The Dirty Business of Replacing ObamaCare


Repeal and replace ObamaCare – that is the goal of President-elect Trump and Congressional Republicans. But we all know the legislative process is much like making sausages – it’s better not to watch!

Repealing ObamaCare is the easy part. With a majority in both houses of Congress, Republicans can easily defund ObamaCare through the budgetary process that only requires 51 votes in the Senate. The hard part is replacement. That will require at least 8 Democratic votes in the Senate to be filibuster-proof.

To convince Democrats to support the replacement bill, Republicans will need to show that the new plan covers at least as many Americans with health insurance as ObamaCare. To do that the plan will have to pass muster with the Congressional Budget Office (CBO), the supposedly neutral government entity that evaluates and “scores” new legislation.

The CBO has been repeatedly wrong on its projections throughout the history of the Affordable Care Act. They have routinely made projections favorable to the Obama administration predicting more Americans enrolling in ObamaCare than actually happened. But any analysis by the CBO that projects fewer Americans covered will be political death to new legislation, giving Democrats the cover they seek to oppose the bill.

Delaying Replacement

Current talk in Congress centers around a defunding bill that will give Republicans time to come up with a suitable replacement. That means the defunding may begin in January, 2019. That would give Congress two years to draft and pass the replacement plan.

However, there are problems to be overcome. First, they must find 8 or more Democratic Senators who will “cross over” and vote for the Republican bill. Since there are 23 Democratic Senators up for re-election and 10 of those in states won by Trump, they may be able to convince 8 or more of those to support the bill. But only if the bill has no obvious weaknesses.

Second, they must be sure that they don’t create an insurance crisis during the interim period until the replacement plan is passed. While keeping funding for Medicaid and the exchange subsidies is not difficult, the insurance carriers represent another problem.

Robert Laszewski, insurance industry analyst, believes Republicans will have to reintroduce the “3 Rs”, risk adjustment, risk corridors, and reinsurance that bail out the insurance carriers, in order to keep them in the system until the replacement is ready. Laszewski says,

“What you do is subsidize the carriers. You reactivate some of the policies that were meant to stabilize the marketplace in the early years, the three R’s. But these are the things that Republicans have hated. This is what they call an insurance company bailout. But keeping them around is the only way to maintain a viable market.”


Laszewski explains that the insurance carriers are losing hundreds of millions of dollars on the exchanges, which has led to many including United Health, Humana, and others abandoning the market. He argues that if the insurance carriers are not assured of a bailout there will be no one to sell insurance coverage on the exchanges during the two years until the replacement plan becomes available.

Two Options

Republicans are left with two options:

  • Wait until they have the replacement plan ready for passage before repealing the old law
  • Repealing the old law with defunding and delaying replacement until it can get the necessary votes


Waiting to repeal the law will anger those Republicans who voted for Trump and Congressional Republicans who promised a hasty repeal. They can’t afford to lose the momentum they have now. The second choice is the only viable one, but they may have to swallow the distasteful idea of reintroducing the “3 Rs” to avoid chaos on the exchanges until the new plan is ready.

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