As Donald Trump’s administration takes office, one thing has been made abundantly clear: the health care industry is going to go through yet another major shake-up.
How and when it will happen is less clear.
The Affordable Care Act, known colloquially as Obamacare, has been at the center of a debate regarding the national health care industry since it was passed in 2010, and though the Republican-dominated Congress and incoming Republican president have vowed to repeal the health care law, experts say that may be a far more complicated, and economically dangerous, task than it may seem.
So what can individuals and businesses expect for the health care industry in 2017 and beyond?
“That’s the million-dollar question,” said Jon Rauser, president of the Rauser Agency, a Milwaukee-based insurance broker. “The carriers have all filed their plans and rates with the commissioners in 2017. They did that way back in May. So calendar year 2017 is kind of etched in blood. People who signed up for coverage in the open enrollment period can count on having that covered in 2017. If they repeal the ACA, there’s going to have to be some language in the repeal providing for continued coverage for this year.”
There are a few different ways the debate in Congress could play out this year. The Republican-controlled Congress could vote to repeal the law without an immediate replacement, wait until it has a replacement plan it finds more suitable to put in its place and then repeal the ACA, or Congress could do nothing.
Given Trump’s campaign rhetoric and promises made by Republicans, it is unlikely Congress will leave the law alone as is.
“The Republicans don’t have to, in my opinion, create a new omnibus piece of legislation; they could take the existing legislation and tweak it,” Rauser said. “That would be, in my opinion, far easier. But given all their promises, they’re kind of stuck with (a commitment to a major overhaul).”
Scott Adams, a professor of economics at the University of Wisconsin-Milwaukee who served as a senior advisor on President Barack Obama’s council of economic advisors in 2008 and 2009, said he expects at least two major components of the ACA to remain in place under the new administration.
“The two things that have been clearly stated by Trump with regard to his health care policy is he wants to keep protection for those with preexisting conditions — and if that’s true, it’s one major success of the ACA that will remain — and he also wants to keep kids on parents’ health insurance until (age) 26,” Adams said. “On the other hand, he wants to get rid of the individual mandate. That’s what keeps a lot of healthy people in the pool and health insurance costs low overall.”
What Adams touched on is one example of why many experts believe a complete repeal of the ACA would be close to impossible — it’s so far-reaching and deeply ingrained that taking out one piece could set off a chain reaction of negative economic consequences.
Using Adams’ example, if the individual mandate portion of the law disappears (the portion which compels every family or individual to have health insurance in lieu of a tax penalty), then it is possible insurance rates could spike dramatically as a result. That’s because the mandate forces young and healthy individuals who are unlikely to file an insurance claim to purchase insurance and pay premiums. Those premiums help the insurance companies compensate for the increase in claims they will be forced to pay because of the growing number of older, sicker and poorer individuals who were able to obtain insurance through ACA exchanges.
The worry is that, if the mandate disappears but other essential aspects of the law remain, then insurance companies would be forced to raise their premiums to compensate for their losses.
By the same token, if the law disappears entirely, then millions of people across the country would lose their health insurance and hospitals would take a hit since they are compelled to care for patients regardless of whether they are insured — they would just stop receiving payments for much of the care they provide. That scenario could cause hospitals to raise prices for care on their insured patients to compensate for their losses, which, in turn, could cause insurance rates to rise.
“My anticipation is that people, for a short period of time, maybe even a year, would remain on their coverage until something new is put in place,” Adams said. “Repealing it without replacing it, that raises a whole host of issues. What I see is more likely is Congress using their budget reconciliation authority to chip away a few aspects of the law” that they don’t like.
On the business side of things, repealing the ACA could actually benefit large companies but could put small businesses at a long-term disadvantage, even though, in the short term, it would seem they are no longer saddled with rising premiums.
“It will be an illusion,” Adams said of the possible short-term benefits. “They’ll feel better off than two years ago, but they’ll be back to a system like it was eight years ago that was untenable.”
Premiums would likely rise in the long run in that scenario for small businesses, he said, making coverage too expensive. In response, if a small business decided to cut its benefits packages, it would put the company at a disadvantage to larger corporations in terms of recruiting and retaining talent.
Eric Borgerding, president and chief executive of the Wisconsin Hospital Association, said that in the best case scenario for 2017, the Republicans choose to make significant improvements to the ACA. Worst case scenario, they repeal it entirely or repeal the wrong portions of it without a sufficient replacement plan, he said.
“Obamacare has problems,” Borgerding said. “I think people also have to realize that. It’s not like it’s this perfectly well-oiled machine that doesn’t need some significant, if not major repairs, regardless of who became president.”
From his position with the WHA, he’s most anxious to see what the Republicans decide to do regarding Medicaid payment cuts to hospitals in states that did not accept President Obama’s Medicaid expansion in 2014. Wisconsin was among them.
“I’ll be very much watching the Medicaid debate, (including) block grants or other sorts of limitations on funding that the federal government provides to states for Medicaid programs,” Borgerding said. “Wisconsin needs to be treated equitably in that debate. Just because we rejected the Obamacare expansion, we shouldn’t be penalized as to the amount of funding that comes to Wisconsin under a new Medicaid formula.”
From his position as a consumer, Borgerding boiled the health care debate down to a couple main issues.
No. 1: Will the Republicans put forth a replacement plan that will be able to sustain the 38 percent reduction in the uninsured rate the nation enjoyed as a result of the ACA?
No. 2: What will replace the ACA exchanges, tax subsidies and premium subsidies that have helped low-income people afford health insurance?
“Unwinding this thing is going to be very, very complicated,” Borgerding said. “There will be a raging debate on how long it should take to replace Obamacare, and that’s going to precede the actual debate on replacing Obamacare.
“The one thing that’s becoming more and more certain is that it will not disappear overnight.”