December 11, 2023

By: Grace Totman, Co-head of Capstone’s Healthcare Practice

It looks like history will repeat itself in the 2024 presidential election, and not just because the prevailing expectation is of a Biden-Trump rematch. During recent campaign appearances, Trump has rekindled discussions on healthcare reform with the familiar rallying cry of “repeal and replace.” The former president made repealing and replacing the Affordable Care Act (ACA), also dubbed Obamacare, a top campaign issue of the 2016 elections but failed to act on the policy once in office.  We expect the renewed debate to have notable implications for companies and investors alike.

The ACA faces a renewed repeal-and-replace threat. The act’s future hinges on the answer to the question, “Replace with what?”

In 2016, repealing the ACA resonated with many voters. Republican lawmakers had long criticized the law as an example of government overreach hampering individual choice. The ACA’s instability at the time, marked by high premiums, volatile insurer participation, and fluctuating enrollment, fueled the desire for change. Still, even with control of Congress and the White House, Trump and fellow Republicans failed to convince Senator John McCain to support a “skinny” repeal. McCain’s reasoning? The critical question of “Replace with what?” remained unanswered.

The 2018 elections saw Republicans double down on the repeal and replace idea, with many candidates making it a focal point of their campaigns. Democrats, in turn, lauded the ACA’s achievements while reminding voters of its backbone—the popular protection of individuals with pre-existing conditions. The outcome was unfavorable for Republicans, as Democrats regained control of the House and secured key gubernatorial victories. Nancy Pelosi famously declared, “Healthcare was on the ballot, and healthcare won.”

Following the repeal and replace failure in 2017 and the electoral setbacks in 2018, the ACA appeared safe, at least for a while. In the 2020 election, despite a few mentions in debates, Trump largely avoided the topic and Biden’s victory brought with it efforts in the opposite direction. Subsidies designed to make coverage more affordable were significantly enhanced as part of a COVID-19 relief package and subsequently extended through 2025. The Supreme Court delivered its third decision largely upholding the ACA in 2021, widely viewed as a nail in the coffin of repeal and replace.

Today, nearly 17 million individuals get coverage through the ACA, a number projected to rise to 18 million before the enhanced subsidies expire in 2026. But the concrete hasn’t dried on the ACA yet.  The Supreme Court affirmation, record-high enrollment, and a repeal-and-replace election curse don’t guarantee the ACA’s future. Pending 2024 election results, Congressional inaction to allow enhanced subsidies to expire in 2026 would tumble enrollment back down to under 13 million. And now, the law faces a renewed threat of complete repeal. The ACA remains a lightning rod for partisan debates. As the 2024 election approaches, healthcare will once again dominate the political discourse, likely alongside other popular dinner-table topics—immigration and abortion. Capstone will be closely watching, most importantly to understand the lingering “replace with what?” a question whose answer could reshape the entire US healthcare system.

---