If the Affordable Care Act Was Repealed

Affordable Care Act

There are a number of Republican presidential candidates who are eager to repeal the Affordable Care Act (ACA). There would be strong repercussions to the American people, the economy, and the government, if that were to happen. It seems that the Republican Party is not weighing the good with the bad when considering the repeal of the ACA.

First of all, if the Affordable Care Act were repealed, 19 million people would be added to the list of those uninsured in 2016. It would also increase the federal deficit over the next 10 years, according to the Congressional Budget Office (CBO) on Friday. This is the first time the CBO has truly analyzed the costs of the ACA. This was done using a method favored by Republicans that factored in the effects on the economy. This is also the CBO’s first analysis on the Affordable Care Act under Keith Hall, the CBO director. He was appointed by Republicans this year.

It has been projected that a repeal could increase the federal deficit by $353 billion over the next 10 years due to higher federal spending on programs like Medicare and Medicaid, as well as lower revenues, according to the report put out by the CBO. If broader side effects are included concerning the repeal and the economy, such as a small rise in employment, the federal deficit would only increase by $137 billion from 2016 to 2025. Under the current law, there are approximately 35 million people who are uninsured, which would increase by 24 million if the law were to be repealed.

According to the CBO, there would be 14 million less people on Medicaid, and 18 million fewer people with private insurance purchased on the open insurance market or on public exchanges under the Affordable Care Act. Eight million more people would have insurance coverage through employers.

Affordable Care Act

The latest reports from the nonpartisan congressional watchdog and the congressional Joint Committee on Taxation arrived within days of the Supreme Court’s ruling concerning the Affordable Care Act’s premium subsidies in the 30 states that depend on the federal marketplace. If the ruling takes away the subsidies of over six million people, the ACA would take a big hit. It might increase the Republican efforts to repeal the entire health care law that Obama put into place in 2010, which would certainly face a promised presidential veto.

President Obama has been open about vetoing any legislation that would repeal the Affordable Care Act, possibly his biggest legislative accomplishment while in office, according to the NY Times. Republicans have continuously tried to repeal this law since 2012. Even before the Supreme Court’s decision, Republicans had already put together proposals to respond to the Court’s decision. The report put out by the CBO will surely be used by both parties to represent their side of the health care law. Democrats will say that repealing the law will have a negative impact on the federal deficit and Republicans will use the same report to state their position that the law is simply bad. According to Senator Michael B. Enzi (R), who is the Senate Budget Committee chairman, the report shows that repealing the law would increase economic growth, but the House minority leader, Representative Nancy Pelosi, said the report showed that a repeal would significantly increase the deficit.

Last week, President Obama revealed that approximately one in three uninsured Americans are covered by the Affordable Care Act, which is over 16 million people. According to the CBO, if the ACA were repealed, the federal deficit would first be reduced over the next five years, but it would steadily increase from 2021 to 2025. Initially, there would be savings because there will be a reduction in government spending on federal subsidies and on expanded Medicaid programs. Repealing the law would stop cuts to Medicare payment rates to hospitals, providers, and new taxes on device manufacturers and pharmaceutical companies.

It was projected by the CBO that the repeal would have 14 million fewer people on Medicaid over the next 10 years. Since 2013, Medicaid enrollment has increased by over 11 million. Over 25 of the states agreed to expand their Medicaid programs under the law. However, by 2024, the uninsured would increase by 24 million people if the Affordable Care Act were to be repealed.

The CBO, in 2012, projected that repealing the Affordable Care Act would cause an increase in the federal deficit by $109 billion over 10 years. The number was higher in Friday’s report, which included considering later years when federal spending would be increased.

The Affordable Care Act reduces the labor supply by reducing incentives to work, according to the CBO’s report. Repealing the Affordable Care Act would reverse incentives and may increase services and goods going out as well as the gross domestic product by seven-tenths of one percent, according to the study. People tend to work less or stop working if they can receive these insurance subsidies or benefit from the expansion of Medicaid, because they do not need to work to receive health insurance.

Although, over the next 10 years, repealing the law would have the following effects:

  • The loss of the $43 billion in penalty payments received by the federal government from people who have opted to go without insurance.
  • The loss of $167 billion in penalty payments from large employers who are not offering healthcare coverage to full-time employees.
  • The government would lose $87 billion by eliminating the new excise tax on some employment-based health care plans with high premiums, called the “Cadillac Tax.” Under the Affordable Care Act, this tax grows quickly as more health plans are affected each year, starting in 2018.
  • The government would lose $346 billion in new taxes which are paid by people with high incomes, $142 billion in fees paid by insurance companies, and $54 billion in fees from the manufacturing plants of prescription drugs and medical devices. These are provisions in the law that are meant to pay for the Affordable Care Act.
  • The government would save $822 billion due to no longer subsidizing some of the private insurances purchased through exchanges.
  • The government would save $824 billion in Medicaid as well as the Children’s Health Insurance Program (CHIP).

Repealing the law will accelerate Medicare spending, which is currently growing at an extremely slow rate. The law was able to hold back the growth of Medicare payments to hospitals, health maintenance organizations, nursing homes, and providers. A repeal would mean the loss of those savings and Medicare spending would rise by $800 billion over 10 years, according to the CBO report.

This report has analyzed the economic effects of the Affordable Care Act and dynamic scoring. Democrats do not want Republicans to use that particular approach to justify tax cuts. However, the CBO report carefully used the new technique put out by the Republicans and was able to cautiously document the first economic assumptions that brought Mr. Hill and the CBO to these conclusions.

The problem, however, is that there has been no defined alternative to the Affordable Healthcare Act. Republicans want to repeal it, but no one has offered an alternative for the 19 million people currently insured under the ACA.

Opinion by Jeanette Smith

chrisjohnsonmd.com: CBO Finds That 19 Million Would Lose Their Health Insurance If The ACA is Repealed
NY Times: Mixed Effects Are Seen on an Affordable Care Act Repeal

Top article and featured image courtesy of Mark Fischer’s Flickr Page  – Creative Commons License
Second image courtesy of Transplanted Mountaineer’s Flickr Page – Creative Commons License

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