(Bloomberg Gadfly) -- If at first you don't succeed, threaten to blow up the health-care system and try again.

On Friday morning, President Donald Trump tweeted that if the Senate fails to pass its proposed bill to replace the Affordable Care Act (ACA), then it should just repeal the ACA and figure out a replacement later.

The tweet seemed to reverse the president's previously held position that repeal and replacement should happen simultaneously.

And it created a big potential mess for health-insurance markets.

One of the few perceived benefits of the fundamentally harmful Senate bill passing was that it would, at the very least, resolve the uncertainty that has plagued hospitals and ACA-exposed insurers all year.

The president's new strategy -- and its reminder of his inconstancy -- ratchets policy uncertainty up once again.

This could just be a bluff, a strategy to strong-arm the Senate into passing a replacement. The repeal could (and likely would) be paired with a one or multi-year delay, giving the GOP more time to work on a replacement.

But repeal-then-replace is only rearing its head again because Senate Majority leader Mitch McConnell doesn't seem to be getting the Senate close to a passable bill as it heads into a July Fourth recess. Moderate Republicans want to make the bill more like the ACA, while conservatives want to gut protections for those with pre-existing conditions, and there's little middle ground.

Those issues may mean the Senate bill may fail or take a very long time to pass, increasing pressure to follow with the president's repeal idea. The issues dividing Republicans won't go away, meaning there's a real possibility a replacement will never come. That's a potentially disastrous prospect for hospitals and insurers.

Because of the rules of the budget-reconciliation process that lets the GOP pass a bill with only 50 Senate votes, a straight ACA repeal won't get rid of its regulations, including those that prevent insurers from denying coverage, require insurance meet some minimum standards and protect people with pre-existing conditions.

The problem is that, without ACA subsidies to help people buy insurance and its mandate pushing healthy people to sign up, those regulations don't work; enrollment is too low and costs are too high.

Read more on page 2:

Sicker people would be more likely to buy insurance than healthy ones. Insurers would flee the ACA exchanges in droves. Insurance premiums and the number of people without insurance coverage would be much higher than even under the House's American Health Care Act (AHCA) or the Senate's Better Care Reconciliation Act (BCRA), according to a Congressional Budget Office estimate.

Under a straight repeal, 18 million people would lose coverage in the first year after the repeal, jumping to 27 million in the first year the ACA's Medicaid expansion is ended, which could vary, depending on how a repeal bill is structured.

This sort of repeal would deal a big blow to insurers such as Centene Corp., Anthem Inc., and Molina Healthcare Inc., which have a large presence on the individual exchanges.

They actually benefit from the fact that the Senate bill keeps big chunks of the ACA around for a while. It would also hurt others, such as UnitedHealth Group Inc. and WellCare Health Plans Inc., which have bet big on Medicaid.

Hospitals, many of which are already in bad shape due to cost pressures and high debt loads, would suffer the most. Rapid coverage losses would mean a potentially dramatic drop in revenue, and a large increase in the amount of uncompensated care.

Senator Ben Sasse has suggested cancelling August's congressional recess and holding hearings six days a week in order to figure out a replacement in a repeal-first scenario, in order to avoid these worst-case outcomes. But there's no guarantee this ticking time bomb will be defused.

And repealing in this way ensures health-care chaos will likely get worse even before a repeal takes effect. Insurers have been pulling out of the ACA's exchanges already due to policy uncertainty, and there's even less incentive to stick around if the whole thing might be destroyed.

The Senate may ignore Trump's Twitter musings and continue to hammer out a compromise. But no matter what, one tweet has expanded the range of possible outcomes for the health-care sector in a very scary way.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.