Affordable Care Act Repeal May Cost Billions

Repealing the Affordable Care Act (ACA) has been atop the agenda of GOP legislators long before President-elect Donald Trump won the election, but Republican lawmakers have yet to devise a comprehensive replacement plan. New findings suggest that repealing the health law may actually prove to be costlier than previously thought.

A new report, published by the Committee for a Responsible Federal Budget, divulges that the proposed appeal of the ACA by Trump and Republican lawmakers may cost $350 billion by 2027.

However, investigators discovered that repealing the law could save $1.55 trillion during this time. While it may seem positive that the repeal would, in theory, save a large amount of money, repealing tax increases could cost $800 billion.

Removing funds given to Medicare through the ACA would also cost $1.10 trillion, but the repeal may lead to a $200 billion in savings resulting from an increase in economic growth, according to the report.

Of the $1.55 billion in savings seen from the repeal, $900 billion is the result of cutting various subsidies offered to individuals who earn a lower income. The investigators noted that these potential savings could be offset by $250 billion in costs resulting from repealing insurance mandate penalties, and $200 billion from other provisions.

Approximately $800 billion of revenue loss from the repeal will result from removing the 0.9% Medicare surtax for individuals who earn more than $200,000 per year, and the 3.8% surtax on investment income of the same amount, according to the report. Additional revenue loss is attributed to eliminating fees for various insurance, medical device, and drug companies.

Cuts to Medicare Advantage would result in $450 billion in costs, and another $500 billion is the result of eliminating growth of payments for traditional Medicare. The authors noted that this estimate assumes that reductions in provider payments from the ACA are kept with no future cuts expected. If these past reductions were also taken into account, the repeal would cost up to $250 billion in costs by 2027.

By these estimates, repealing the ACA would not save money, in fact, there would be no funds left for a replacement plan. So, how should Republican lawmakers go about the repeal if they wish to avoid adding to the country’s debt?

The authors suggest that only repealing the mandates related to individuals and employers would save $300 billion by 2027, by less individuals receiving subsidies. However, repealing the individual mandate would increase the population of uninsured individuals by 15%, which could add additional costs to the healthcare industry.

Making changes to guaranteed issue and related rules could potentially increase the insured rate, but could also reduce savings seen from repealing the mandates, according to the report.

Repealing all provisions, except Medicare reductions and tax increases, could save $1.55 trillion, and provide the government with substantial funds for a replacement plan. Unfortunately, this plan of action would leave 23 million individuals without health insurance.

Repealing coverage and tax provisions, without eliminating Medicare changes, could save $750 billion, according to the authors.

The authors caution that potential changes to the ACA should intend to reduce federal debt, but because of the nature of the repeal, it is unlikely that this will be achieved. Savings seen from repealing parts of the health law need to be substantial enough to cover the costs of the repeal, but also to fund a replacement plan.

The repeal and replacement plan should also be evaluated based on what will happen to insurance rates, economic growth, and premium costs, according to the report.

The goal of lawmakers should be to slowdown healthcare costs, and will require them to use the ACA to identify which parts of the legislation lead to a slowdown and which did not. Lawmakers should then build upon the successful parts to implement a more expansive healthcare reform.

It is critical that lawmakers do not take action that will cause a rapid increase in healthcare cost growth that would be unsustainable for families, businesses, and the economy, the report concluded.