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ACA Deathwatch UPDATE: Three problems for the GOP

Republicans have three problems with their promise to “repeal and replace” ACA.

The net – Republicans’ risk – and it is a very real one – is their efforts may blow up the entire healthcare system as it tries to address one narrow slice of the insurance market.

The first problem is internal division.  

Republican Representatives and Senators have committed to “repeal” ACA, but haven’t reached any consensus, agreement, or framework about what the “replacement” is going to be. And there is no indication they are making any progress.

As the Democrats found when constructing ACA six years ago, reaching consensus about healthcare is incredibly difficult as each “wing” in the party wants its own version to prevail. The GOP is learning once again it is MUCH easier to tear down than to build.

UPDATE – Politico reported this today...

disagreements spilled over Wednesday at a closed-door meeting with Vice President-elect Mike Pence that had been intended to unify the Senate GOP. Instead, multiple senators stood up to express concern that the party’s plans to repeal and replace the law could blow massive holes in the budget ... Newly ascendant Republicans are reckoning with the reality that dismantling a nearly seven-year-old law that reshaped a $3 trillion health sector and covers millions of Americans is more daunting than simply campaigning against it.” [emphasis added]

Especially when the “problem” the GOP publicly committed to fix – the individual insurance market – is a relatively small part of the healthcare market – and ACA itself.

Second, without a credible replacement, those individual insurance markets will implode as carriers leave the market. Cost shifting to privately insured patients from hospitals that a) agreed to lower Medicare payments and b) have more uncompensated care will increase dramatically.

Any major problems in the insurance or healthcare provider markets that come after a repeal are going to cost the GOP dearly.  There is no question those people who lose coverage – and there will be millions under ANY of the scenarios now under consideration – will be really, really angry. (Pre-ex is just one issue the GOP has no real solution for)

Third, a repeal and replacement is going to cost hundreds of billions of dollars.

Under the best case scenario, repealing ACA increases the deficit by $350 billion over ten years.  That’s causing major heartburn among GOP deficit hawks, and is a big reason there’s no consensus on what to do. (thanks Brandon Miller for correcting my mistake!)

What’s the net?

Republicans’ pledge to immediately repeal ACA was a winning campaign promise. It may well be a loser in the next election.


6 thoughts on “ACA Deathwatch UPDATE: Three problems for the GOP”

  1. Tha ks for your time Joe. This is all very discouraging because Obamacare isn’t the right answer. Obviously millions are being negatively effected by the current healthcare set up. It’s all great for the poor and those with pre-existing conditions being able to be covered but what about the middle class getting gutted and paying the costs? What about small businesses being effected? There can be an argument that the middle class are being insensitive to those who have pre-existing conditions or those who are poor. I agree it would suck to be given that challenge in life just as it would be to be born in the middle east under dictatorship and without freedom. But why punish others to try and make it right for those not as fortunate? How is that fair? Making the middle class pay for that isn’t the answer. Socialism isn’t the answer. It’s frustrating all around. And I can’t help but think had Obama not got us in this mess in the first place than the GOP wouldn’t be having this massive challenge. Politicians are smart in how and when they set things up and sometimes I feel they do things in hopes that it will make the others (Republicans or Democrats) look bad when they have to fix the wrong decisions previously made. Both parties do it. Frustrating to say the least.

    1. Hi Spencer
      Thanks as always for the thoughtful comment.
      A couple things you may want to consider.
      The taxes that partially fund ACA were specifically directed towards the wealthy (e.g. income over $200,000 annually for individuals. $250k for families). This was to ensure that those most able to pay a bit more would do so, and not the middle class (which, believe it or not, some folks think means people making $195k a year).
      Other revenues were added from a bunch of sources – reducing Medicare reimbursement, reducing funding for hospitals serving the indigent, the medical device tax, and projections on savings from delivering better care via ACOs.
      You note that socialism isn’t the answer; I guess it depends on what question you are asking. By any measure, the US health care system costs way more than any other country’s, and outcomes are mediocre at best – far worse than almost any single-payer system or other models.
      Net is ACA was – and is – an attempt to “fix” the privatized healthcare system we have in the US, a system which is driven by stakeholders’ desire to generate profits. Privatized healthcare isn’t inherently good or bad, but it is the primary reason healthcare costs way more here than in any other country.

  2. Joe, Your point # 3 should say the deficit will likely grow by $350 BILLION, not million, assuming the OMB numbers are used.

  3. Spencer, well said. We’re a whopping 3 days into the session and the proverbial sky is falling – I’m not sure what part of yesterday’s discussed plan folks don’t understand (see — unfortunately the corrupt censorship media blocked the video this morning) but the transcript is quite clear on the plan. I believe a really great benefit from all this is that Americans are more educated than ever before on healthcare (example at and are reading for themselves instead of relying on the media or pundits for interpretations. I guess it has to hit us in the pocketbook before we do our homework… The additional comfort I have is that we finally have ‘adults’ in charge, everyone in the leadership team has a proven successful track record and they have an obvious love for this country and care for the American people. My hope and prayer is that the great Americans in the Democratic areas of the heartland who put their trust/vote in Trump will put enough pressure on their Senators to come to the table WORK TOGETHER and FIX this. If not, 2018 is going to be more trouble for Dems (see If the scale tips too far right, I’m not sure Congress will be able to come together on anything for decades. Unfortunately, what we saw yesterday with the Democratic leadership was disturbing – the first step is to admit WE AMERICANS have a problem that the ACA is broken and failing (not the BS poll-tested slogans that Democrats broke it or Republicans own it or Make American Sick Again…) and instead need to come together to FIX the issues. It makes me SICK they do not understand the clear message from Americans that we want them to WORK TOGETHER to fix this (interesting to watch their approval ratings

    1. John – always interesting to read your take. Fact is, there is NO GOP “Plan” – there’s a whole bunch of ideas, none of which are supported by more than a relatively small minority of Republican Senators and Representatives.

      Ryan’s “A Better Way” is his idea; as I’ve noted – and cited sources on – Ryan’s plan is just one of the many GOP plans in circulation. The Freedom Caucus’ plan is repeal and do nothing. Rep Price’s plan is return to pre-ACA days, vouchers for Medicare, no medical malpractice suits, higher payments for physicians. HELP Chair Alexander’s been much more cautious.

      I’d suggest what you’re missing here is the refusal on the part of Republican committee members, Senators and Representatives to do anything to make the fixes to ACA that the legislation needed. In fact, they did the opposite – cutting risk adjustment payments, suing the Obama Administration over cost- and premium-sharing subsidies, initiating various and sundry other Court cases, cutting funds for necessary IT investments in the 2015 budget bill…the list is endless.

      The GOP’s refusal to work with the Dems on ACA is in marked contrast to the Dems’ willingness to fix major problems with W’s signature bill – Medicare Part D. In fact, just one of the fixes to Part D is the part of ACA that fixed the “doughnut hole”, a major problem for seniors who had signed up for Part D. This bipartisan cooperation occurred on many issues, not just healthcare legislation, in days gone by.

      I’m sorry you’re sick that democrats don’t want to “work together” with the GOP, however I think you’re misinterpreting the data. When you ask Trump voters what they want in a health care reform “fix”, it looks a lot like Medicaid for all – and nothing like any of the current GOP proposals. Here’s what Trump voters said they want.

      I’d suggest you may want to go beyond what the pols in DC are talking about and consider what the voters really want – which is a far cry from tax credits and vouchers and lower taxes on wealthy people and a bankrupt Medicare Hospital Trust Fund.

      Always enlightening to hear from you John.

  4. Joe, it just amazes me how people just mindlessly oppose something like Obamacare and then when bad things happen like rising prices they have no historical understanding or perspective to base their groundless arguments against it. First, there is an excellent paper written by Aaron Catlin and Cathy Cowan “History of Health Spending in the US, 1960-2013. It describes the underlying components that have driven medical expenditures in the US over the past 50 years.

    The paper makes a couple of important points.

    First growth in medical expenditures has increased at double or near double digit rates for decades.

    Second, medical expenditures are really made up of two pieces, increased utilization and price increases. Without getting into lots of detail both components drive significant pieces of the increase over time.

    Throughout the past 50 years increased utilization has been driven by expansion of insurance programs both government and private (Medicare, Medicaid, expansion of private insurance by the private sector in the 80’s, introductions and expansion of HMOs in the 90’s, the CHIP program, Medicare Part D and now Obamacare. In all cases these programs either provide or expanded coverage to individuals who where either not served or underserved by the medical system.

    Big surprise (not), healthcare expenditures rose in response to the introduction of each of these programs. Rising prices under Obamacare are not driven by greedy insurance companies raising rates to make more money. Cost are rising because prior to Obamacare there was a significant segment of our population that was either being underserved or not served by the healthcare system.

    It’s not a big surprise that when sick people enter the insurance system utilization goes up and they cost a lot more money to insure. This has happened before and it will continue to happen in the future.

    Repealing Obamacare without a viable replacement that still provides coverage is an unconscionable act indifference and political expediency directed at 30 million plus Americans. Obamacare has many issues that need to should be addressed but it is certainly not the disaster the uninformed make it out to be. Shame on those who call for rejecting a healthcare system that covers nearly 10% of the US population. I hope when the opponents of Obamacare face their moment of need others are not so cavalier in rejecting their lifeline.

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Joe Paduda is the principal of Health Strategy Associates



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