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For the U.S. Congress, repealing Obamacare is the easy part

The spectacle of a U.S. President, days before leaving office, reduced to visiting Capitol Hill to rally his own party's legislators to oppose the dismantling of his health-care legacy was strange enough. The spectacle of his replacement firing off warning tweets to his party about jumping the gun in undoing that legacy made the far-fetched plot twists on House of Cards look untangled in comparison.

Ever since a Democratic Congress passed the Affordable Care Act in 2010, Republicans have vowed to repeal the law that gave birth to Obamacare the second their party was in charge of both the Congress and the White House. The election of Donald Trump, who railed against Obamacare on the campaign trail, seemed to ensure the health-care law's days were numbered.

Until Wednesday, that is, when Mr. Trump tweeted: "Republicans must be careful in that the Dems own the failed Obamacare disaster, with its poor coverage and massive premium increases … It will fall of its own weight – be careful!"

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Only minutes later, vice-president-elect Mike Pence insisted his boss still supported the law's repeal and only aimed to ensure an "orderly transition" from Obamacare – under which about 20 million previously uninsured Americans gained health insurance – to something better.

But what, if anything, could that be?

For decades before Obamacare's implementation – the law's essential provisions only took effect in 2014 – millions of Americans fell through the cracks of a health-care system in which employers were the primary providers of health insurance. In the richest country in the world, this was the national shame.

Since 1965, the federal government had provided health insurance for seniors, known as Medicare, under a system similar to Canada's single-payer model. The feds also provided the bulk of funding for Medicaid, a shared-cost program under which states distributed health insurance to their poorest residents – though coverage and quality varied widely.

Obamacare aimed to fill the gap in two ways. First, it vastly expanded funding for Medicaid to improve its quality and allow those with incomes of up to 2.5 times the poverty level to qualify for coverage. For uninsured individuals earning more than that, Obamacare provided subsidies to purchase private insurance. Insurers were banned from charging risk-based premiums, meaning that even the sickest Americans could get coverage. To pay for it all, taxes were raised.

The linchpin of Obamacare, however, was the individual mandate. This measure forced every American to purchase health insurance or face a tax penalty. Only by forcing the healthiest Americans to buy insurance could Obamacare cover the cost of insuring high-risk individuals.

Republicans railed against the mandate as a violation of individual freedom, even though the idea first emerged from the right-leaning Heritage Foundation. They also argued that the law served as a disincentive to work. But that's not what ultimately turned many Americans off Obamacare.

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The flaws in Obamacare's design began to emerge as millions of healthy, mostly young Americans opted to pay a modest penalty rather than fork out thousands of dollars for health insurance. This left insurers struggling to cover their costs, leading them to sharply raise premiums and deductibles for everyone, or pull out of some markets altogether.

While millions of Americans are better off under Obamacare, millions more are not. Even many Democrats agree the law needs a major fix. Hence, Barack Obama's Wednesday visit to Capitol Hill to bolster Democratic unity as the party's congressional leadership rolled out a new slogan – Make America Sick Again – to warn of the consequences of the law's demise.

Still, the GOP leadership in Congress, led by House of Representatives Speaker Paul Ryan, has dreamed too long of this moment to let it pass.

Mr. Ryan's plan is to repeal Obamacare and provide Americans without health coverage refundable tax credits to buy private insurance. His plan would "privatize" Medicare by giving seniors a fixed sum of money to put toward the purchase of private insurance. And instead of sharing Medicaid costs, the federal government would provide fixed sums to the states, forcing states to rein in spending.

Still, it's unclear how this could work without an individual mandate, even stronger than Obamacare's, forcing all Americans to purchase insurance – especially since Mr. Trump has vowed to preserve Obamacare's most popular features, including the ban on denying coverage to people with pre-existing conditions. But without reform, Mr. Ryan argues Obamacare, Medicare and Medicaid will soon squeeze out all other spending and send the U.S. debt into the stratosphere.

Mr. Trump, a big-man populist rather than small-government ideologue, may not care.

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About the Author

Columnist Konrad Yakabuski writes on politics, policy and business for The Globe and Mail’s Comment section and Report on Business. More


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