Nearly nine months ago on Nov. 9, 2016, three things seemed to be almost certain: Donald Trump was to become the 45th President of the United States, Congress was going to stay under control of the Republican Party, and the Affordable Care Act (ACA) was running on borrowed time. After all, Trump had campaigned on the idea of repealing and replacing the ACA. Yet, here we are in August 2017, and the ACA, which is best known as Obamacare, firmly remains the health law of the land.
The GOP's failure to launch
During Barack Obama's tenure, the House voted on more than 60 occasions to repeal Obamacare. In fact, one repeal effort passed in both the House and Senate, with Obama himself vetoing the measure in Jan. 2016. However, what's ironic is that now that Republicans control the legislative branch of the government, they can't get an acceptable repeal-and-replace bill through Congress.
Since March, there have been four publicly criticized iterations of a repeal-and-replace bill. This includes the American Health Care Act, which came out of the House and actually was passed in its second amended version by a very narrow margin in May, and sent to the Senate. It also includes both versions of the Better Care Reconciliation Act, which were shot down by a combination of moderate Republicans and Freedom Caucus members in the Senate. Moderate Republicans fear coverage losses to their constituents, while the Freedom Caucus believes current efforts don't distance the bill far enough away from Obamacare.
Over the past two weeks, multiple -- and I do mean multiple -- variations and amendments were presented, which even included what's known as a "skinny repeal." A skinny repeal would have eliminated the individual mandate and employer mandate, as well as repeal the medical device excise tax. The skinny repeal failed to reach the required 50 votes for Vice President Mike Pence to break the tie, falling 49-to-51.
In other words, Trumpcare, as it's been dubbed, appears to once again be on life support.
Trump may go nuclear on Obamacare
However, President Trump doesn't seem too content letting Congress sweep its failure to pass a healthcare bill under the rug. Instead, Trump has suggested that he's not afraid to use a nuclear option with Obamacare, and essentially force Republicans, and possibly even Democrats, to the discussion table.
Before we get to that nuclear option, we need some background on why it could be such a devastating move to millions of insured folks and to Obamacare.
It all starts back in 2014, when the Republican-led House sued Sylvia Burwell, who, at the time, was the Secretary of the Department of Health and Human Services. The lawsuit concerned cost-sharing reductions, or CSRs. Cost-sharing reductions are subsidies given to individuals and families earning between 100% and 250% of the federal poverty level, and they're designed to help lower the costs of receiving medical care. This means lower copays, deductibles, and coinsurance for these folks. Earlier this year, more than 7 million people were receiving CSRs through Obamacare marketplace exchanges.
Here's the problem: Congress, and only Congress, has the authority to authorize the disbursement of federal funds for CSRs. Since Congress hadn't been apportioning CSR funding, it sued Burwell. As is the norm for most legal battles, it took years to be resolved. However, in May 2016, District of Columbia Judge Rosemary Collyer sided with the Republicans. But the judge also stayed her order given the expectation of an appeal, which did indeed come from the Obama administration.
For more than a year now, the appeal to Collyer's decision has remained in place despite the fact that Tom Price has been plugged in as the Secretary of the Department of Health and Human Services under the Trump administration. In a way, it's as if the GOP is now suing itself.
Trump and the GOP have options. They could continue to pay CSRs and ensure that the more than 7 million people who qualify continue to have affordable access to medical care, or, as Trump has threatened previously, he could drop the federal government's appeal of the case and allow Collyer's judgment to take hold, ergo withholding future CSR payments.
Here's what happens if Trump "pushes the button"
Should Trump move forward with the latter proposal, it would effectively allow low-income folks the ability to buy health insurance (the Advanced Premium Tax Credit helps to significantly lower premium costs), but many wouldn't be able to afford to use it, since copays, coinsurance, and deductible costs would be far too high. The result of removing the appeal and going nuclear on Obamacare likely would mean that millions of low-income folks would have to drop out of the system, and the uninsured rate would therefore rise.
Additionally, we would almost certainly see a rise in healthcare premiums for 2018 and beyond. Health insurers very much dislike uncertainty, and removing CSRs creates a market with fewer potential enrollees and the real possibility that consumers could seek care, but be unable to foot their bills. Higher uncollected debts mean a steady stream of cost increases from top to bottom.
If there is a silver lining for insurers, however, it's that government-sponsored members tend to generate lower margins. Thus, while they'd be giving up guaranteed revenue and some profit in the process, their operating margin would be expected to improve as they turn their focus back to employer-sponsored care and private buyers.
Long story short, if costs begin to spiral out of control, Trump believes that Republicans and Democrats will have no choice but to come back to the table and pass a new plan. But if he does "push the button," some 7 million people could lose their coverage, and millions more could face higher premiums as a result. That's probably not the change Americans are looking for in their healthcare plan.
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