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The economics and potential emotional cost of repealing Obamacare

February 2, 2017 at 6:30 PM EDT
Repealing and replacing the Affordable Care Act was a top priority for President Donald Trump during his campaign. But there are hurdles -- both economic and in the expectations of the millions who are now covered. Economics correspondent Paul Solman reports from Kentucky, a region that's seen one of the biggest drops of the uninsured rate in the country due to Obamacare.

JUDY WOODRUFF: But first: Can Obamacare be repealed and replaced with a law without a mandate requiring health insurance coverage?

That’s something the president and congressional Republicans seem to be trying to do, although just how is not at all clear yet. As the annual enrollment season for buying insurance has come to a close, there are very real questions about how this all would play out once the law is changed.

Our economics correspondent, Paul Solman, went to Kentucky to explore that further. It’s part of his weekly series, Making Sense.

PRESIDENT DONALD TRUMP: Folks, folks, we want to end Obamacare. We want to go to a plan that is so much better and so much less expensive, right?


PAUL SOLMAN: Throughout the campaign, Donald Trump promised to repeal and replace the Affordable Care Act.


PAUL SOLMAN: And, sure enough, on Inauguration Day, he signed his first executive order, directing government agencies to begin scaling back the law.

That was good news for Trump voter Perry Partin, a security guard from Corbin, Kentucky.

PERRY PARTIN, Kentucky: It was forced on me, shoved down your throat, whether you wanted it or not.

BOBBI SMITH, Kentucky: I’m with Perry.

PAUL SOLMAN: Bobbi Smith, who owns an antiques store, was diagnosed with breast cancer in the fall of 2015, a year in which, having missed the open enrollment deadline, she’d accidentally gone without health insurance. She waited until January to buy coverage on and get treated.

But, says this Trump voter:

BOBBI SMITH: I think if I were to walk around here with no health insurance, and that’s what I choose to do, then that’s my right.

PAUL SOLMAN: But you’re thankful you have that insurance?

BOBBI SMITH: Oh, yes, I am, yes.

PAUL SOLMAN: So, you’re kind of torn here?

BOBBI SMITH: That’s right.

PAUL SOLMAN: Elizabeth Easton has no such conflicts.

ELIZABETH EASTON, Kentucky: I love it. The only thing that Trump would be able to do for me would be universal health care.

PAUL SOLMAN: Easton didn’t vote for Trump. She didn’t vote at all, she says, because she was high and suicidal, having relapsed into drug abuse following a painful spinal infection. She’s now in recovery, her addiction treatment covered by Medicaid, which was expanded under Obamacare.

ELIZABETH EASTON: I have been a user since I was in high school. And I was able to check into treatment because of it.

PAUL SOLMAN: And you wouldn’t have been without the Affordable Care Act?

ELIZABETH EASTON: It saved my life. It’s — yes, it’s great.

PAUL SOLMAN: We came to this corner of Kentucky last week, famous as the birthplace of Colonel Sanders’ Kentucky Fried Chicken, because it’s seen one of the biggest drops in the uninsured rate due to the Affordable Care Act.

Kathy Oller says she herself has signed up thousands, including, on this day, mall jewelry store worker Aaron Lewis.

AARON LEWIS, Kentucky: To me personally, it was worth the peace of mind to have some sort of safety net. In case something did happen to me or in case some illness or accident happened, I would be a little bit more covered, rather than susceptible to bankruptcy.

PAUL SOLMAN: But when we visited, with just over a week to go before the deadline for 2017 coverage, the enrollment rush had stalled, in part due to the Trump administration’s cancellation of ads urging people to sign up. But there’s another reason, says Oller.

KATHY OLLER, Obamacare Enrollment Official: Some people feel that because Trump’s in office, why do we have to have it, because they’re hoping they don’t get fined.

PAUL SOLMAN: In other words, they’re counting on repeal to kill the mandate, the requirement to buy health insurance, or else pay a penalty to the government.

ANTHONY FLANNERY, Kentucky: We get this letter, you got to get insurance, which instantly infuriated me.

PAUL SOLMAN: Don’t tread on me.


PAUL SOLMAN: Health care worker Anthony Flannery refused to buy insurance each of the last two years.

ANTHONY FLANNERY: I was looking at like $280 with a $6,000 deductible that would then pay 60 percent of any medical expenses I may incur. And I was like, no, I’m not doing it. So I will pay the penalty. So, last year come tax time, I owed $652.

PAUL SOLMAN: For tax year 2016, the fine will be higher. But so what, says Perry Partin?

PERRY PARTIN: It’s cheaper to pay the fine than it is to pay for the insurance.

PAUL SOLMAN: So are you going to pay the fine, instead of the insurance?

PERRY PARTIN: I probably will, you know, because, I mean, my cup’s about run over with insurance.

PAUL SOLMAN: But can whatever replaces Obamacare accommodate Perry Partin, while also caring for Beth Easton?

ELIZABETH EASTON: This time last year, I was in the hospital, almost died several times.

PAUL SOLMAN: With her many preexisting conditions?

ROBERT FRANK, Economist, Cornell University: If you don’t have a mandate, you cannot have an insurance system.

PAUL SOLMAN: To an economist like Bob Frank, cases like Easton’s make the logic behind the mandate crystal clear.

ELIZABETH EASTON: The only way a system of insurance can work is if everybody’s in the pool together, healthy and sick people alike. And if you want healthy people in the pool, you have essentially got to mandate that they be a participant.

PAUL SOLMAN: It’s simply how insurance works, he says.

ROBERT FRANK: The insurance company needs a large number of people, only a few of whom are going to make claims against it.

PAUL SOLMAN: But if it were mainly sick people in the pool, the costs per person would skyrocket. Moreover, poorer people, who also tend to have poorer health, need financial help to pay their premiums.

AARON LEWIS: There’s no way to insure people who have lower income are able to get it without increasing taxes on somebody.

PAUL SOLMAN: In the case of Obamacare, increasing taxes on top earners, who help subsidize most of the 20-plus million people who gained coverage under the Affordable Care Act.

ROBERT FRANK: And so there you have the three basic components of the Affordable Care Act, mandates — you have to buy insurance — the guarantee that if you have preexisting conditions, you can’t be denied coverage, and then subsidies if you can’t afford to buy insurance.

If you take any one of those away, the whole system collapses.

PAUL SOLMAN: And if the current system is repealed, but not replaced, at least 18 million people stand to lose their insurance within a year, according to the Congressional Budget Office, which might feel worse than never having had insurance at all.

KATHY OLLER: I think it’s such a backwards step, because they are now excited because they have the opportunity to sign up for health care. And if they take it away, it’s just going backwards, instead of forward.

PAUL SOLMAN: Behavioral economists call this loss aversion, illustrated in this YouTube cartoon.

MAN: It’s more painful to lose something than it’s joyful to gain something.

PAUL SOLMAN: To most people, it turns out, losing $1,000, say, hurts far more than the pleasure of $1,000 windfall. And Bob Frank applies this attachment to what we have to threats to Obamacare.

ROBERT FRANK: Millions have coverage now for the first time. And if they take people’s coverage away from them with this new repeal measure, you’re going to see a political firestorm unlike anything we have seen in recent history.

PAUL SOLMAN: It was enough to scare Elizabeth Easton straight.

ELIZABETH EASTON: I had an epiphany, like, the world’s gone completely mad, and I have got to get better. Seriously. I’m not joking. So, thank you, Mr. Trump.


ELIZABETH EASTON: You got me sober, so I can try to save health care.

PAUL SOLMAN: No wonder Republicans are having such a tough time coming up with a replacement plan, and how hard it is for working folks like Anthony Flannery, who finally joined the insurance pool this year.

ANTHONY FLANNERY: If we want to look at this from a standpoint of doing my part to fit into this pool and this social responsibility, I can handle that.

PAUL SOLMAN: But to Bobbi Smith and Perry Partin, it’s the very principle of a mandate that rankles, no matter the economics.

How can there be health insurance if the healthier people don’t participate? Because then it’s just going to be the sicker people who are going to be insured, and then the cost is going to be too high, no?

BOBBI SMITH: You made a point.


BOBBI SMITH: I didn’t say I necessarily agreed. You made a point I will think about.

PERRY PARTIN: I would say you’re right. But I’m just like her. If you want insurance, it would be your option.

PAUL SOLMAN: For the PBS NewsHour, economics correspondent Paul Solman, reporting from Corbin, Kentucky.