Late in the day on July 19, 2017, the Senate released the Obamacare Repeal Reconciliation Act (ORRA) of 2017 (summary). The bill would repeal the Affordable Care Act’s (ACA’s) coverage provisions, but delay the repeal of the coverage provisions until 2020, presumably giving Congress time to come up with a replacement. It is virtually identical to the reconciliation bill that passed both houses of Congress in 2015, only to be vetoed by President Obama. The Congressional Budget Office (CBO) simultaneously released a cost estimate of the bill, which was very similar to the report it had offered on the 2015 bill. 

The ORRA would repeal the penalties imposed by the individual and employer mandates retroactive to 2016. It would end the ACA’s premium tax credits, cost-sharing reduction payments, Medicaid expansion to cover adults up to 133 percent of the federal poverty level, and small business tax credits—-that is, all of the assistance that the ACA gives to low- and moderate-income Americans—as of the end of 2020. The bill would remove current caps that limit the amount of premium tax credit overpayments that the IRS can claw back at the time individuals who receive advance tax credits file their taxes. These caps currently provide some protection for low-income individuals who underestimate their income for a year and thus must pay back excess credits.

The bill would also repeal the ACA provisions that allowed hospitals to make presumptive Medicaid eligibility provisions and the requirement that Medicaid alternative benefit plans cover the essential health benefit. It would restore the ACA’s Medicaid disproportionate share hospital payment reductions.

The bill would repeal all of the taxes imposed by the ACA, including the Medicare payroll tax surcharge and unearned income taxes on individuals earning more than $200,000 a year ($250,000 for joint filers), which were not repealed in the latest version of the Senate’s earlier Better Care Reconciliation Act. It would also restore various tax preferences for health savings accounts and flexible spending accounts limited by the ACA. The tax repeals would take effect for 2017 or 2018.

The ORRA would repeal funding for the ACA’s prevention and public health fund for years after 2018, but would provide $750 million for each of FY 2018 and FY 2019 for responding to the substance abuse crisis and urgent mental health needs. It also includes $422 million for community mental health centers. It would defund Planned Parenthood for one year.

The main difference between the ORRA and the 2015 reconciliation bill is that the effective dates are two years later. The bill does include a couple of provisions not included in the 2015 bill. First, it would prohibit the use of premium tax credits or small business tax credits for health plans that cover abortions (other than those necessary to save the life of the mother or in cases of rape or incest). The bill would also fund reimbursements to insurers for cost-sharing reductions through 2019, when the payment would end.

Presumably the provisions in the bill identical to the 2015 bill will not face Byrd amendment barriers, since they were cleared with the Senate Parliamentarian in 2015. The abortion prohibitions are new and do not obviously affect the revenues or outlays of the United States in a non-incidental manner, and thus might be challenged under Byrd.

Fiscal and Coverage Effects

The Congressional Budget Office report on the ORRA concludes that the coverage repeals would reduce the budget deficit by $473 billion over the 2017 to 2026 budget window. It would reduce Medicaid spending by $842 billion and tax credit and other coverage costs by $679 billion. The tax cuts would reduce revenues by $606 billion while the repeal of the employer and individual mandate penalties would reduce revenues by $210 billion. Other budgetary effects would increase the deficit by $210 billion.

The CBO projects that enactment of the ORRA would increase the number of uninsured by 17 million by 2018. By 2020 the number of uninsured would increase by 27 million and by 2026 to 32 million. By 2026, 59 million people would be uninsured, compared to 28 million under current law.

Much of the short-term increase would be due to individuals dropping or failing to renew individual, employer, or Medicaid coverage because of the end of the individual mandate penalty or to employers dropping coverage because of the end of the employer mandate penalty. But the CBO also notes that dramatic increases in premiums would drive insureds to drop coverage and discourage enrollment. Few low-income people would purchase coverage once the subsidies disappeared.

The CBO predicts that the end of the mandates and of the subsidies while the ACA’s insurance reforms remained in place would drive dramatic increases in premiums. Premiums for benchmark silver plans would increase 25 percent compared to current law by 2018, 50 percent by 2020, and double by 2026. Those who were able to find coverage with affordable premiums would face very high cost sharing.

The downward pressure on enrollment and upward pressure on premiums would drive insurers out of the individual market. The CBO projects that one tenth of the nation’s population would live in areas with no individual market coverage by 2018, half by 2020, three-quarters in area without any individual market insurers by 2026. Note that these would not just be “bare counties” without exchange coverage, a handful of which exist right now, but areas with no individual market coverage at all. Fewer than 2 million individuals would remain in the individual market by 2026.

Of course, Congress could in theory adopt a replacement plan that would cover some of those who lose coverage, reduce premiums, and preserve individual market coverage by 2020. The experience of the past six months offers little hope that this could happen expeditiously. Moreover, Congress would not have two years to act — any law it would adopt would require federal and state rulemaking and likely the creation of new programs and institutions at the federal and state level. It may already be too late for Congress to adopt legislation in time for these steps to occur.

It has been widely noted that all current Republican senators except for Senator Collins voted for the 2015 bill, and thus arguably should support the current proposals. It has also been widely noted that they all knew that President Obama would veto the bill, so they took no risk that it would actually be implemented. It must also be noted, however, that when they voted on the 2015 bill they had not yet experienced how hard it is to adopt a health care reform that will work and be acceptable to the American people. It is to be hoped that Senators, like the rest of us, learn from experience and from receiving additional information, and that they know a lot more now than they did in 2015.