Right now, the current Republican plan is Repeal and Delay as the NY Times reports:
Republicans in Congress plan to move almost immediately next month to repeal the Affordable Care Act, as President-elect Donald J. Trump promised. But they also are likely to delay the effective date so that they have several years to phase out President Obama’s signature achievement.
This emerging “repeal and delay” strategy, which Speaker Paul D. Ryan discussed this week with Vice President-elect Mike Pence, underscores a growing recognition that replacing the health care law will be technically complicated and could be politically explosive.
The mechanics of the repeal bill are fairly straightforward. A reconciliation bill would be written to sunset subsidies and Medicaid Expansion money after two (or three) years while a Replace bill is cobbled together. The individual mandate tax would be dropped to zero even if it was not technically repealed and all of the taxes that fund the ACA would be dropped immediately. This blows up the insurance market fast. There are discussions and rumblings that some Republican wonks are trying to make this point to Republican leaders. Someway of shoveling a massive amount of cash to insurers would be needed that would perform the same function as risk corridors and reinsurance but called something else is the most likely response.
And then there would be some type of Replace bill that would offer skimpier subsidies and much higher cost sharing than current law.
That Replace bill will cost money. It won’t cost as much money as the ACA but it will cost money.
That is a major problem as the major funding streams from the ACA (Cadillac Tax and high income tax surcharges) are gone. Nicholas Bagley at the Incidental Economist flagged this very early on:
You’ve got to bear in mind that passing the reconciliation bill would represent an immediate $346 billion tax cut over ten years to the wealthy—$123 billion from the Medicare tax surcharge and $223 billion from the tax on investment income. All of that money—every dime—will go to people making more than $200,000 a year.
The other major source of funding for the ACA is the Cadillac tax in the out years and Medicare Advantage payment equalization. The Cadillac tax is popular with health economists who, when they concentrate for an annual convention, might have sufficient political power to elect a county commissioner in an NFL market and no one else. The Republican Replace plans use modified Cadillac plans that usually apply regular income tax rates to health insurance benefits at far lower thresholds than the Cadillac tax. But I digress.
The Replace plan will cost money. And here is where we run into the Norquist problem. It is Republican orthodoxy that once a tax cut is passed it can never be re-enacted. The Replace Bill would not be signed for at least six months (absurdly optimistic case scenario) after the Repeal bill that wiped out the high income taxes that fund the ACA. The Congressional Budget Office (CBO) would score Replace based on current law which means no high income surcharges as offsets. Republicans can’t vote for higher taxes per Norquist even if those are taxes that just got cut.
Assuming Norquist is still a major political enforcer of Republican orthodoxy, my best bet is that any Replace Bill will be like the 2003 Medicare Modernization Act (MMA) in that it is almost completely deficit financed.