Over the next few weeks, Republicans will probably vote to repeal Obamacare. Though Republicans and vice president-elect Mike Pence are huddling to come up with replacement plans, the general framework of action over the immediate term seems clear. Republicans will likely delay its phase-out so as to not immediately cancel millions of plans and “create a transition and bridge so that no one is left out in the cold,” as per Speaker Ryan. Barring defections, Democrats have little power to stop them.
There’s one big problem with this approach, however. While the “repeal and delay” tactic seems like a way to keep people from becoming suddenly uninsured or having to make inconvenient changes—or to keep kicking the can down the road—in reality the mere announcement of a legally-binding repeal or pledge to end government support for federally-backed markets could cause severe disruptions in how those markets operate. And those disruptions could mean turmoil for millions of people.
The secondary currency of any insurance market is risk—or the amount plans can be expected to pay in claims for each beneficiary. Originally, insurers hedged against risk by finding healthy patients and charging sicker patients more or denying them coverage altogether. Obamacare effectively eliminated many of those hedges by creating qualifying health plans, by removing lifetime spending caps, and by prohibiting companies from refusing to insure based on pre-existing conditions bans. In order to make the health plans work work and entice health insurance companies to participate in the health insurance exchanges, Obamacare mandates healthier people to join and offset sicker people’s costs, and also uses federal money to offsetting risky bets in several different ways. Those shopping for plans on the exchanges are often inherently risky bets, and only federal funding and the promise of more such funding in the future keeps insurers insuring them.