The “skinny repeal” of Obamacare is dead

Out on a limb.
Out on a limb.
Image: AP Photo/Gregory Bull
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Update at 2:59am ET, July 28: Senate Republicans failed to partially repeal Obamacare when three Republicans, including John McCain, sided with Democrats. US president Donald Trump later tweeted that those who voted against the repeal had “let the American people down.”

Update at 11:15pm ET, July 27: The Senate version of the “skinny repeal” bill was released a few hours before an expected early morning vote on July 28. The bill would do everything described below, as well as defund Planned Parenthood reimbursements for Medicaid recipients for a year and cut funds for preventative health care.

To the uninitiated, it may look like a compassionate compromise: The US Senate is finally hurtling towards the long-promised Republican goal of repealing the Affordable Care Act, president Barack Obama’s signature health-care law, and the most likely outcome, which could be voted on this afternoon, is a “skinny repeal.” It would get rid of Obamacare’s individual and employer mandates, which require people and companies to buy health insurance, but keep its expansion of Medicaid, the government program for the country’s poorest. It will also still require insurers to cover people with pre-existing conditions and ban them from charging sick people higher premiums than healthy people.

However, the likely effect will be to drive up the cost of insurance and force many insurance companies out of the market, bringing the system to a near collapse, experts say. Because people would neither need to nor have any incentive to buy insurance until they got sick, the pool of people insured would be mostly those who are ill and have high health-care costs. That goes against the fundamental principle of insurance—to spread the risk of a costly accident or disease among a large pool of people.

And the result would be to hurt one group of voters the most—working-class people who make too much money to qualify for Medicaid, but who don’t get insurance (or at least not good insurance) through their employers. These are people who are “nowhere near affluent, but not poor,” says Josh Bivens, the research director at the Economic Policy Institute, which studies the impact of government policies on working-class Americans.

If “skinny repeal” is enacted Medicaid will still cover the nation’s poorest, in most cases. In most states that means a family of three is covered if the parents make less than $28,179 a year, but the threshold varies from as low as $3,675 in Texas and Alabama to over $45,000 in DC. (Non-parents have lower thresholds and are ineligible for Medicaid altogether in 17 states.)

So it’s the not-quite-poor, who currently buy insurance on the health-care exchanges created under Obamacare, who will suffer. They will face skyrocketing premiums and some may have a hard time finding an insurer at all as companies pull out of an unstable market. “The real damage, the people who will lose insurance, are definitely the exchange enrollees,” says Bivens. There were about 9.6 million of them at the last count by the Centers for Medicare and Medicaid Services.

The biggest band of these are people making between 150% and 250% above the federal poverty line—or between $36,900 and $61,500 for a family of four. Many of these families are well above the country’s median annual income of $56,516.

“These are by and large people who are working, but in jobs that don’t give them access to affordable care” through their employers, says Rachel Garfield, a senior researcher at the Kaiser Family Foundation. Some are self-employed, but most work for small businesses that pay moderate wages but aren’t offering very comprehensive benefits, she says.

People who get sick in this population are the most at risk, Garfield says, as they will be forced to buy insurance to cover their expenses no matter how high the premiums are.