The Risk of Expanding the Uninsured Population by Repealing the Affordable Care Act

(HealthNewsDigest.com) – discussions surrounding repeal or repeal and replacement of the Affordable Care Act (ACA) have been a high priority for the Trump administration and the Republican majority of the US Congress, but specific replacement plans are less clear. Levitt1 outlined what the ACA replacement plan might look like based on proposed legislation from House Speaker Paul Ryan (R, Wisconsin) and Secretary of Health and Human Services Tom Price. Levitt observed that repeal of the entire ACA and the replacement plans that have been proposed recently by Republican congressional leaders “would likely result in more people uninsured, less comprehensive benefits, and fewer protections for people with preexisting conditions.”1

In January 2017, the Congressional Budget Office released a report estimating the effect of repealing portions of the ACA on insurance coverage and premiums.2Specifically, the Congressional Budget Office and the Joint Committee on Taxation analyzed the effect of the repeal of components of the ACA such as the individual mandate and the employer mandate, elimination of the ACA’s expansion of Medicaid eligibility, and elimination of subsidies available to purchase health insurance through the marketplace established by the ACA. The analysis showed that repealing these provisions of the ACA would increase the number of uninsured individuals by an estimated 18 million in the first year of enacting the repeal. By 2026, the number of uninsured individuals is projected to increase by an estimated 32 million people.2

The Congressional Budget Office and the Joint Committee on Taxation also estimated that repeal of these ACA provisions would result in 20% to 25% increases in premiums for individual policies purchased through the health insurance marketplaces or directly from insurers in the first year that these repeals are enacted. The elimination of Medicaid expansion and the marketplace subsidies were projected to cause the premiums to double by 2026.2 Both the number of uninsured individuals and the increase in premiums are based on proposals that have been suggested in the past. It remains unclear what the Republican leadership will actually propose.

The Uninsured Population

Prior to implementation of the ACA, 44 million nonelderly people in the United States lacked health care coverage in 2013, the year before the major provisions of the law went into effect.3 Poor and low-income adults were especially likely to lack health insurance coverage, which was attributed mainly to the lack of affordability of the coverage.4Among uninsured nonelderly individuals (aged <65 years), 28% had incomes below the federal poverty level (about $16 000 for an individual or $28 000 for a family of 3) and 62% had incomes below 200% of the federal poverty level in 2013.3

With the implementation of the ACA in 2014, including the expansion of Medicaid, establishment of health insurance marketplaces, removing the exclusion of people with preexisting conditions, and providing subsidies for individuals with incomes less than 400% of the federal poverty level, the number of uninsured individuals decreased by an estimated 17 million by 2016.3 The Medicaid enrollment gains caused the rate of uninsured nonelderly persons to decline from 16.6% in 2013 to a historic low of 10% in 2016.3 Without additional legislation, repeal of the ACA risks the reversal of these gains.

Even under the ACA, 28.5 million individuals remained uninsured in 2015. Although 74% of those who were uninsured had at least 1 full-time worker in their family, more than 80% of uninsured individuals are in low- or moderate-income families with incomes below 400% of the federal poverty level.4 As of July 2016, 19 states did not opt for expansion of Medicaid, and eligibility of uninsured adults was limited. Undocumented immigrants are ineligible for Medicaid and are excluded from purchasing coverage through the ACA insurance exchanges.4

Health Care Risks of Being Uninsured

Uninsured people are less likely to receive preventive care or follow-up of chronic diseases. In addition, uninsured adults are 3 times as likely as adults with insurance to postpone needed follow-up or medications because of the costs (20% vs 6%).4Because of lack of regular outpatient care, uninsured persons are more likely to be hospitalized for avoidable health problems and more likely to experience worse health outcomes. For example, when hospitalized, uninsured patients receive fewer diagnostic and therapeutic services and have higher mortality than patients with insurance.4

The Financial Risks of Being Uninsured

In 2015, 53% of uninsured nonelderly adults (aged <65 years) were likely to have serious negative financial consequences due to medical bills compared with 20% of insured adults.4 Medical debts contributed to 52% of debt collection actions that appear in consumer credit reports and contributed to almost half of all bankruptcies in the United States.4Inability of uninsured people to repay medical debt translates into increases in uncompensated care costs for physicians. The expansion of coverage under the ACA has been associated with reductions in uncompensated care costs for physicians and declines in medical debt, especially in states that opted for expansion of Medicaid under the law.4

Between January 2014 and June 2015, the 31 states that expanded Medicaid under the ACA received $79 billion in enhanced federal funding for newly eligible adults.3 These states achieved net economic gains in employment, increased revenues to hospitals and physicians, decreases in uncompensated care, and savings in other state-funded programs such as corrections and behavioral health programs.3 Repeal of the ACA, without substitute legislation, could adversely affect this federal funding to the states.

Additional Factors That Could Expand the Uninsured Population

A recent analysis by the Kaiser Family Foundation estimated that 52 million adults younger than 65 years (27% of that population) have preexisting health conditions that would make them uninsurable if they applied for health insurance in the individual insurance market under the medical underwriting practices that existed prior to the implementation of the ACA.5 Examples of conditions that could have led to denial of coverage prior to the ACA include cancer, diabetes, heart disease, epilepsy, and pregnancy.5 Even though most people with preexisting health conditions have coverage through a group plan offered by an employer or a public plan such as Medicaid, they may need to apply for coverage through the individual market if they become ineligible for these plans. For example, they may seek coverage through the individual market if they lose their job or go through a divorce, are lower-wage workers in businesses without health benefits, or are self-employed.5 The repeal of the ACA protections could increase this group’s risk of being uninsured.

There are additional risks of repealing unpopular provisions of the ACA such as the individual mandate and the premium subsidies, while maintaining the popular protections for coverage of preexisting conditions. Levitt6 cautioned that this scenario could produce a “death spiral” resulting from rapid increases in premiums by insurers in response to healthy individuals dropping their coverage, while health care costs increase for the sicker insured population. The uncertainty created in the health insurance market if the ACA is repealed without replacement could also lead insurers to exit the market to avoid financial losses.6 The effect of less affordable insurance premiums and fewer health insurers in the marketplace could increase the rates of uninsured individuals.

In conclusion, partial or complete repeal of the ACA without replacement with comprehensive and affordable health insurance legislation would likely increase the number of uninsured people in the United States. The expanding uninsured population could encounter serious health and financial risks due to the loss of health care coverage, while the cost of health insurance premiums could increase more steeply for the insured population.

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About the Author

Michael McCurdy
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