Why it's so hard to replace Obamacare

Some Trump supporters hoping they don't lose Obamacare
Some Trump supporters hoping they don't lose Obamacare

Lots of people -- including many lawmakers -- want to know more about how Congress will replace Obamacare.

So far, Republican leaders in the House and Senate have promised to make health insurance more affordable and provide consumers with more choice.

But there's not much unity beyond that. Lawmakers can't even agree on the timing of a replacement bill, much less the contents of it.

One major stumbling block: The sweeping health insurance reforms that Obamacare put in place, such as guaranteeing coverage for those with pre-existing conditions and mandating a set of benefits insurers must provide.

Overhauling the provisions that dictate insurers' practices is critical to the Republicans' ability to lay out their vision. But they may prove surprisingly hard to unwind.

The problem is Republicans can't repeal Obamacare in full. Doing that would require 60 votes in the Senate, and they only have 52 members. So the GOP's repeal method of choice is budget reconciliation, which requires only a simple majority in the Senate.

The catch is that budget reconciliation is limited to items directly related to federal spending and revenues, and the fiscal effects can't be a cover for making broader policy changes. Jettisoning Obamacare's penalties, subsidies and taxes is a given. Beyond that, the plan is murkier.

Related: Ryan: GOP will repeal, replace Obamacare at same time

Republicans are expected to push the envelope on what's allowed under reconciliation. Key to this effort is loosening the rules on insurers so they can offer a wider variety of policies, many with lower premiums because they would offer fewer benefits. Consumers would have more options to pick the coverage that suits their needs -- for instance, 55-year-old men would not need pricey maternity coverage or healthy, young folks might opt for a policy that doesn't cover prescription drugs.

"You need to give insurers more flexibility in designing their products," said Doug Badger, senior fellow at the Galen Institute, a free-market, health-care think tank. "People in reasonable health and young people do not find these products [in the individual market] something they want to purchase."

Related: Health care battle cheat sheet: Democrats vs. GOP

Obamacare completely changed the individual market, instituting stringent rules on whom insurers must cover, what benefits they must provide and how much they can charge.

Chief among these was the requirement that insurers cover those with pre-existing conditions. Prior to Obamacare, insurers in most states could opt not to sell policies to those with such conditions or could charge them much higher premiums. Some 27% of American adults have health conditions that would likely leave them uninsurable if they applied for coverage under the former practices, according to a Kaiser Family Foundation study. Now, insurers must take everyone.

"The number one way to offer an affordable plan is not to take sick people," said Sabrina Corlette, research professor at Georgetown University's Health Policy Institute.

Related: What doctors think about the Affordable Care Act

(The pre-existing conditions rule is pretty popular among Americans, and Republicans have promised to protect this group, as long as they've been continuously insured. Just how they'll do this, however, remains to be seen. The GOP will have to find a way to woo younger people into the market to offset the costs of those with pre-existing conditions.)

A much less expensive provision is that children under the age of 26 can now be covered under their parents' policy. Republicans have said they are likely to keep this rule.

Related: Why so many people hate Obamacare

Insurers also must offer 10 so-called essential health benefits, including hospitalization, maternity, pediatric care, mental health, emergency services and prescription drugs. Before Obamacare, carriers were largely free to sell the benefits packages of their choice. It was almost unheard of to find maternity or mental health benefits. Many had very high deductibles -- $20,000 for an individual in some cases -- or offered limited benefits, earning them the moniker "catastrophic" or "bare-bones" plans because they provided so little coverage.

Obamacare also did away with insurers' financial limits on coverage. It had been common to have lifetime caps --- for instance, an insurer might no longer pay for your care if it cost more than $500,000 in total. The health reform law flipped the equation -- now, consumers don't have to pay if their care costs more than $7,150 in 2017 for a single person or $14,300 for a family.

And the law restricted the premiums insurers could charge older Americans (age 64) to three times that of younger enrollees (age 21). Beforehand, a ratio of at least 5-to-1 was more common.

Related: Trump: Obamacare repeal and replace will happen 'essentially simultaneously'

Without softening or lifting these rules, insurers could have a tough time rolling out policies that fulfill the Republicans' promise. But Congressional leaders realize that they could have a problem addressing this in their current reconciliation plan, leading them to temper expectations on a replacement bill.

"We'll continue working this week to pass the legislative tools necessary to begin clearing the way for repeal, and then, a different way forward that will lower costs and increase choices from where they are now," Senate Majority Leader Mitch McConnell said Monday. "There's no quick fix to undoing the damage created by this broken and complex law, and repeal is just the first step in that process."

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