The Bankruptcies That Would Follow an Obamacare Repeal

Senate Republicans are working to pass legislation scaling back government support for health coverage, with Majority Leader Mitch McConnell calling for a vote on Tuesday to begin debate on a bill whose precise contents remain unknown. “Every Republican running for office promised immediate relief from this disastrous law,” President Trump said on Monday, referring to Obamacare. “But so far, Senate Republicans have not done their job in ending the Obamacare nightmare.”

Even without more specifics on the details of the legislation, one thing is clear: The options under consideration would increase the number of uninsured by 15 to 30 million over the next 10 years, the Congressional Budget Office has estimated. A consequence of this will be not only a loss of access to medical services, but an increase in financial crises for millions of American families. Insurance, after all, is also a financial product, protecting people from economic ruin.

Take, for example, the story of Kathy Mosby. In early 2014, Mosby went through the most painful, calamitous period in her life. In January, her mother died of an aneurism. In February, a neighbor’s tree crushed part of her house. “I wasn’t feeling right, and I started having excruciating pain when I ate,” she told me. She figured it was a stress-induced ulcer. But a doctor performed a CAT scan and found tumors pressing on her bowel. In March, she was diagnosed with lymphoma, later determined to be Burkitt lymphoma, a rare and aggressive form of cancer that is quickly fatal if left untreated.

The Affordable Care Act saved her not just from cancer, but from financial ruin, Mosby told me. Her employer, a small Lake Tahoe resort, did not offer insurance. “I’d tried to get it personally and was knocked down,” she told me. “You had migraines? Preexisting condition. You’ve ever had a toothache? Preexisting condition. So I signed up for Covered California,” the state’s Obamacare marketplace. Her insurance had kicked in when the Affordable Care Act came into full effect on January 1, 2014. The treatment she needed shortly thereafter—including surgery and intensive chemotherapy—ended up costing more than a million dollars, paid for almost entirely by her plan. “It was the most astonishing blessing,” she told me.

Much of the debate around the GOP’s proposals has centered on how the bill will determine whether Americans have access to health care. But economists and policy analysts fear that any of the options under consideration by Republicans in the House and the Senate would not just strip away coverage and care from millions of America’s most economically vulnerable families. It would financially imperil them too. “There’s been an appropriate focus on how many more people will be uninsured,” said Larry Levitt of the Kaiser Family Foundation, a nonprofit that performs health-policy research. “In some ways, lost in the shuffle has been the dramatic changes these replacement bills would make in how much financial exposure low-income people would have.”

One way or another, economists and health-policy experts say that the Republican plans would place millions of lower-income Americans into dire financial circumstances. In a recent analysis, the Congressional Budget Office and the Joint Committee on Taxation estimated that the subsidized plans that former Medicaid enrollees would be able to buy would carry $6,000 deductibles—making the coverage unaffordable for a person earning, say, $18,000 a year. “As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan,” the CBO concluded.

The result both for the insured and the uninsured would be more people going bankrupt, amassing debt, dipping into their savings, selling assets, and otherwise facing financial ruin when dealing with calamitous health problems—health problems, it is worth noting, that often destroy earning power at the same time as they require costly treatments. The bills under consideration “would reverse the gains we’ve made on cost protection,” said Sara Collins of the Commonwealth Fund, a health-care research foundation. “It would roll back the progress we’ve made with low-income families without addressing the underlying cost problems for people in the [exchanges].”

The House and Senate bills would increase financial hardship for lower-income families in several ways, experts said. First, rolling back the Medicaid expansion the ACA provided for would strip low-cost coverage from millions of people—coverage that has proven to be a powerful financial safety net. A 2013 study of Medicaid in Oregon showed that enrollment in the program cut the chances of having a medical bill sent to a collection agency by 25 percent, slashed in half the probability of having to borrow cash or delay paying other bills due to medical costs, and, researchers wrote, “virtually eliminated out-of-pocket catastrophic medical expenditures.” The Obama-era law added some 11 million Americans to the program, and the evidence is that those enrollees saw similar results: People who gained coverage had an average of $600 to $1,000 less in non-medical debt, an amount that rose to $1,400 to $2,300 for people who needed to be hospitalized or went to the emergency room. A new study by researchers at the Consumer Financial Protection Bureau and Penn State found that the Medicaid expansion reduced medical debt and non-medical debt, while also improving credit scores and lowering the bankruptcy rate.

In addition, the Republican proposals would impact Americans buying plans on the Obamacare insurance exchanges, raising costs for millions of lower-income individuals who do not qualify for Medicaid or Medicare and do not have employer-sponsored insurance coverage. Legislation considered by the Senate, for instance, would allow insurers to bar people with preexisting conditions from many plans, let them charge more to the old and sick, functionally eliminate the individual mandate, withdraw subsidies for people with incomes between 350 and 400 percent of the poverty line, and peg the remaining subsidies to plans with much higher deductibles. The older and the sicker would be the worst off, analyses have found. “Despite promises to the contrary, [the bill] will leave millions of people without health coverage, and others with only bare bones plans that will be insufficient to properly address their needs,” the Association of American Medical Colleges said in response to the Senate proposal.

Mosby is in that older and sicker population: She is currently 58 years old and earns about $25,000 a year. She pays roughly $1,300 a year for her subsidized health plan. An analysis by the Congressional Budget Office suggests that her premiums could go up to more than $16,000 under Republican legislation under consideration—meaning she would have no choice but to drop coverage. That is a prospect that terrifies her. Though she is now cancer-free, she requires frequent checkups and will likely need a hip replacement due to the aftereffects of her treatment. She said she was considering having the hip surgery as soon as possible, in case the laws change and her premiums were to become unaffordable. “Why should I even have to think that?” she said. “If things change dramatically, I’m screwed. It’s scary because if I felt well enough to work full time, I would. But I don’t. And it scares me that I don’t have the energy to take care of myself to pay more for insurance if I had to.”

There are no good estimates as to the scale of financial strain that would accompany the repeal of the ACA, but economists expect that families would accumulate more debt, be forced to sell assets to pay their bills, and so on. Catastrophic medical events, like cancer and road accidents, would lead to bankruptcies. Chronic conditions would go untreated. “In the marketplaces, the largest protection is for people under 200 percent of the poverty line,” said Collins. “Cost-sharing reductions have really reduced deductibles and out-of-pocket costs for them.”

Granted, the current health-care system still leaves millions of Americans—including lower-income, middle-class, and even higher-income Americans—struggling with the cost of care or of insurance. Rising deductibles, high copayments, and unaffordable premiums are persistent and in some cases growing problems. But both Collins and Levitt, along with other health experts I talked to, stressed that the Republican bills did not address those issues for the middle class, either. “We’re nowhere near where we need to be in terms of making health care affordable for people with moderate incomes enrolled in private insurance,” said Collins. “These bills don’t help with that.”

Instead, the Republican bills would do little to help middle-income families struggling with high out-of-pocket costs while making coverage unaffordable or stripping it outright from low-income families. Mosby stressed that the problem was emotional, not just financial—a finding backed by research showing that insurance coverage reduces self-reported measures of stress and depression. “The thought of not having insurance, it terrifies me,” she told me. “Even if I hadn’t had cancer, just knowing I have the security of having insurance is huge. People who’ve had insurance their whole life, they don’t understand. It’s that fear that you’re one illness away from catastrophe. Or one injury. Anything.”