A common debating tactic is the straw man argument — misrepresenting an opponent’s argument or position so that you can refute it. Proponents of the Affordable Care Act are trumpeting a new Urban Institute study that predicts disaster if the ACA is repealed. But the report examines a sham version of what Republicans are proposing and ignores inconvenient realities that undermine its conclusions.
The Urban Institute analyzed what would happen after partial ACA repeal through the budget reconciliation process alone without any replacement or modification of remaining ACA provisions. Reconciliation — a procedural maneuver to circumvent filibusters by passing legislation that has budget implications with a simple majority in the Senate — would eliminate the ACA’s Medicaid expansion, subsidies to purchase insurance on the ACA exchanges, and the individual and employer mandates. It would leave intact insurance market reforms like guaranteed issue, prohibitions on pre-existing conditions exclusions, modified community rating and an essential benefits package. Urban Institute predicts this would lead to nearly 30 million people losing their insurance. It claims repeal will leave fewer people insured than before the ACA was enacted.
The problem with this doomsday scenario is that no one is suggesting repeal through reconciliation alone. House Republicans proposed a replacement package called A Better Way. Department of Health and Human Services secretary designee, Rep. Tom Price, R-Ga., has also proposed replacement legislation. House Speaker Paul Ryan announced his intention to pass legislation that will repeal the ACA over a year or two to transition to a replacement.
Any action by the new Republican president and Congress will change the ACA’s insurance market reforms and include new programs. The generous and expensive ACA minimum essential benefits package will likely be replaced with more flexible standards to allow consumers to select insurance that they want, need and can afford.
The ACA’s arbitrary 3:1 limitation on age adjustments for insurance premiums between older and younger enrollees will also disappear. It was a thinly disguised wealth transfer from the young to the old and resulted in artificially high premiums for young people that discouraged them from buying insurance. Age adjustments will likely revert to the more realistic 5:1 ratio that prevailed before the ACA, making insurance cheaper for the young, healthy consumers it is critical to attract.
Refundable tax credits and expanded access to Health Savings Accounts will replace the ACA subsidies that locked consumers into buying on the exchanges, leaving consumers with more options to obtain affordable plans.
The Urban Institute’s projections of coverage losses are also problematic because they are predicated on an erroneous portrayal of how the ACA has worked in practice. The institute claims 22.5 million will become uninsured as a result of eliminating the ACA’s Medicaid expansion, individual mandate and premium tax credits. While the majority of ACA coverage gains came from higher Medicaid enrollment, economist Jonathan Gruber — one of the ACA’s chief architects — has reported that nearly 70 percent of the coverage increase attributable to Medicaid (44 percent of the overall coverage increase) came from people who were already eligible for Medicaid coverage before passage of the ACA. Eliminating the ACA Medicaid expansion will not affect their coverage.
Gruber also reported that the individual mandate had no significant effect on increasing coverage — eliminating it should have minimal effect.
The ACA’s premium tax credit subsidies are prone to errors and susceptible to fraud. Enrollees predict the credit they are entitled to for the coming year — estimates that are inherently inaccurate because income, employment and family size change, often unexpectedly. Enrollees are then supposed to reconcile the advanced credits they received with amounts they were actually entitled to on their tax returns. But nearly a third of premium credit recipients never file tax returns or the IRS Form 8962 needed to reconcile their credits. Moreover, several agencies have confirmed the government is unable to verify eligibility for insurance or subsidies and that fictitious people can easily enroll.
Urban Institute also predicts 7.3 million will become uninsured because the non-group market will collapse because insurers will be unwilling to participate if the individual mandate is not enforced. Yet anyone not living in a cave knows the exchanges are already collapsing. Insurers are exiting in droves, leaving 68 percent of U.S. counties with two or fewer insurers to choose from. Insurers complain the individual mandate is so riddled with exemptions that few people have been compelled to buy insurance. Consumers game the system — delaying insurance purchases until they are ill — leaving insurers covering sick, expensive patients and no profits from insuring healthy people.
The majority of Americans have waited eight years to repeal and replace the ACA with a more flexible, consumer-centered healthcare system. Neither the new president nor the Congress should be deterred by fallacious arguments.
