cripple it by defunding it.

It is hard to believe that a President would simply decree that a 2,800-page law could be ignored. If the President of the United States can pick and choose which laws to follow, why can’t the rest of us? The rule of law is pretty basic to our system of government.

Even if a Romney administration tried to circumvent the health law statute by choosing to ignore it, you have to believe the ACA’s advocates would be in any number of federal courts pretty quickly.

And once we got through 2013, there would still be some pretty big residual problems if Republicans were able to defund the law and thereby kill some of its biggest parts. That is because gutting the money from the bill under budget reconciliation rules would still leave lots of those 2,800 pages of the original legislation in place. The biggest element still left after defunding would be the insurance reform rules.

Under the new health law, starting on January 1, 2014, insurance companies will no longer be able to refuse to cover people with pre-existing conditions. They will have to offer insurance products predetermined by government regulation, underwrite to a minimum 80% medical loss ratio, and charge older people no more than three times the premiums they charge younger people.

These provisions are popular and would continue to be popular. The problem is that if the Republicans gut those elements of the new health law that are budget related, they would kill the individual mandate to buy insurance as well as the subsidies consumers would have used to afford health insurance, that now averages $15,000 a year for a family.

While consumers might be happy to see the individual mandate repealed, all of these changes would leave insurance companies being forced to sell insurance policies to any person about anytime they wanted to buy one—whether they are sick or healthy. The insurance industry supported insurance reform in the new law with the expectation that they would get the individual mandate and the insurance subsidies necessary for a cross section of the sick and healthy population and a workable market. Instead, the insurance companies could be faced with an unworkable market—not only for them but also for consumers who would face dramatically higher prices as a result. (See my earlier post on health insurance costs in New Jersey)

The Congress could let the insurance industry off the hook—but not without Democratic votes and I doubt many Democrats would want to help deconstruct their signature domestic policy achievement.

If Mitt Romney is elected President, sweeps more than 50 Republican Senators in with him, and holds the House, he and the Republicans have a legitimate claim on their ability to follow-through and get rid of “Obamacare.”

I understand Mitt Romney’s political and policy objectives here. But I do not understand how he is going to do it without creating one hell of a mess.

Obama vs. Romney: A Detailed Analysis of Mitt Romney’s Health Care Reform Plan

Romney vs. Obama: The Romney-Ryan Medicare Plan Compared to the Obama Medicare Plan—Who’s Telling the Truth on Medicare?

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