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The Trump Effect: Arkansans Brace for Obamacare Repeal

6 min read

With Obamacare in critical condition, Arkansas hospital officials are closely watching Washington while warning that it’s too early to predict an outcome.

They expect the Affordable Care Act, President Barack Obama’s landmark legislation, to be repealed and eventually replaced after President-elect Donald Trump takes office on Jan. 20, giving Republicans control of the White House and Congress.

But they say what happens in health reform from there is anyone’s guess.

It’s unlikely that 20 million Americans, including more than 300,000 Arkansans, who now have health insurance as a result of the ACA will immediately lose their coverage. It’s likely that a bill could pass to repeal most of the ACA but delay the implementation date for two or three years, which would give Republicans time to firm up replacement legislation.

The replacement would most likely keep the popular parts of the ACA, such as preventing insurance companies from denying coverage to people with pre-existing medical conditions. Allowing parents to keep their children up to the age of 26 on their health insurance plan probably would survive the repeal too.

“Right now there are many more questions than there are answers,” Dr. Dan Rahn, chancellor of the University of Arkansas for Medical Sciences, told Arkansas Business.

In the midst of this uncertainty, health care officials are wringing their hands about potential fallout from Obamacare’s repeal.

The “positive impact” on UAMS as a result of the expanded population of insured patients is estimated at $65 million a year, Rahn said. If that money went away and wasn’t replaced, “that would obviously have a cataclysmic impact on UAMS,” Rahn said.

One concern hospital officials have is that, while repealing the ACA, Congress will leave in place the billions of dollars in Medicare reimbursement reductions that helped pay for Obamacare. To pass Obamacare, hospitals and other providers accepted Medicare reductions because they expected the increased number of insured patients would more than make up the difference.

“Well, if you get rid of all the new coverage, then we believe that a lot of those payment cuts need to be repealed as well,” Paul Cunningham, executive vice president of the Arkansas Hospital Association, said.

Scott Pace, executive vice president and CEO of the Arkansas Pharmacists Association, said he didn’t expect the newly insured people to lose their insurance. Instead, he thinks Arkansas’ congressional delegation will “be the voice for those people who want fiscal responsibility in Arkansas, but also those who want to be compassionate towards folks who have chronic conditions and have health care today,” he said.

Regardless, the Pharmacists Association will deal with any health law changes. “Change has been the only constant in health care for the last couple of decades,” Pace said. “To get nervous about more change is kind of fruitless.”

A repeal of Obamacare could affect sectors other than health care.

In California, a repeal of the ACA would cost the state more than 200,000 jobs and $20.3 billion in GDP, according to a study released last month by the Center for Labor Research & Education at the University of California at Berkeley.

The study was based on what would happen if Congress repealed the ACA using language from the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, which Obama vetoed.

That bill repealed the coverage offered by the ACA, along with many of its funding requirements. But it left in place the billions of dollars in reduced payments from Medicare.

Under that scenario, health care workers would lose jobs, but restaurants and stores where they spend their money could also see job cuts, Laurel Lucia, a co-author of the study, told Arkansas Business.

“I hope members of Congress would really seriously consider the big step backwards in terms of health insurance that this would mean, but also the significant economic losses that communities would suffer if the ACA was repealed,” she said.

Under Attack
After the ACA became law in 2010, no one was sure what the impact would be, or even if it would survive. Starting on Jan. 1, 2014, the centerpiece of the legislation — known as the “individual mandate” — required Americans to have health insurance and offered financial assistance in the form of tax credits for those who couldn’t afford it on their own.

The law has survived countless repeal attempts since. The individual mandate endured a challenge at the U.S. Supreme Court, but the ruling gave states the option of refusing to expand Medicaid, mainly with federal dollars, to households with income just above the poverty line — the working poor who earn too much for traditional Medicaid but too little to afford health insurance.

Nineteen states rejected the Medicaid expansion. Arkansas, however, accepted the federal money and crafted a unique approach that used the federal dollars to buy private insurance from the exchanges for eligible Arkansans rather than covering them through the traditional state-run Medicaid program. This plan was known first as the “private option” but has been tweaked and renamed Arkansas Works by Gov. Asa Hutchinson.

That influx of new customers has created more stability for the private policies sold in Arkansas. Across the country, however, monthly premiums for private insurance sold through government-run exchanges rose by an average of 25 percent for coverage beginning this year. Those increases, affecting in varying degrees the 4 percent of Americans who buy individual insurance on the exchanges, had become a centerpiece of Trump’s campaign for president, in which he described the ACA as a “total disaster.”

Some Predictions
Ray Hanley, president and CEO of the Arkansas Foundation for Medical Care, said he thinks the ACA will be repealed but that Congress will delay implementing the repeal. “I think that satisfies the political promise to repeal it, but it avoids the immediate catastrophic impact on 20 million people who have gotten their insurance,” he said.

He expects debate on the specifics of the replacement to start in the spring.

Ray Montgomery, president and CEO of Unity Health in Searcy, said he fears that Arkansas Works could go away with an ACA repeal.

As a result of Arkansas’ Medicaid expansion plan, almost 11 percent of Arkansans, about 325,000 out of nearly 3 million, are insured through the exchange. That’s well above twice the national rate and four times the rate in Mississippi, a neighboring state with an almost identical population that did not expand Medicaid at all.

Montgomery is worried that under a replacement of the ACA, states would receive block grants to cover the costs for the uninsured. And those probably wouldn’t be enough to cover Arkansans now served through Arkansas Works, he said.

Yet another complicating factor: Arkansas Works has helped improve hospitals’ finances.

Mercy Hospital Northwest Arkansas has seen a “slight drop” in charity care as a result of the newly insured, Eric Pianalto, president of Mercy Hospital Northwest Arkansas, said in an email statement to Arkansas Business.

“When patients have insurance, they’re more likely to seek treatment from their primary care doctor instead of waiting for a health crisis that sends them to the ER,” he said. “Some of the keys to reducing health care costs overall are preventative care and educating patients to get treatment before it’s a catastrophic event.”

UAMS’ Rahn said Arkansas Works has helped UAMS lower the number of uninsured patients it sees. In December 2013, about 13.5 percent of UAMS’ Medical Center’s patients were uninsured. Now that figure is about 3 percent.

Rahn said that he’s in talks with Arkansas’ congressional delegation about the importance of patient revenue to UAMS to support the underfunded parts of its academic and research programs. He also plans to talk with Arkansas’ elected officials, the governor’s office and state legislators — “just so everybody understands what the ramifications are for us.”

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