Obamacare's stubborn legacy looms over GOP health bill

Republicans can repeal the Affordable Care Act. But Obamacare's legacy lives on in the public's expectations for health policy and the very framework of the internal GOP debate.

Republicans want to get rid of Obamacare. But in one respect, perhaps they can’t.

Sure, they can repeal Barack Obama’s signature Affordable Care Act and replace it with a new GOP plan. And it’s possible that plan will look different and cover many fewer people than the ACA.

They can’t erase the fact that millions of Americans have now received subsidized insurance coverage via the federal government, however. That’s changed many voters’ expectations for health policy in the United States, and moved the Republican debate over health-care legislation from whether it should be to what it should be.

Washington’s involvement in the provision of access to insurance has widened. Any new health law will inevitably be shaped by that legacy.

“The very existence of Obamacare makes it very, very difficult for the GOP to try to ratchet back subsidized insurance,” writes Stuart M. Butler, a health-care expert and senior fellow in economic studies at the Brookings Institution, in an email response to a reporter.

This doesn’t mean the GOP bill now moving through the House of Representatives is a small-scale effort that just nibbles around the edges of existing law. The Congressional Budget Office just estimated that the Republican health bill as it stands would increase the ranks of the uninsured by 24 million through 2026, while shaving $337 billion off accumulated federal budget deficits.

The legislation, dubbed the “American Health Care Act” by GOP leaders, would scrap Obamacare’s existing structure, which provides health insurance premium subsidies based on a recipient’s income and place of residence.

Some subsidies persist

But it doesn’t do away with subsidies entirely. The legislation would put in place a simpler and cheaper framework of subsidies almost entirely dependent on a recipient's age.

Those subsidies would be structured as refundable tax credits. That means the US would send a check to anyone whose tax liability is smaller than their health-care subsidy.

This provision drives conservative opponents of the bill wild. They say it’s a new version of the health entitlement established under the Affordable Care Act. They oppose the GOP bill because they think that structurally it’s just another version of what came before.

“I think it is basically Obamacare-lite. Keeps the subsidies, keeps the taxes for a year,” said Sen. Rand Paul (R) of Kentucky on CBS “Face the Nation” on Sunday.

Senator Paul is also critical of how the Republican bill treats Obamacare’s expansion of Medicaid – a big driver of the law’s increase in coverage for Americans previously without health insurance.

The GOP effort would roll funding for Medicaid into a block grant. But that block grant wouldn’t be a fixed amount of money, Paul complains. It would increase at the rate of medical inflation, plus one percent.

“It is still building in the growth of an entitlement program that really isn’t paid for,” said Paul on CBS.

Not just 'repeal,' but 'replace'

But Paul and the tea party-backed conservatives of the House Freedom Caucus are not the only, or even the largest, of Republican Party factions on health care. The GOP remains split as to its underlying health-care philosophy. President Trump has pushed to preserve some of Obamacare’s coverage gains. Speaker Paul Ryan and other drafters of the current House effort obviously felt it imperative to maintain subsidies in some form.

In part that’s because a structure of tax credits is necessary if the government is to have any hand at all in helping voters afford health insurance. That’s why they’ve been a key part of some past Republican plans, says James C. Capretta, a resident fellow in health-care policy at the American Enterprise Institute and former associate director of the Office of Management and Budget under President George W. Bush.

“The folks that are against federal tax credits ... really don’t have an approach to health reform that could in any way work,” says Mr. Capretta, referring to Republican critics.

It’s also because the existence of Obamacare may have moved the goal posts on health care. That’s evident in the Republican rallying cry on the subject, “repeal and replace,” says George C. Edwards III, Jordan Chair in Presidential Studies at Texas A&M University.

It’s not just simple “repeal” and a return to the status quo ante. “Replace” is a key indicator of intentions.

“The debate now is not: do we have something or nothing? The debate is, is the something we are going to have good enough?” says Dr. Edwards.

How long will revisions last?

Increasing health-insurance coverage among US voters just wasn’t high on the GOP policy agenda before the Obama years, says Edwards. Whether Republicans had plans or not, they didn’t pass them.

Obama did. The Affordable Care Act has many flaws, to the point where it may be unsustainable in some parts of the US. Not all states opted to sign up for its expanded Medicaid coverage. But it introduced many insurance reforms that remain popular, such as requiring coverage of people with preexisting conditions, its prohibition of lifetime payout caps, and allowing adult children to remain on their parents' insurance until age 26. It extended coverage to some 27 million Americans.

Millions – maybe tens of millions – may lose coverage under a Republican replacement plan. But millions of people will remain covered by a framework of government subsidies that did not exist prior to Obamacare.

“That is Obamacare’s legacy,” says Edwards.

Under Republicans, this subsidy structure may be radically pruned. But if it still exists, it can be changed. And in the end, that means the GOP’s 2017 moves to transform Obamacare might be far from permanent in their own right.

Any GOP 2017 health bill that passes will become law in an atmosphere of charged partisanship (as did the Affordable Care Act in 2010). It would certainly be a Democratic Party target for years to come. It might be a simple legislative task for any future Democratic Congress and president to undo, increasing subsidy levels to expand coverage.

“Just as soon as the Democrats get back in power they will use the same simple majority rules the Republicans are now exploiting to turn the table once again,” writes Bob Laszewski, a health policy consultant and former insurance executive, on his “Health Care Policy and Marketplace Review” blog.