How Undoing the Affordable Care Act Would Affect Americans’ Health Care

Pending the outcome of the 2024 presidential and congressional elections, the fate of the Affordable Care Act, or ACA, may hang in the balance. Republican presidential nominee Donald J. Trump has a history of calling for the repeal of the ACA, which he has described in the past as a “disaster.” Several repeal proposals were introduced in 2016 and 2017 during his administration, though none were enacted into law — largely because Democrats were uniformly opposed, as were some Republicans.

Enacted in 2010 and expanded in 2014, the ACA has largely been successful in its primary goal of expanding access to affordable, comprehensive health insurance coverage, particularly among Americans with low and moderate income. The law has achieved historic reductions in the nation’s uninsured rate in three key ways:

• Allowing more people to enroll in Medicaid, the public health insurance program, by expanding income eligibility standards.
• Making income-based subsidies available for the purchase of nongroup, or individual, market coverage through new insurance exchanges called marketplaces.
• Introducing a number of reforms to the private insurance market, among them: a ban on insurers denying coverage to people with preexisting health conditions; guaranteed issue, or the requirement that health plans accept applicants regardless of age, health status, gender, and other characteristics; modified community rating (meaning insurers cannot vary rates based on health status); and the requirement that plans cover important preventive health services, like cancer screenings, at no cost to consumers.

What could a repeal of the ACA look like?

Previous repeal proposals offer clues as to what future efforts to walk back the ACA could look like. Some proposals aimed to fully repeal the law. Others involved a partial repeal, which could be more easily enacted through a budget reconciliation act requiring only a simple majority of votes in the Senate.

Full repeal would eliminate all the ACA’s insurance market reforms, its coverage expansions, its premium subsidies (tax credits) for people with low to moderate income, and its revenue-raising provisions (including a tax on medical devices).

Under partial repeal through budget reconciliation rules, only pieces of the law that have budgetary effects can be considered. This means that ACA provisions related to coverage and affordability could be repealed. All insurance market reforms would remain in place, however.

How would repeal of the ACA affect health insurance coverage?

Under partial repeal, significantly more people would lack health coverage than under full repeal, as counterintuitive as that might seem. That’s because partial repeal would almost certainly trigger a “death spiral” in the nongroup insurance market.

It would happen like this. Without the ACA’s premium subsidies and requirement that people have health insurance — but with market rules still in place that restrict insurers’ ability to adjust pricing for risk, deny coverage, and modify benefits — premiums would rise sharply. Only people who are sicker than average, and thus use more health care services, would enroll in marketplace plans, which would have increasingly greater proportions of sicker, higher-cost enrollees. As premiums grow larger and coverage becomes less affordable, more and more healthy people would stop purchasing insurance, triggering additional premium increases. Eventually the nongroup insurance market would be virtually wiped out.

Studies suggest a full repeal would lead to between 21 million and 24 million more uninsured people than there are currently, with Medicaid enrollment falling by 14 million to 15 million and coverage through the nongroup market falling by 6 million to 9 million. But partial repeal would result in 30 million to 32 million more people without insurance, with 13 million people losing Medicaid and 18 million losing nongroup coverage.

With full repeal of the ACA, nearly two-thirds (64%) of the newly uninsured would have incomes below 200 percent of the federal poverty level ($30,120 for an individual or $40,880 for a two-person household). With partial repeal, more than four of five (81%) of the newly uninsured have incomes below 200 percent of poverty.

How would ACA repeal impact government spending?

Under full repeal, federal spending would fall by $1.1 trillion to $1.2 trillion between 2017 and 2026, according to a Congressional Budget Office projection. This is mainly due to elimination of both the Medicaid eligibility expansion and the premium tax credits. Under partial repeal, federal spending would fall by about $1.3 trillion. As more people become uninsured, states’ Medicaid matching payments would fall under both full and partial repeal. But these “savings” are likely to be more than offset by additional state spending to support those health care providers that deliver the bulk of uncompensated care.

What is the impact of repeal on health care provider revenues?

The widespread loss of health insurance coverage and reductions in government spending would affect providers greatly. Total spending following partial repeal would fall by about $1.7 trillion between 2019 and 2028 according to one study, $600 billion of which would be allocated to hospital care. Spending on care provided in physician offices, other services, and prescription drugs would drop by $1.1 trillion.

While provider revenues fall, the need for uncompensated care would increase because of the substantial number of people losing their insurance. According to some studies projecting the impact of a potential repeal between 2019 and 2028, the newly uninsured would account for $1.1 trillion in additional uncompensated care. This would include $286 billion in hospital care, with the remainder spread among physician care, prescription drugs, and other services. In the absence of new federal funding, the burden would fall to states and counties, or to providers themselves. There would also likely be a substantial increase in unmet care needs.

Would ACA repeal have a different financial impact on lower-income versus higher-income households?

The ACA provides benefits that largely flow to people with lower incomes and that are funded by taxes that affect people proportional to their income. If the law were repealed, people in households with incomes below $75,000 would experience a net loss due to reduced coverage and benefits. People in households with incomes above $75,000, however, would experience a net financial gain due to lower taxes. The greatest financial gains would go to those at the very top of the income distribution.