Report Examines Repercussions of Partial ACA Repeal Through Budget Reconciliation

A recently released report investigates the potential ramifications of partially repealing the Affordable Care Act (ACA) through the process of budget reconciliation. The study by the Urban Institute Health Policy Center warned that such a move by Congress would double the number of uninsured Americans and significantly disrupt the insurance market, resulting in reduced access to care.

A reconciliation bill that would have repealed substantial portions of the ACA was passed by Congress and vetoed by President Barack Obama in January 2016. If a similar bill is passed in early 2017, it is expected to be approved by incoming President-elect Donald Trump. Because reconciliation bills only have the power to make changes affecting the federal budget, not all of the ACA’s provisions would be repealed under such a bill.

The budget reconciliation process would have the authority to repeal Medicaid expansion, premium tax credits and cost-sharing assistance through the ACA's marketplace, the individual mandate, and the employer mandate. Efforts to repeal the insurance market reforms that do not affect the budget, like prohibitions on preexisting condition bans and prolonged coverage under a family plan for children up to age 26, would need to be attempted through normal legislative channels.

As such, the Urban Institute report considered the potential effect of a partial ACA repeal via a reconciliation bill similar to the one passed in 2016, assuming that the bill will delay repeal by 2 years to give legislators time to agree on a replacement. The authors “estimate that the effects of passing and implementing the reconciliation bill would be large and swift,” rendering the country’s healthcare situation worse off than before the ACA.

The report estimated that the reconciliation bill would dramatically affect individuals covered under public insurance and private nongroup insurance, adding 29.8 million to the number of uninsured people for a new total of 58.7 million without insurance by 2019. The proportion of uninsured nonelderly people would rise from 11% to 21%, higher than it was prior to the ACA. The loss of coverage for 7.3 million of these newly uninsured people would be caused by the unraveling of the nongroup insurance market, which would occur in response to rising premiums as healthy people drop their coverage due to repeal of the premium tax credits and the individual mandate penalty.

Demographic analysis indicates that 82% of those who would become uninsured under this bill would be part of working families and 80% would lack college degrees. Rates of uninsurance among people of all income levels, age groups, races/ethnicities, and educational attainment levels would increase by at least 50%. For instance, 56% of people losing insurance coverage would be white, bringing the uninsurance rate among non-Hispanic whites from 7% to 18%.

Under the reconciliation bill, federal spending on Medicaid/CHIP for the nonelderly and Marketplace financial assistance would decrease by a total $109 billion in 2019, and $1.3 trillion from 2019 to 2028. State governments would reduce spending on Medicaid/CHIP by $76 billion from 2019 to 2028. However, the growing numbers of uninsured Americans would seek an additional $1.1 trillion in uncompensated care from 2019 to 2028. This unsustainable financial pressure placed on state and local governments as well as healthcare providers would likely result in more unmet need for healthcare services.

The report states that the immediate repeal of the individual mandate in 2017 would have dramatic consequences on private nongroup insurance markets both inside and outside the marketplaces, leading to “lower coverage (an additional 4.3 million uninsured), some midyear insurer exits, substantial financial losses for insurers ($3 billion), and displacement and financial losses for consumers having to change plans.”

In summary, the report asserts these changes in coverage and spending would lead to reduced access to care, and warns that a partial repeal of the ACA by reconciliation would not just revert the United States healthcare system to its state prior to the ACA.

“Because it would lead to a near-collapse of the nongroup insurance market, it moves the country to a situation with higher uninsurance rates than before the ACA’s reforms. 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.”