President Trump and the House leadership have decided to indefinitely delay attempts to pass the American Health Care Act (AHCA), the Republican proposal to replace the Affordable Care Act – usually known as Obamacare. Shortly after 3:30 p.m. EST Friday, when a vote on the bill was scheduled to be held, Washington Post reporter Robert Costa tweeted that he was on the phone with Trump: "We just pulled it," the president told him. A dramatic week of hard legislative bargaining had not enabled the Republican party leadership to produce a bill that pleased both GOP moderates and the ultraconservative Freedom Caucus. 

At a press conference following the decision, House Speaker Paul Ryan attributed the shortfall in support for the bill to "growing pains" the party felt after transitioning from the opposition to power. "Obamacare is the law of the land," he told reporters, though he warned that "the worst is yet to come" and that the law would enter a death spiral as premiums rise at an out-of-control rate.

"This is a setback, no two ways about it," said Ryan, but he quickly transitioned to talk about the other items on the party's legislative agenda, highlighting tax reform in particular. 

In a separate press conference, Trump blamed the Democrats for refusing to support the bill, saying the best thing for his party "politically speaking" would be to "let Obamacare explode, it's exploding right now." He added, "the losers are Nancy Pelosi and Chuck Schumer." (See also, Is the Affordable Care Act Failing?)

A Tough Week

The vote that did not happen Friday had already been rescheduled from the previous day – the seventh anniversary of Obamacare's signing – after members of the Freedom Caucus refused to support it. The White House responded to this rebellion with an ultimatum: hold the vote Friday or the president is "done with healthcare," in the words of an unnamed source speaking to Fox News. The vote was rescheduled to 3:30 p.m. EST Friday.

Trump appears to agree with many commentators that further delays would have hampered his broader legislative agenda. In addition to repealing and replacing Obamacare, he has promised steep tax cuts for individuals and businesses, and $1 trillion in public and private spending on infrastructure projects. Speaking to Reuters earlier in the week, Brookings Institution senior fellow William Galston compared the Trump agenda to "a one-lane road with this big truck called 'healthcare' in the lead," meaning that "if that truck breaks down, everything else will back up."

Despite gaps between its provisions and the policies he campaigned on – most notably, "insurance for everybody" – Trump threw himself behind the bill, threatening on Tuesday that representatives will "lose your seats in 2018 if you don't get this done." White House press secretary Sean Spicer told reporters Wednesday, "There's plan A and plan A. We're going to get this done." 

While defying Trump is risky, however, he is not the only power broker House Republicans look to. The Koch brothers on Wednesday promised to donate only to the 2018 campaigns of representatives who vote "No." 

Last-Minute Negotiations

CNN reported on Wednesday night that after 24 hours of negotiations, Republican leaders had not secured the necessary votes to pass the bill. Accounting for one absence, the Republicans hold 237 of 430 votes in the House (five seats are currently empty), meaning that only 21 party members could vote against the AHCA.

That cushion proved insufficient. Kentucky Senator Rand Paul, who calls the proposal "Obamacare Lite," had lunch with members of the Freedom Caucus Wednesday. Shortly afterwards a spokeswoman for the group tweeted that more than 25 members had committed to vote "No."

Later that evening the caucus' leader, North Carolina Representative Mark Meadows, told Fox News that he and the president had reached an "agreement in principle" regarding the bill, but Meadows' press secretary tweeted Thursday morning that he'd spoken with Trump: "We're not there yet, but I am very hopeful we can get this done."

According to the New York Times, though, 31 Republicans had committed to vote "No" as of 3:40 p.m. EST Thursday. (For more on the changes the AHCA makes to Obamacare, see here.)

Essential Health Benefits

Early Thursday afternoon Politico reported that the administration might give into pressure from the Freedom Caucus and remove the 10 "essential health benefits" that Obamacare requires insurers in the individual and small business markets to cover:

Affordable Care Act section 1302 via obamacarefacts.com

The Freedom Caucus argues that Americans should be able to buy simpler plans that omit some of these benefits, resulting in lower premiums overall. Democrats argue that the change could expose patients to financial risk due to unexpected medical issues and that insurers would be better able in practice to discriminate against those with pre-existing conditions. Larry Levitt, senior vice president at the Kaiser Family Foundation, predicted that insurance policies would become "skimpy" without the requirements:

The possibility that these predictions come to pass was not the only issue Republicans faced going into the canceled vote. Making concessions to the Freedom Caucus was likely to alienate centrist representatives who fear that their constituents would lose coverage or be faced with heftier premiums.

The Congressional Budget Office (CBO), a nonpartisan research arm of the legislature, released an assessment of the Republican proposal on March 13. The CBO forecast that 14 million more people would be without insurance in 2018, a figure that would rise to 24 million by 2026. The report attributed much of the initial change to younger, healthier people choosing to forgo insurance, since they would not be punished by Obamacare's individual mandate, which the Republican plan would scrap. Much of the reduction in coverage between 2018 and 2026 would have been due to changes to Medicaid.

This decrease in coverage would have left nongroup insurance markets older and sicker than under Obamacare, the CBO wrote, leading premiums to rise faster than projected under current law. By 2026, however, premiums would have been around 10% lower than under Obamacare. The report predicted that older, lower-income patients would have seen their premiums rise dramatically under the AHCA: while a 64-year-old making $68,200 per year would have seen their net premiums – accounting for tax credits – fall by 5% under the AHCA, for example, a person of the same age making less than 40% that amount would have seen theirs rise by 759%. 

Obamacare vs AHCA: subsidies for nongroup health insurance
Individual with $26,500 annual income (175% poverty level)
Current law Premium Tax credit Net premium paid
21 years old $5,100 $3,400 $1,700 
40 years old $6,500 $4,800 $1,700
64 years old $15,300 $13,600 $1,700
AHCA Premium Tax credit Net premium paid Change
21 years old $3,900 $2,450 $1,450 -$250 (-15%)
40 years old $6,050 $3,650 $2,400 +$700 (+41%)
64 years old $19,500 $4,900 $14,600 +$12,900 (+759%) 
Individual with $68,200 annual income (450% poverty level)
Current law Premium Tax credit Net premium paid
21 years old $5,100 $0 $5,100
40 years old $6,500 $0 $6,500
64 years old $15,300 $0 $15,300
AHCA Premium Tax credit  Net premium paid Change
21 years old $3,900 $2,450 $1,450 -$3,650 (-72%)
40 years old $6,050 $3,650 $2,400 -$4,100 (-63%)
64 years old $19,500 $4,900 $14,600 -$700 (-5%)
Source: Congressional Budget Office (CBO)

Following the report, House Republicans amended the bill. The changes focused on the ways the federal government would provide Medicaid funding to states, allowing states to require able-bodied recipients to work and giving them the option of receiving Medicaid funding in the form of block grants – a Trump campaign promise – rather than on a per capita basis as in the original version. Another change would have immediately stopped states from expanding Medicaid, rather than allowing them to do so until 2020.

The CBO updated its forecasts in light of the amendments, but did not change its predictions for insurance coverage. Instead, it projected that the federal deficit would  have fallen by $150 billion from 2017 to 2016. Without the amendments, the deficit was forecast to fall by $337 billion.

Take 63

Republicans bitterly opposed the passage of Obamacare in 2010, calling it socialist and accusing it of setting up "death panels." Not one Republican voted for the bill in the House or Senate. The law provided penalties for not obtaining insurance – known as the individual mandate – and set up exchanges where patients without employer-provided plans could purchase coverage. It also allowed children to stay on their parents' plan until age 26 and prevented insurers from denying coverage based on preexisting conditions.

The last two measures are popular and the AHCA would have left them intact. It would have scrapped the individual mandate, however, replacing it with a 30% penalty for those who let their insurance lapse. It would have allowed insurers to charge older customers five times as much as younger ones, compared to the current three times. It would have raised contribution limits to Health Savings Accounts (HSAs) and eliminated most of the taxes Obamacare introduced – though according to the Hill, it might have allowed the "Cadillac" tax on high-cost health plans to take effect in 2025, rather than 2020 under Obamacare.

Republicans' last-minute haggling over Obamacare's replacement was surprising in light of the fact that repealing and replacing the health law has been a top party priority since 2010. MSNBC estimates that Republicans voted to repeal the law 62 times during the Obama administration, but never agreed on what would replace it. Trump campaigned on a number of promises – allowing the sale of insurance across state lines, allowing drug imports, funding Medicare through block grants to states, expanding the use of HSAs – but did not formulate a coherent policy.

President Trump's choice for Secretary of Health and Human Services, Tom Price, wrote a bill to replace Obamacare, but it was just one of several conflicting Republican proposals. The AHCA retained some of its provisions, but left others out. It also left out several of Trump's campaign promises, which he acknowledged when – following the March 6 release of the proposal – he tweeted "don't worry":

Exchanges and the Industry

Republican criticisms of Obamacare gathered steam when prices began to spike on the law's exchanges. In October 2016 the Department of Health and Human Services said premiums rose an average of 25% from 2016 to 2017. Anxiety began to build that the markets had entered a "death spiral," in which rising premiums drove the younger and healthier to leave the exchanges, which would in turn drive up premiums for the older and less healthy remaining pool, driving further defections. (See also, Is the Affordable Care Act Failing?)

Insurers began to leave the exchanges. Aetna Inc. (AET) announced that it would cut its participation from 778 counties to 242 in August, joining UnitedHealth Group Inc. (UNH) and Humana Inc. (HUM), which had announced similar pullbacks. Trump, calling the law a "disaster," accurately pointed out that according to the Kaiser Family Foundation, 32% of counties would have just one insurer on their exchanges in 2017, up from 7% in 2016. Pinal County, Arizona would have none.

According to the CBO, however, the death spiral scenario was unlikely to take hold: "The subsidies to purchase coverage combined with the penalties paid by uninsured people stemming from the individual mandate are anticipated to cause sufficient demand for insurance by people with low health care expenditures for the market to be stable." 

Obamacare may also have permanently altered Americans' expectations regarding healthcare. Trump promised shortly before his inauguration, "We're going to have insurance for everybody." Republicans did not necessarily embrace that goal prior to Obamacare, as President Trump acknowledged: "There was a philosophy in some circles that if you can't pay for it, you don't get it. That's not going to happen with us."

According to the CBO, however, the AHCA would not have led to universal coverage: 52 million people were projected to lack insurance in 2024 if the law had been passed. Under current law, the projection is 28 million. 

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