Some Obamacare may linger in a Trump world

The Affordable Care Act in its existing form has been a dead man walking since Donald Trump won the presidency last week, following months of campaigning to "repeal and replace" the insurance overhaul that always lacked Republican support.

But health care experts say an immediate decapitation of the health care law, also known as Obamacare, is unlikely and impractical as tens of thousands of Michiganders (and many more nationwide) have already begun shopping on the Healthcare.gov marketplace for 2017 individual market coverage  that will kick in Jan. 1 — three weeks before the Trump inauguration.

Any big change affecting those getting coverage under the ACA is more likely to take effect for 2018, these experts say.

What's more, it does not appear that Trump favors a  full repeal of the polarizing law. During the campaign, he repeatedly voiced a desire to keep some of the more popular parts of Obamacare. . On Friday, he told the Wall Street Journal that he particularly likes the prohibition against insurance companies denying coverage to those with pre-existing conditions and the provision allowing adult children to stay on their parents' insurance until age 26.

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Republican leaders have pledged to repeal Obamacare because it's a new government entitlement that requires everyone to have health insurance coverage or face a tax penalty, among other mandates. It also relies on tax credits and subsidies to lower the price for lower-income participants.

But supporters say the mandate to participate — including requiring businesses with 50 or more full-time workers to provide employee health insurance — is the only way to ensure the viability of the marketplaces.

The tension underscores the extreme challenge for any policymaker in keeping the popular parts of Obamacare and paying for it without killing its intent, to provide health insurance for tens of millions of Americans who otherwise would be uncovered.

Aside from the government-run marketplace, about 625,000 low-income Michiganders now enjoy a basic level of health coverage through Medicaid that they once presumably lacked before the ACA expanded Medicaid eligibility to those somewhat above the poverty line.

Many hospitals statewide want the expansion to remain in place as it helps their bottom line. They previously received no reimbursement when these newly eligible individuals lacked insurance and showed up in their emergency rooms.

"From a policy standpoint, both of the initiatives have been incredibly positive for the community we serve," Detroit Medical Center CEO Joe Mullany said of the law's Medicaid expansion and insurance marketplace.

However, experts say Medicaid's expansion and the overall shape of the program could be very different in a Trump administration. Trump has expressed an interest in transforming Medicaid into a block-grants program, involving federal lump-sum payments to states.

This revamp — a recurring idea among some conservatives — would ostensibly save money for the federal government by discontinuing its open-ended Medicaid funding commitment and granting states the flexibility to adjust or cut the program's services.

In total, the Affordable Care Act provides coverage for about 975,000 people in Michigan: about 625,000 from Michigan's unique Medicaid expansion program, the Healthy Michigan Plan, and another 350,000 through policies sold on the online marketplace.

Nationwide, President Barack Obama has said that 20 million people have gained health coverage through the 2010 law.

Death spiral

Trump and Vice President-elect Mike Pence, who take office Jan. 20, made clear on the campaign trail they are against most of Obamacare.

But experts say it would be a policy challenge to retain just the popular parts of the ACA — call them the Best of Obamacare — while ending the taxes, government subsidies and the nationwide mandate that everyone show proof of health insurance or pay a tax penalty.

The penalty started off small but is now either $695 per adult or 2.5% of a person's household income, whichever is higher.

Eliminating the Obamacare mandate, penalties and Healthcare.gov subsidies would likely worsen the problem of rising health plan premiums for individual coverage because that would mean fewer young and healthy people signing up, experts say.

More than 80% of Michigan residents who buy insurance on Healthcare.gov received a tax credit subsidy based on income level. The subsidies shield consumers from the full impact of insurance premium spikes, which ultimately get passed along instead to taxpayers in general. Premiums for individual policies are set to jump an average of 16.7% in Michigan next year and a whopping 25% nationwide.

Should the individual mandate and subsidies go away, "then you get into the death spiral, where the only people who end up enrolling are people who are sick, and that will drive (insurance) prices up," said Marianne Udow-Phillips, executive director of the Center for Healthcare Research and Transformation in Ann Arbor.

Intent of the law  

An analysis by the Rand Corp. of some of Trump's health care ideas, including a full ACA repeal, determined that they would decrease the number of insured Americans by 20 million and actually increase the federal deficit by $5.8 billion once the various Obamacare taxes on high incomes, medical devices, prescription drugs and tanning beds are discontinued.

Even though some politicians blame the health care law for recent double-digit premium increases, the ACA was primarily designed to expand insurance coverage to more people — not contain the ever-rising costs of health care.

Large annual premium spikes were common in the years before the law took effect, as were unpopular lifetime and yearly coverage limits in some plans that the law banned.

It is not yet clear how a Trump administration working with the Republican-controlled Congress would undertake an ACA repeal, or what they would replace it with. One possible repeal strategy is the Senate's "reconciliation" process that requires just 50 votes and can't be filibustered by Democrats, who will remain a minority in the upper chamber next year.

Reconciliation was used to pass the ACA in 2010 after former Republican Sen. Scott Brown of Massachusetts won a special election early that year, snagging the seat of the late Sen. Ted Kennedy and depriving Democrats of the 60 votes needed to override a filibuster.

More recently, Republicans this year used reconciliation to pass an Obamacare repeal featuring a Medicaid expansion rollback. The president promptly vetoed the bill. But once Obama vacates the White House, it's open season on the ACA.

"It is easy to repeal," said Peter Jacobson, a professor of health law and policy at the University of Michigan. "What's always been problematic is what are you replacing it with."

No blueprints after repeal

Trump's team has yet to unveil any blueprints for an Obamacare replacement. He and Pence cited a few "free market reforms" during campaign stops, such as tax-free health savings accounts, the Medicaid block grants, greater price disclosure by health care providers, letting individuals fully deduct payments on their premiums from their taxes like businesses can, and allowing insurers to sell products across state lines.

In one of the more detailed speeches, Pence lambasted the premium spikes happening with policies sold on Healthcare.gov — "we've got to pull it off the market so it stops burning up our wallets." He criticized the high-deductible plans that prevail on the ACA marketplace. The deductibles for such plans can exceed $5,000, requiring people to spend that amount before the insurance fully kicks in.

The incoming vice president noted how people who buy high-deductible plans often avoid going to the doctor due to the out-of-pocket expense.

"What good is a health care plan if you can't afford to use it?" Pence said in the Nov. 1 speech in Pennsylvania, which coincided with the start of the 2017 open enrollment on Healthcare.gov that runs through Jan. 31.

Detroit resident Jordan Stoewsand-Kryscio, 27, who works in the restaurant industry, is well familiar with those types of plans. He said he enrolled in one through the marketplace that costs him an affordable $70 to $80 a month, once his subsidy is factored in. But the plan's deductible is a sky-high $6,500.

"I know — it's insane," he said last week. "I haven't even gone to the doctor since I signed up. I just did it to avoid the penalty and for the peace of mind."

How can costs be contained?

Missing so far from Trump and Pence are explanations on how rising premiums could be reined in even as the individual mandate to buy insurance would go away. Experts say this conundrum is why few Obamacare replacement plans have been put forth.

"That's why you have the individual mandate — so you can pay for all this," professor Jacobson said. "They have never been able to say how they pay for it. And if you're not paying for it, that means higher premiums."

The Michigan Health & Hospital Association says Obamacare has had a net positive impact on Michigan hospitals, which have seen a 50% reduction in the number of patients without insurance.

The Detroit-based Henry Ford Health System saw a significant drop in its charity care as "those individuals who might have come through our emergency department with no insurance now have Medicaid or an insurance product," said President Wright Lassiter III. However, some of those gains were washed out by an uptick in uncollected debt from individuals with high-deductible plans who ended up needing health care but couldn't pay their deductible, he said.

Enrollment up

Last week's historic election has been a boon so far for ACA enrollment. The Obama administration announced that more than 100,000 people signed up for a marketplace plan on Wednesday, the most of any day since the current enrollment period started.

Dizzy Warren, executive director of Enroll Michigan, which assists people in signing up for Healthcare.gov plans, said her staff has been fielding questions about what a Trump presidency could mean for the ACA.

"But it is not at a panic level," Warren said. "We understand that this is not an overnight action and there is not any information out there to be able to advise consumers on anything."

The likelihood of repeal is already nerve-racking for Antoine Jackson, 31, of Detroit. He is a legal guardian for two family members with disabilities who have insurance through the ACA: his 42-year-old brother and his mother, who recently turned 65.

They previously had Medicaid but switched to a marketplace plan for the better quality coverage, which saved them hundreds of dollars a year in co-payments and prescription costs. While Jackson's mother is now old enough for Medicare, he said he doesn't want his brother's health care coverage to backslide if Obamacare gets repealed.

"I am very concerned because it is going to impact him," he said. "To what degree, I don't know."

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter@JCReindl.

What could be in Trumpcare?

President-elect Donald Trump has yet to unveil a blueprint for what he would replace Obamacare with. Below are a few aspects of the health care law he has said he might keep and a few new things he might add.

To keep:

• Prohibition against insurers denying coverage to those with pre-existing conditions.
• Allowing adult children stay on parents' insurance until age 26. 

To add:

• Tax-free health savings accounts.
• Letting individuals deduct premium payments from their taxes.
• Allowing insurers to sell products across state lines.
• Greater price disclosure by health care providers.