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Winners and losers of an Obamacare repeal

By Claes Bell · Bankrate.com
Wednesday, November 9, 2016
Posted: 5 pm ET
Bjarte Rettedal/Getty Images

Bjarte Rettedal/Getty Images

President-elect Donald Trump has pledged to ask Congress for a full repeal the Affordable Care Act on his first day in office.

But Marianne Udow-Phillips, executive director of the Center for Healthcare Research and Transformation at the University of Michigan, has one message for those who rely on the ACA for health care benefits: Don't panic.

"We have the enrollment going on now on the exchanges, and that is going to continue," Udow-Phillips says. "The federal subsidies are going to continue. I would be extremely surprised if the new administration and new Congress, in the middle of a plan year next year, were to make changes."

Udow-Phillips sees present plans continuing through 2017, and says that people would have some time to plan for changes to their coverage before any potential changes took effect.

"It's going to be important from a consumer standpoint to stay informed, and to be engaged," she says.

Still, sooner or later, it's likely that big changes will be coming. How those changes affect you will depend a lot on how a repeal is implemented, how and whether it's replaced, and where in the landscape of the health care market you happen to be sitting.

A short list of winners and losers of an Obamacare repeal:

Winners: Younger, healthy Americans seeking individual insurance coverage

Bottom line, the pre-existing condition portion of the ACA has been contributing to rising premiums for individual policies.

Repealing the pre-existing condition portion, effectively locking sicker people out of the individual insurance market, could result in lower premiums overall and especially for the younger, healthier people who would qualify for lower rates.

"That's one of those features that sort of drives the narrative about the rising cost of coverage in the marketplace plans, because people that have been enrolling are people in relatively worse health," says David Becker, an associate professor specializing in health care policy at the University of Alabama at Birmingham.

Losers: Americans with pre-existing medical conditions

Under a full repeal of the ACA, insurance companies could again take into account a person's medical history when setting their insurance premiums and could refuse to renew policies of those who became ill, says Becker.

That means that anyone with a pre-existing medical issue such as a history of cancer or other chronic diseases will likely pay much higher prices for coverage in the individual insurance market, if they can find coverage at all.

On the bright side, says Becker, this could be one part of the ACA that's either spared repeal or restored in a replacement law, because it does enjoy bipartisan support.

"I'm not sure there's a tremendous amount of disagreement with respect to the need to insure that individuals with high persistent health care costs are able to find reasonably priced coverage," he says.

A replacement could also attempt to solve the problem of covering those with pre-existing conditions by offering "high-risk pools" -- insurance pools subsidized by the government to make it affordable.

Winners: People who don't want to buy insurance

Another group who would benefit from repeal would be those who currently face financial penalties for choosing to go without insurance.

One specific way that Trump has said he will alter the ACA is by removing the individual mandate that requires Americans to carry health insurance and imposes penalties on some who don't. Those penalties rose to the greater of 2.5% of income or $695 per uninsured adult and $347.50 per child, up to a maximum of $2,085 per family) in 2016.

While some health care experts have suggested actually raising those penalties to get more healthy people into the insurance exchanges and lower per-person premiums overall, that would be politically dangerous.

"If they were to start ratcheting up those penalties to get young people to purchase coverage, you have severe risk of alienating that chunk of the electorate," Becker says.

Instead, it's more likely that under a Trump plan, penalties would no longer be in place at all, and individuals would be free to purchase insurance, or not, as they saw fit.

Losers: Americans who can't afford insurance on their own

Even without some kind of pre-existing medical condition, many Americans have serious trouble affording insurance if they don't get it through work.

"The majority of people who are uninsured in this country are uninsured because they don't make very much," Becker says. "There's lots of people who work at jobs that don't provide coverage. You live in a nation with a world-class health system, and insurance is expensive."

The Affordable Care Act provides federal subsidies to expand Medicaid to cover Americans making up to 133% of the federal poverty level.

"There are lots of low-income Americans who are not going to be able to purchase health insurance coverage without very, very generous subsidies from the federal government" or a public insurance program like Medicaid, he says.

A full repeal of the ACA would mean "all of the gains that have been made in the states that have expanded -- and obviously the people who have gained coverage through the marketplaces -- those would be undone," Becker says.

One alternative in an ACA replacement may be replacing federal assistance to states funding Medicaid expansion with fixed block grants, says Colleen Carey, an assistant professor of policy analysis and management at Cornell University.

Those grants allow states more freedom with how the money is spent, but also don't allow increasing spending when, for instance, unemployment is rising.

But anything that cuts Medicaid subsidies to U.S. families will likely reduce some of the benefits that recipients have seen to their finances, says Carey.

"Over a short time period, when relatively few families would have experienced a big medical crisis we see a pretty big average improvement" in families' indebtedness and financial well-being, Carey says.

Winners: High-income Americans and those with expensive insurance plans

One way that the ACA was funded was by imposing a 0.9 percent Additional Medicare Tax on high-earning individuals and couples. That will likely go away under a new Trump health plan.

Another possible beneficiary: businesses who offer high-cost "Cadillac" health plans and the employees who get them. An excise tax of 40 percent on such plans was scheduled to take effect in 2018; now it's unlikely that that will ever happen.

Losers: Young adults coming into the work force

The ACA requires insurance companies to cover a policyholders' children up to age 26.

Under a full ACA repeal, young adults in this age group would again have to seek coverage on their own.

Fortunately for those receiving insurance under the provision, this part of the ACA has flown under the radar with opponents of the law, says Becker.

"It's kind of been one of those things where nobody is that strongly opposed to that provision," says Becker, and he could see it being part of a replacement health insurance plan.

Winners: Business owners

Under the Affordable Care Act, businesses would eventually have to pay a "shared responsibility payment" to the IRS for each employee to whom they didn't offer an affordable health plan that didn't provide "minimum essential coverage."

In the event of an ACA repeal, it's unlikely they'll be required to make those payments in the future.

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Losers: Seniors on Medicare

A lesser-known provision of the ACA provides benefits for prescription drugs for Medicare beneficiaries. Those benefits closed up the "donut hole" that had seniors paying up to $3,000 of their costs for drug prescriptions each year.

Should the ACA be repealed, "seniors would be worse off," Becker says, but the cost of the program would likely fall, benefitting taxpayers.

"Any changes we make, someone's going to be better off, and someone's going to be worse off," Becker says.

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5 Comments
M Morris
November 16, 2016 at 9:26 am

Wilson - I urge you to apply for Social Security Disability, if you have worked. If you have no work record, apply for SSI.

Wilson Blakely
November 12, 2016 at 3:13 pm

My only option for any healthcare will be cancelled. I am 64 years old and not yet eligible for Medicare. I was just diagnosed with cancer, so the election of Trump will likely be a death sentence for me.

Sandra gladden
November 10, 2016 at 8:44 pm

Excellent article. This is exactly what we need to know for planning during these difficult times. Thank you.

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