How Obamacare Can Be Repealed

“On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare,” states Donald Trump’s campaign website. Now that he is president-elect and will lead a Republican-controlled Congress, this statement has Americans wondering if Trump really can fully repeal the Patient Protection and Affordable Care Act of 2010 (the ACA, or Obamacare) and, if so, how he might accomplish his goal. 

Although the ACA was a single act, it may not be possible to repeal it all at once. Parts that affect the federal budget could be repealed under a filibuster-proof Senate strategy called budget reconciliation; other sections would need to be repealed or changed separately. And some of those provisions – such as letting children remain on their parents’ insurance until age 26 and covering pre-existing conditions – Trump appears to want to keep. Here are some possible scenarios of what might happen.

There are 100 seats in the U.S. Senate. When Trump is sworn in as president, 48 of those senators will be Democrats and 51 will be Republicans. One seat is up in the air and will be decided after Louisiana’s runoff election in December.

A special legislative procedure called budget reconciliation that lets Congress quickly evaluate certain tax, spending and debt bills without the threat of a filibuster could take advantage of this imbalance. Approving a reconciliation measure requires 51 Senate votes, which the Republicans would have if no Republican broke ranks. 

Trump could use the budget reconciliation process to stop funding income-based subsidies for the ACA's health insurance marketplace plans and to cut federal funding to the 31 states receiving increased Medicaid benefits from the ACA. Such funding changes seem possible since this past January Republicans passed a bill, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, that would have done this. It didn’t become law because President Barack Obama vetoed it, but President Trump might approve a similar act.

However, while Republicans broadly supported that bill, some analysts suspect they did so because they knew it would be vetoed. They didn’t want to break party ranks in voting for the bill. Under President Trump, when such a bill actually could become law, they might vote differently to avoid taking healthcare away from their constituents.

Budget reconciliation would not enable legislators to get rid of the ACA provisions that protect individuals with pre-existing health conditions or those that prevent gender-based pricing of health insurance, nor would it eliminate coverage for preventive care or the provision allowing children under age 26 to remain on their parents’ health insurance. Only a total repeal could do that.

What’s more, budget reconciliation bills are not permitted to pass unless they have a measurable and direct effect on the federal budget. Since the ACA contains so many parts and not all of them have a meaningful effect on the budget, a reconciliation bill aimed at totally repealing Obamacare would likely not be permitted.

The new administration could try to eliminate the individual mandate, the requirement for individuals to carry health insurance or pay a tax penalty if they don’t. Trump’s administration could also refuse to enforce it. The individual mandate is meant to make sure that both healthy and sick people pay insurance premiums so the insurance companies stay solvent and can afford to cover people when they need care.

Scrapping or failing to enforce the individual mandate could cause Obamacare to implode. Enough healthy people could stop buying insurance that insurers wouldn’t be able to collect enough premiums to cover their sick consumers. Either the remaining consumers would see significantly higher premiums – although the higher premiums couldn’t be based on their health—or the insurers wouldn’t be able to stay in business and would pull out of the market. Consumers might have to drop coverage that become unaffordable, or they might find they have few or no options when it comes time to buy a policy for 2018.

Through the appropriations process, Congress decides which government activities and operations to fund each year.

Removing the funding for key components of the ACA would not be difficult, given Republican control of the White House, Senate and House of Representatives, says Irving L. Stackpole of Stackpole & Associates, a healthcare consultancy in Newport, R.I.

The components of the ACA that the Republicans could defund through the appropriations process – and that would have the biggest impact on the largest number of consumers – would be the insurance premium subsidies and the state exchanges.

“Without subsidies, the people who are receiving subsidies will cancel their insurance because they won’t want to take on debt that they cannot afford,” Stackpole says. “Or, alternatively, they’ll simply stop paying the bill – effectively abandoning their insurance.”

Without exchanges, consumers wouldn’t have a channel to find insurance because there are hardly any health insurance brokers or agents, Stackpole says.

An executive order lets the president create a law without Congress’s prior approval or the possibility of Congress overturning it. Trump can’t simply eliminate the entire ACA by executive order. However, he could seriously undermine certain components of the law this way.

A Republican House lawsuit entitled House v. Burwell charged the Obama administration with unconstitutionally spending federal funds to reimburse insurance companies that cover low-income workers. A lower court found in favor of the House, but the Obama administration appealed. Trump could drop the pending appeal of this lawsuit by executive order. 

The result, according to Kaiser Health News, would be that insurers, by law, would still have to offer lower deductibles and coinsurance, but the government would no longer reimburse them. Insurers would face huge losses and stop covering those consumers – more than half of the people who bought policies through the exchange. If the insurance exchanges failed, Congress would have to take action to reform Obamacare, and the Democrats would have less leverage because of the urgent need for a solution.

“Executive orders can be issued immediately, while funding cancelations may take a bit longer,” Stackpole says.

The state and federal health insurance exchanges have already been selling insurance for 2017 since November 1 and will continue to do so through December 15. At the earliest, the new administration could get rid of the exchanges for 2018, but it’s more likely that nothing will change for consumers until January 2019, according to Kaiser Health News. Healthcare experts recommend signing up for coverage as usual this year and planning to use it during 2017.

No matter what the result of Louisiana’s runoff election is, the Republicans will have a simple majority in the Senate (51 or 52 seats out of 100), but they will not have a supermajority.

If the Republicans try to repeal Obamacare completely through a standard bill, the Democrats will likely respond with a filibuster. A filibuster prevents a bill from being voted on – and ending a filibuster requires a three-fifths supermajority, or 60 votes.

What could Senate Republicans do then? They could attempt to get rid of the filibuster itself by eliminating the 60-vote minimum. Such a move would be shortsighted, however, because it would hurt the Republicans if the Democrats regain the majority after a future election. But eliminating the filibuster is a tool Republicans could attempt to use if they can gather enough support from their own party and don’t see another way to accomplish their goals.

“Repealing is very unlikely. The law has too many chapters and is interwoven with a wide range of other federal regulations,” Stackpole says. Also, many of the ACA’s provisions are extremely popular, such as guaranteed issue (you can get insurance, even if you're sick) and preventing insurance companies from canceling policies when beneficiaries become ill (rescission). So are the provisions that prevent insurance companies from charging more for policies issued to people who were previously ill (pre-existing conditions) or who become sick while covered (risk-adjusted pricing), Stackpole explains.   

“To remove or eliminate these popular changes to the health insurance markets may cause a backlash,” Stackpole says. But he does expect that a Republican Congress will remove funding for key provisions of the ACA, such as the subsidies that make health insurance affordable and the state exchanges where people go to purchase insurance. The government heavily subsidizes the exchanges, with the money primarily going to healthcare information technology, he says.     

Obamacare is unlikely to be fully repealed in a single vote. But in a worst-case scenario, enough pieces could be dismantled that millions of Americans could lose coverage or be faced with unaffordable premiums, depending on what the Republicans come up with to replace the dismantled pieces. What If Obamacare Is Repealed? explores what could happen next.

Republican lawmakers have repeatedly voted to repeal all or part of the Affordable Care Act since its passage, and Senate majority leader Mitch McConnell (R-KY) has said that repealing the ACA is a high priority. Without President Obama to veto their bills, Republicans could use methods such as budget reconciliation, eliminating or failing to enforce the individual mandate, defunding and executive orders to accomplish their goals to change healthcare.   

You may also be interested in reading How to Shop for Health Insurance and Getting Health Coverage Outside Open Enrollment.