Repealing Obamacare would have big financial consequences for New York

Dec 9, 2016

President-elect Donald Trump has promised to repeal the Affordable Health Care Act — also known as Obamacare — and replace it with something else. While no one really knows what that means, one health care analyst with a prominent Albany think tank said New York could be billions of dollars in the hole as a result.

The Empire Center, a fiscal watchdog group, is trying to figure out what would happen if Trump and Congress do make big changes to President Barack Obama’s Affordable Care Act. Empire Center health policy analyst Bill Hammond said the state budget could end up with a very large deficit, as high as $2.7 billion.

“My finding is that New York potentially could be hurt more by Obamacare repeal than any other state except California,” Hammond said. “This is because we have a really large Medicaid program.”

And the state’s Medicaid program greatly expanded under Obamacare. States were given the option of expanding their Medicaid programs to enroll more people into the health care exchanges, to those earning up to 138 percent of the federal poverty level. The federal government, for now, pays the entire cost.

New York took full advantage of that deal, as well as another plan for the federal government to subsidize low-cost health insurance for the working poor who earn up to twice the federal poverty rate.

In the past, Republicans in Congress have tried unsuccessfully to repeal the Medicaid portion of the Affordable Care Act. It’s much more likely that they could succeed in ending the Medicaid funding early next year.

Gov. Andrew Cuomo said that would be morally wrong and have dire financial consequences for New York.

“If they go with the classic conservative governmental theory of cutting those programs to the high-needs states, it’s going to be a serious problem,” Cuomo said.

The governor said there are already other pressures on the state budget. Tax receipts have been coming in a bit lower than expected. He hinted that he may have to reauthorize a temporary tax surcharge on New York’s wealthiest when it expires in 2017, in order to make up for any potential losses.

“The big question is you don’t know what the federal government is going to look like,” Cuomo said. “You need that answer first before you can say what you’re going to do on taxes.”

Repealing the Affordable Care Act also would have a huge impact on the individual insurance market that’s been set up for people who pay the premiums themselves. The costs already rose by an average of 16 percent this year.

Trump has said he wants to keep some parts of Obamacare, like allowing children to stay on their parents’ insurance plans until the age of 26, and not penalizing people for pre-existing health conditions. But Hammond, with the Empire Center, said if the other regulations that require healthy people to buy the insurance are rescinded, the entire market would descend into what he called a “death spiral.”

“We know this happens because it did happen in New York before the Affordable Care Act,” he said.

He said New York’s laws required insurance companies to cover high-risk people, and the costs skyrocketed.

Cuomo said he’s not panicking yet, though.

“The president-elect has said a lot of things,” Cuomo said. “I want to wait and see what the president-elect actually does, and what the Congress has an appetite to do, and then we’ll respond accordingly.”

According to the state health department, New York’s health exchange has so far been a success, enrolling more than 3 million New Yorkers in the health coverage plans over the past three years. The number of uninsured New Yorkers has declined during that same time from 10 percent to 5 percent.