Trump’s Dilemma: Can He Repeal Obamacare Without Killing Medicare?

Trump’s Dilemma: Can He Repeal Obamacare Without Killing Medicare?

© Nathan Chute / Reuters

Voters opposed to Obamacare have waited six years for the opportunity to repeal it. Since the election, Republicans have suggested that it might take as many as three more years to unwind the gears of the Affordable Care Act, especially when it comes to Medicare. The “repeal and delay” strategy to push off the heavy lifting until yet another election had passed, stirred grumblings of discontent among Republicans who had already expressed considerable disgust at the party’s inability to keep its promises on the ACA. 

On Wednesday, incoming White House chief of staff Reince Priebus recommitted the Trump administration to its campaign pledge. Asked by Salem Radio host Hugh Hewitt about the president-elect’s priorities after the inauguration, Priebus replied, “I think we’re probably going to lead with Obamacare repeal and then replace.” Two separate tax reform packages would follow, but both the repeal and a replacement for Obamacare would come first. 

Related: 8 Big Changes Under Tom Price’s Obamacare Replacement Plan 

Priebus’ statement is consistent with the moves already taken by Donald Trump during the transition. His appointment of Tom Price as Secretary of Health and Human Services and a subsequent choice of Seema Verma to run the Centers for Medicare and Medicaid Services (CMS) at the beginning of his transition sent a message that Obamacare repeal would be Trump’s top domestic policy priority. Both want wholesale reform rather than incremental change or even a strategic pause. 

“The first step out of the gate for Obamacare is a step in the wrong direction,” Price told Washington Examiner reporter Philip Klein, “and that is for government control over every aspect of health care. So it's hard to fix the system that they have put in place without ending that premise that government ought to be running and controlling health care."

 But even the best of intentions often run head-on into reality – and a new report from the Kaiser Foundation underscores the reality of dismantling Obamacare and its implications for Medicare. A full repeal, as repeatedly proposed by Price in his “Empowering Patients First Act,” would eliminate cost savings in Medicare and add as much as another $350 billion in Medicare costs over the next decade, using June 2015 calculations by the Congressional Budget Office.

Related: Democrats Send a Warning to Trump: Don’t Mess With Medicare 

The CBO report also noted the risk to broader health insurance coverage under a full repeal, a politically sensitive issue for Republicans. Uninsured Americans would increase by 19 million in the first year to 48 million, and eventually by 24 million in the fifth year to a projected 50 million overall. Most of those would be lost in the Obamacare insurance exchanges, which would provide Democrats and the media endless opportunities to highlight any pain caused by repeal. 

However, those numbers are overblown. CBO projected exchange enrollment in 2016 at 20 million and higher in later years, a figure that Obamacare has never come close to reaching. Actual enrollment at the end of 2015 was 8.8 million people who had paid for their insurance the entire year; enrollment dropped in 2016 to 11.1 million after 12.7 million signed up during open enrollment. HHS Secretary Sylvia Burwell predicted an enrollment of 13.8 million for 2017, but so far only four million have completed the enrollment process on the federal exchange.   

On the other hand, the CBO holds out promise for significant economic benefit from Obamacare’s repeal. The labor supply would grow an additional 0.9 percent starting five years out and also increase aggregate compensation and hours worked. That growth would largely benefit lower-wage workers – the people who responded most enthusiastically to Trump. Republicans have long argued that Obamacare mandates and costs on employers have held back growth, and its full repeal would help generate an economic boom. They would like to see those benefits materialize as fast as possible.

Related: A ‘Full Repeal’ of Obamacare Could Spur Medicare’s Bankruptcy

Republicans have to tread carefully with Trump on Medicare, though. The president-elect has emphasized that he does not want to overhaul the entitlement program, which cuts out some maneuvering room on mitigating the effects of total repeal. Price’s EFPS bill exists in legislative language now and could be enacted fairly quickly, at least those portions of it that could qualify under reconciliation, but its changes to Medicare would accelerate its coming insolvency by a few years. If Trump felt that he was getting trapped into working on broader entitlement reform, he might just balk at the whole project, leaving Republicans – and insurers -- in limbo on Obamacare.

The alternative would be to unwind parts of Obamacare immediately through a partial repeal, but leave its Medicare components in place for a later date. That would take a more surgical approach, while Price could cut into the vast regulatory expansion created under the ACA by his two predecessors. It would take more time but would provide a better landing arc for the demolition of the program.

That would afford Republicans an opportunity to find enough Democrats to go along with a replacement. Not every aspect of their plan can pass through reconciliation, plus the lesson of Democrats’ go-it-alone approach should be obvious. Republicans could and did wash their hands of Obamacare and now dominate at every level of politics, while Democrats marginalized themselves into coastal and urban enclaves.

Related: Obamacare RIP: Republicans Finally Have a Plan

The next health-insurance market reform plan needs to have some bipartisan consensus in order to keep from creating another futile disruption that will get reversed the next time the political winds change.

With 10 Senate Democrats looking at defending their seats in 2018 for states that Trump won in 2016, obvious incentives to play along exist. But that only works if Republicans can repeal Obamacare up front, at least those portions that don’t impact Medicare. As long as it’s possible to save Obamacare, Democrats will refuse to cooperate on any Republican alternative, and they will get more obstinate about it the longer it drags out. Trump and Priebus really have no choice but to act quickly if they want to deliver on this promise at all.