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How repealing Obamacare would punish the working class

Alberto Abin leaves the UniVista Insurance office after shopping for a health plan under the Affordable Care Act in Miami. (Joe Raedle/Getty Images)

This item has been corrected.

The number of people without health insurance could more than double under Republican plans to repeal President Obama's Affordable Care Act, reaching nearly 59 million — or more than one in four Americans, according to a new analysis published Wednesday.

The figures illustrate the challenges for newly empowered Republicans who, having won the presidential election after pledging to ease the financial burdens on the American working class, must work out the details of how they will deliver on their promises. About four in five of those who would become uninsured following repeal do not have a college degree, the report, from the Health Policy Center at the nonpartisan Urban Institute, projects. Two-thirds live in a household with at least one person working full time.

The ACA, also known as Obamacare, provides subsidies to help subscribers afford the cost of individual policies. The law also required all Americans, with a few exceptions, to have insurance.

Without the subsidies or the requirement that all Americans have coverage, experts say the healthiest customers would cease buying insurance if they do not have policies through their employers or through the government. As a result, insurers would be forced to increase premiums to cover the cost of treating those sicker patients who remain. Many would find they could no longer afford coverage.

Repeal and delay

House Speaker Paul D. Ryan (R-Wis.) has said that any GOP repeal would not cause hardship for those who have benefited from the ACA. Instead, Republicans have been talking about passing legislation that would repeal the law after a couple of years to give themselves time to work out the details of a new system that would make those beneficiaries whole.

“Clearly, there will be a transition and a bridge so that no one is left out in the cold, so that no one is worse off,” Ryan said Monday in an interview with the Milwaukee Journal Sentinel.

Because Republicans have not yet reached an agreement about what form that new system would take, however, the analysts at the Health Policy Center did not assume that the party would be able to make good on Ryan's promise.

“At this point, there’s no consensus on any replacement,” said Linda Blumberg, an economist and one of the authors of the report. She said that there is intellectual disagreement among Republicans about how to resolve the serious practical challenges involved in reforming health care. Indeed, several conservative commentators have warned that repealing the reform could be a risky strategy for Republicans if they cannot come up with a replacement in time.

“It's a huge mountain to climb,” Blumberg said. “It's a pretty strong possibility that … you may end up with a repeal without a replacement.”

The projections from Blumberg and her colleagues are for 2019, assuming that any legislation passed by the new Congress and signed by President-elect Donald Trump once he takes office would take effect after two years. That would have been the plan under a repeal Republicans in Congress passed earlier this year and that Obama vetoed.

Although it is difficult to predict exactly how insurance markets would respond if confronted with persistent political uncertainty, Blumberg noted that broad disruptions could begin as soon as 2018 if Republicans cannot lay out a clear plan for reform. “At some level, this is a best-case scenario,” she said.

For example, some insurance companies might have been willing to accept losses up until now to win over customers in the individual markets created by the ACA. If those markets are about to disappear, these firms could become less interested in competing for customers, and they might raise their premiums. Those premiums would discourage healthy people from buying insurance, resulting in greater costs for insurers that require even steeper hikes and adding instability to the market.

Who would be affected

Of the 30 million who would become uninsured, 55 percent are poor or nearly poor, with incomes under twice the federal poverty threshold.

The majority (56 percent) of those who would become uninsured would be white, but a disproportionate share would be Hispanic, according to the report. While census data show that about 17 percent of the country is Hispanic or Latino, this group accounts for 22 percent of those who would become uninsured by 2019. Nearly one in three Latinos would not have coverage, the most of any racial or ethnic group.

Reductions in insurance would be concentrated in states led by Democrats and moderate Republicans who have expanded Medicaid under the reform. Repeal would remove some 13 million people from the Medicaid rolls, the report projects.

Fewer people covered than before Obama

Blumberg pointed out one unexpected result from her group's research: After repeal, the country's health-care system could provide coverage to even fewer people than were insured before Obama enacted the reforms.

That is because despite costly premiums, millions of people without insurance through their employer or through the government bought insurance on the individual market before the reform. That market cannot be easily restored following repeal.

Repeal would not only increase premiums in the online exchanges established under the reform. Subscribers in the individual market outside the exchanges would also have to pay those steeper rates, because insurers would remain barred from charging cheaper rates to healthier customers, or from offering plans that do not meet certain standards.

Republicans might be able to change those rules — but it is unclear whether they would be able to do so without a filibuster from Democrats in the Senate. (A filibuster would not be an obstacle to repealing most of ACA because of the quirks of the Senate's parliamentary procedures.)

At those increased prices, only about 1.6 million people would sign up for individual plans, Blumberg and her colleagues project.

In 2009, when Obama took office, about 50 million people were uninsured. The report projects that after repeal, 59 million people will lack coverage by 2019, compared to 29 million if the ACA remains in place.

“We’re not talking about setting ourselves back to where we were, say, in 2009,” Blumberg said. “We’re talking about putting ourselves in a situation where the number of uninsured is actually higher than it was then.”

Correction: An earlier version of this item misidentified the organization that published the analysis on repealing the Affordable Care Act. The report was from the Health Policy Center at the Urban Institute, not the Tax Policy Center, a joint program of the Urban Institute and the Brookings Institution.