Obamacare

The G.O.P. Health Care Nightmare Has Just Begun

Former Secretary of Health and Human Services Kathleen Sebelius, who oversaw Obamacare's controversial rollout, talks to the Hive about the challenges the G.O.P. faces in re-making the $3 trillion health care industry.
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By Patrick Smith/Getty.

For more than six years, Republican lawmakers railed against the Affordable Care Act only to see their countless efforts to repeal Barack Obama’s signature health-care law thwarted. The prospect of another Clinton presidency seemed to promise more of the same. But the unexpected election of Donald Trump changed the G.O.P.’s calculus in previously unfathomable ways. Now, with near-complete control over the United States government, the Republican Party finally has the opportunity—or, perhaps, the misfortune—to re-make the $3 trillion health-care industry. As Obama warned: “Now comes the hard part. Now is governance.”

At the end of last week, Republicans in Congress moved forward with plans to repeal Obamacare through the budget reconciliation process, which will allow them to make sweeping changes to the law with a simple majority vote, but no plan for a replacement. Despite Trump’s undefined promise to offer “insurance for everybody”, the G.O.P. still hasn’t rallied around an alternative—threatening to undermine health care access to millions of Americans in the interim.

Democrats know what it’s like to incur steep political costs for remaking the health care system. And there are few Democrats for whom the Affordable Care Act has come at a greater political cost than Kathleen Sebelius. Appointed by Obama in 2009 to lead the department of Health and Human Services, the former governor of Kansas spearheaded the Affordable Care Act and found herself caught in the political cross-fire during the disastrous rollout of Heathcare.gov in October 2013. The early website stumble prompted dozens of members of Congress to call for Sebelius to step down and sullied her tenure as secretary of Health and Human Services, which came to an abrupt end in April 2014, when she offered her unprompted resignation to Obama.

One week before Trump’s inauguration, Vanity Fair’s Hive spoke with Sebelius about the G.O.P.’s decision to move forward with the Obamacare repeal—without a replacement lined up—and whether the party is destined to hit the same stumbling blocks the Democrats have struggled to clear over the past six years.

Hive: What was your reaction to the recent Senate vote to push forward with a repeal of the law without a replacement?

Sebelius: Most people feel that the law should be fixed, not changed. The vast majority feel that you should see a replacement plan before you have a repeal, so it’s not just a Democratic viewpoint; it seems to be a universal viewpoint in the country. It will be seven years in March since the president signed the bill into law and there never has been a replacement plan. Now there is talk about having a full plan ready to go by March, but I think that Republicans have had their own struggles over the course of seven years coming up with a strategy that actually insures people and lowers cost at the same time.

It is not an easy fix or it would have been fixed a long time ago. The conversation and the promises to the American public seem very far apart from the reality of what is likely to be put forward.

President-elect Trump has made a number of sweeping promises, seemingly impossible to keep, about healthcare. Notably, that he will retain the A.C.A.’s most popular provisions—such as offering coverage to people with pre-existing conditions and allowing young people to be on their parent’s insurance until age 26—all while repealing the law and replacing it with something that lowers the cost of healthcare. Is that feasible?

The Democratic plan in the Affordable Care Act has, I would say, more government support, more government regulation around trying to protect the finances of individuals, trying to protect people who had pre-existing conditions, making sure that they could actually be in an insurance market and not set off to the side. And if those protections go away, then those populations are at risk.

People with pre-existing conditions are at least one third of the population, that have some condition that insurance companies used to underwrite. It could be asthma as a kid, it could be that you took Accutane for your acne condition, it could be that you had been pregnant in the past or are likely to be pregnant in the future, it could be that you are cancer survivor or had a heartattack, have high-blood pressure—any range of issues that people have as children, as young adults, or adults that can dramatically raise the price of coverage or eliminate the possibility of getting coverage at all.

Under the A.C.A., many Americans are able to afford health-care through subsidies and tax credits. Can you walk me through the Republicans’ alternatives and how they differ?

The premium tax credit that is in the Obama plan is exactly that—it is a tax credit and it isn’t cash. It is a discount on the amount that you pay for an individual policy based on your family size and your income. Then some individuals also can qualify for cost sharing. So their deductible and their copays are actually lowered. The Republicans are talking about eliminating both of those. What they have talked about is giving people tax credits if they buy coverage in the individual market—but actually getting rid of a lot of the tax benefits that employers now have to provide coverage. So, for 150 million or 160 million people who get their coverage in the workplace market, and have a share of those benefits paid for by their employer, the Republican trade-off is, let’s get rid of all of that and let’s just have people, all on their own, purchase their own coverage and get some kind of a tax relief for doing that—to give individuals the same [tax credits] that employers have.

It sounds, I think, like an interesting plan, and I think everyone agrees that tax credits would be very helpful for individuals. But I would suggest that you look at the trade-offs that Republicans are talking about and who wins and who loses. The lower income individuals, under any Republican proposal, at least that I have seen, are real losers in the framework because there is not enough subsidy, not enough assistance, for them to realistically participate in the market. Particularly, if you halt or rollback the Medicaid expansion, which is for the lowest income workers. Most of the people on Medicaid, actually, are workers. They are not sitting at home on government assistance. They are in the workforce, but they are low income workers, service workers, and others, who may be working one, two or three jobs. They do not have employer-based coverage and Medicaid has been by far the most-effective, lowest cost way to get full coverage. If that all gets wiped away, the tax credit proposal just will put lots of lower income folks back in the ranks of the uninsured.

The Medicaid expansion under the A.C.A. has also come to the forefront of the debate. House Speaker Paul Ryan has argued in favor of pushing the responsibility to the states, but so many Republican governors are fighting it. Why?

A lot of the discussion about rolling back the Affordable Care Act is about dismantling the marketplaces where individuals are shopping for their own coverage when they don't get it in their workplace. What has been focused on less, I think, is the huge impact that repealing Obamacare will have on Medicaid, which is the largest insurance program in the country, with about 70 million individuals. If, in fact, the government stops the expansion of Medicaid and cuts the amount of money going to states, that burden will fall on state governments and on local governments and have a huge impact on a productive workforce and people's lives.

On the Medicaid side, there is a lot in the Affordable Care Act that lowered the cost for the 52 million, 53 million seniors who are in the Medicare program. So their premiums have been held at a very low rate compared to past increases based on government reductions in payment to insurance companies and payment to providers. They have had additional benefits if they were high drug users because of the government support of getting rid of the gap in coverage for prescription drugs for seniors. And the Medicare trust fund actually has been extended for eleven years based on the government regulation of Medicare prices. All of that would go away, leaving the Medicare program in very dire financial straits and really requiring a lot of seniors to begin to pay more in both their premiums and their copays as costs go up.

And that is why you are seeing a lot of Republican governors who will now have to absorb those costs in their state budgets pushing back on the repeal efforts?

The governors who have expanded Medicaid—John Kasich in Ohio, Governor Rick Snyder in Michigan, Governor Brian Sandoval in Nevada—have all come out pretty forcefully against any kind of impact on Medicaid rollback, which is part of the plan that Republicans have put forward. They have taken advantage of the Affordable Care Act, they have expanded Medicaid in those states, in spite of the fact that they are Republican governors. Two-thirds of the population now lives in a state with expanded Medicaid benefits.

If those roll back, it has a huge impact on payments to the hospital systems throughout the country, payments to doctors throughout the country, on the lives of individuals who now have treatment and care because they qualify for a low cost health insurance plan. In states where Medicaid is a huge portion of the budget, if the federal assistance goes away, budgets for education, for roads, for economic development are suddenly in very grim situations.

Based on your experience leading HHS, do you think the Republican Party will hit some of the same stumbling blocks as Democrats did?

At the end of the day, when the Affordable Care Act was signed into law by President Obama, in March of 2010, only Democrats in the House and the Senate voted to pass the bill. Republicans have opposed the bill from the outset as a very partisan measure. So it is ironic, and troubling, that Republicans now want to use that same method—with only Republican votes—to now wipe out health care for some 20 million people, to wipe out additional assistance to states for Medicaid coverage for the lowest income workers in the country and to really, I would say, jeopardize the future solvency and the benefits for 56 million seniors who rely on a stable Medicare program going forward.

The Affordable Care Act rollout became incredibly politicized, and you bore the brunt of a lot of vitriol from the Republican Party. Do you think Republicans will find themselves on the other side of that?

We had a really difficult eight week period where the Web site didn’t work. It was before people’s benefits would have started, it was a mess—no question—but it got fixed by December and benefits didn’t start until January. Nobody lost coverage. They were frustrated with signing up for coverage, but nobody lost coverage. I think this is a very different situation from one in which people who have relied on health-care will see that will go away.

More than the debate that goes on in Congress, I fear that this is going to impact lots and lots of real people. The coal miners in West Virginia who will lose their black lung benefits because that is a part of the Affordable Care Act. The very steelworkers who may not have jobs any longer in Ohio and Pennsylvania, but are buying their health insurance now through a marketplace and qualify for various financial benefits, which they are likely to lose. The people who stop me every day, who talk about their mother who now has treatment for diabetes, or their child with a pre-existing condition, who now can rely on the fact that she will be covered—these are real people who are going to lose benefits, lose financial security, and they live in every city and town across this country.