Current ACA repeal plan carries $1.1 trillion increase in uncompensated care costs

The number of uninsured people would more than double and the individual insurance market would collapse if the Affordable Care Act (ACA) is repealed through a fast-track process called budget reconciliation.

The study from the Urban Institute is based on a bill passed by Congress in 2015 and vetoed by President Barack Obama. Using this reconciliation tactic, Republican majorities would be able to strip parts of the ACA that deal with spending and revenues, like Medicaid expansion, the tax credits and cost-sharing reductions for buying coverage, and the insurance mandates on individuals and employers—with Democrats in the Senate unable to attempt a filibuster to block the changes.

“The market for non-group coverage would virtually collapse,” wrote Urban Institute researchers Linda Blumberg, Matthew Buettgens and John Holahan. “Some insurers ... may continue to offer ACA-compliant plans at much higher premiums in the non-group market, but without federal financial assistance, relatively few people—we estimate approximately 8 percent of those who have such coverage now—would enroll.”

Those effects would include:

• The number of uninsured would increase from 28.9 million to 58.7 million by 2019, with the nonelderly uninsured rate increasing to 21 percent
• 82 percent of the people becoming uninsured would be in working families, 38 percent would be ages 18 to 34, and 56 percent would be non-Hispanic whites. 80 percent of adults becoming uninsured would not have college degrees.
• 12.9 million fewer would have Medicaid of Children’s Health Insurance Program (CHIP) coverage.

Government spending on healthcare would decrease dramatically: Between 2019 and 2028, it would be reduced by $1.3 trillion at the federal level and $76 billion among states.

According to the report, that burden would instead be placed on providers.

“This financial pressure would result from the newly uninsured seeking an additional $1.1 trillion in uncompensated care between 2019 and 2028,” the researchers wrote.

The last attempt at ACA repeal through reconciliation didn’t increase federal funding for uncompensated care. With the uninsured population doubling, there would be a massive increase in demand for uncompensated care while providing no funding for services the newly uninsured would seek.

The effect on insurers would be felt much more quickly than the three-year timeline to implement a replacement Republicans are favoring. With the individual mandate eliminated in the middle of a plan year, the report predicted many would stop paying their premiums, leading to an estimated $3 billion in losses for insurers. With the employer mandate gone, 4.3 million people may lose their coverage immediately.

Insurers would likely respond by leaving the individual market mid-year or opting out of participation in 2018, even if tax credits and subsidies are extended as insurance companies are demanding.

“This scenario does not just move the country back to the situation before the ACA. It moves the country to a situation with higher uninsured rates than was the case before the ACA’s reforms,” the researchers wrote. “To replace the ACA after reconciliation with new policies designed to increase insurance coverage, the federal government would have to raise new taxes, substantially cut spending, or increase the deficit.”