The Cato Institute

Did Republicans Just Repeal Obamacare?

Short answer: No. 

House Republicans have approved a bill to revise Obamacare with only one vote to spare. Democrats and the media are having such conniptions about the American Health Care Act, you’d think Republicans were really about to repeal Obamacare. They’re not.

Rather than do what their supporters sent them to Washington to do — repeal Obamacare and replace it with free-market reforms — House Republicans are pushing a bill that will increase health-insurance premiums, make health insurance worse for the sick, and ensure that Republicans rather than the real cause (Obamacare) will take the blame.

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Five Unavoidable Obamacare Reform Realities

The congressional Republican bill is flawed, but so are many of the talking points being used against it…

It has been barely a week since the Republican plan to (sort of) repeal and replace Obamacare was unveiled and already the proposal has been savaged from both left and right, by most of the media, by various interest groups, including doctors, hospitals, and insurance companies, and by virtually anyone else with an opinion. Outside of Paul Ryan, it is hard to find anyone who truly likes this bill.

While it is true that the American Health Care Act is a deeply flawed bill that perpetuates — and in some cases exacerbates — some of Obamacare’s worst aspects, many of the talking points being used against it are even worse.

Here are the top five things to keep in mind about healthcare reform…

1. There will be losers as well as winners. Every piece of legislation creates winners and losers. Obamacare did. There were far more losers than winners, but some of those who won under Obamacare will be losers under the Republican plan. 
   
2. There will be more winners than losers. Premiums would be lower under the GOP plan starting in 2020, about 10 percent lower by 2026. Plus, the more than $1 trillion in tax cuts — many for the middle class — and the $337 billion reduction in deficits over the next ten years mean more jobs and economic growth, a big win for everybody.
   
3. 14 million people are not having their insurance taken away. Much of the projected decline in coverage stems from CBO’s belief that, without the individual mandate, many people would choose not to buy insurance. 
   
4. Of the 25 million fewer insured in 2026, 14 million would come from a reduction in Medicaid enrollment. That may sound alarming, but Medicaid was not only fiscally unstainable in its current form, it provided barely minimal care. Reforming Medicaid in a way that encourages states to innovate and focus more of their resources on the most vulnerable populations can only benefit those most in need.
   
5. The alternative is Obamacare not utopia. Projections of how many people would be insured or what premiums would be ten years from now assume that Obamacare would survive that long. It couldn’t, not in its current form.
   

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“Replacing” Obamacare with…Obamacare-Lite?

The House Republican leadership bill does not replace Obamacare. It merely applies a new coat of paint to a building that Republicans themselves have already condemned….

Earlier this week, the Republican leadership of the House of Representatives released legislation it claims would repeal and replace ObamaCare, but the House leadership bill isn’t even a repeal bill. Not by a long shot.

Instead, the bill is a train wreck waiting to happen that would repeal far less of Obamacare than the bill Republicans sent to President Obama one year ago. 

The Obamacare regulations it retains are already causing insurance markets to collapse. It would allow that collapse to continue, and even accelerate the collapse, leaving seriously ill patients with no coverage at all. Instead of fixing the issues caused by the ACA once and for all, this new bill would mean Congress would have to revisit Obamacare again and again to address problems they failed to fix the first time around. 

Here are some of the major issues…

• Medicaid Expansion
• The House leadership’s bill would not even start to repeal ObamaCare’s Medicaid expansion until 2020, more than two and a half years from now, and even then would repeal it only one enrollee at a time. It is likely that the number of states participating, and the number of people enrolled in the Medicaid expansion will be higher after “repeal” than before, which means the Medicaid expansion may never disappear at all. 
• Medicaid Reform
  
• States would get additional federal dollars for each additional person they enroll in their programs. But states would face the full marginal cost of providing new or existing benefits to enrollees. Just as Obamacare’s Medicaid expansion creates incentives for states to expand their programs to able-bodied adults, while reducing access to care for the aged, blind, disabled, children, and pregnant women, the House leadership bill would create (or preserve) an incentive to expand enrollment to less vulnerable populations while cutting benefits for more vulnerable populations.
  
• Private-Insurance Overhaul
  
• The House leadership bill retains the very Obamacare regulations that are threatening to destroy health insurance markets and leave millions with no coverage at all. 
• Taxes
  
• The House bill zeroes out the individual and employer mandates and outright repeals all manner of ObamaCare taxes. In a pretty crass budget gimmick, the bill retains the “Cadillac tax” on high-cost health plans but delays its onset until 2025. Conservatives deny any similarities between an individual mandate and a tax credit for health insurance. However, the bill’s modified tax credits are the functional equivalent of ObamaCare’s individual mandate. 
• Swallowing the Republicans’ Agenda
  
• Republicans don’t seem to have any concept of the quagmire they are about to enter with this bill. If Congress gets health reform wrong on its first try, health reform could consume most of President Trump’s first term. Pressure from Democrats, the media, and constituents could prevent Republicans from moving on to tax reform, infrastructure spending, or even Supreme Court nominees.
• Partial Repeal Is the Road to Single Payer
  
• Flubbing Obamacare would at once united and embolden Democrats while dividing the GOP base, driving the former to the polls in 2018 and 2020 while causing the latter to stay home. Obamacare opponents often muse that supporters designed the law to fail because it would give them the excuse to enact a single-payer system. Republicans have a choice. They can either prevent that future from unfolding, or they can help it along.

Making health care better, more affordable, and more secure requires first repealing all of ObamaCare’s regulations, mandates, subsidies, and taxes. Congress needs to enact reforms that make health care more affordable, rather than just subsidize unaffordable care.

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What Are We “Replacing” Obamacare With?

Republicans have officially begun the long and complex road to repealing and “replacing” Obamacare…

If you believe congressional Democrats, various special-interest groups and much of the media, the Four Horsemen of the Apocalypse are about to be unleashed. Let’s all get a grip.

Initially, any changes will be very small and incremental. Repeal won’t happen overnight, or all at once. Rather, Republicans are likely to establish a sunset date, three or four years from now, allowing time to craft a replacement. Still, sooner or later, we’ll be living under a very different health-care system. 

In general, most consumers will find themselves with more and better insurance choices after ObamaCare is repealed.

One of the first things most Americans are likely to find is that they’ll have more choices when it comes to buying insurance. You may have to pay more for insurance that covers some providers and conditions, but you’ll also be able to buy cheaper, less-comprehensive insurance if you want to.

ObamaCare required all insurance to cover a wide-ranging — and expensive — “essential benefits package.” Repeal will mean more of an a la carte approach to insurance, based on individual consumer preference.

Consumers won’t just find more options in the types of plans; there should also be more insurers to choose from. And, a replacement plan will almost certainly let you shop for insurance out of state, forcing some much-needed competition into the insurance market.

People will even have the choice not to buy insurance at all, since the much-reviled individual mandate will be gone. Going without insurance may not necessarily be a wise choice, but it does re-establish a fundamental limit to state power over the individual. And it allows young and healthy people to purchase low-cost catastrophic coverage that makes much more sense for them.

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