When Donald Trump shocked America and won the presidency in November despite polls suggesting the election would narrowly be won by his opponent, the fate of the Affordable Care Act (ACA), better known as Obamacare, was all but set in stone.
In some ways Obamacare achieved everything it set out to do. It allowed millions of low-income and sicker individuals who'd previously been shut out of the system to obtain coverage, and it ultimately reduced the uninsured rate from 16% to less than 9%, according to data from the Centers for Disease Control and Prevention.
On the flip side, Obamacare wasn't viewed as a sustainable model by health insurance providers. Insufficient healthy-adult enrollment, coupled with inadequate protections and a lengthy list of regulations, pushed some of the largest insurers in this country to significantly reduce their coverage or bow out altogether.
"Trumpcare" is revealed
With Republicans retaining their majority in both the House and Senate, and Trump in the Oval Office, Barack Obama's hallmark healthcare legislation is on the precipice of being replaced by the American Health Care Act (AHCA), the Republican healthcare proposal that was released nearly two weeks ago.
Though you can read about the GOP's plan in far greater detail, here's a quick summary of its key provisions:
- It would repeal the individual and employer mandate associated with the ACA, as well as end all ACA subsidies and penalties associated with purchasing, or not purchasing, health insurance.
- The income-based subsidies of the ACA would be replaced with age-based tax credits.
- Medicaid expansion would cease by 2020, and Medicaid funds to the states would be doled out on a per capita basis.
- Older adults could be charged up to 67% more (5-to-1) in monthly premiums than younger adults, up from the current 3-to-1 ratio under the ACA.
- Health saving accounts could see their annual contribution limits nearly double by 2018.
- A $100 billion risk pool would be created for the states to help care for higher-risk patients.
- Insurers would be allowed to charge a 30% monthly premium to members who didn't have continuous coverage in the previous year.
- The AHCA keeps two popular ACA provisions: Children up to age 26 can stay on their parents' health plan, and insurers won't be able to deny coverage to consumers with pre-existing conditions.
Not everyone is happy with it
Clearly, this plan has sparked some serious debate. Most notably, there's concern about what might happen to lower-income and older adults under Trumpcare, as the AHCA has been dubbed.
Lower-income folks currently rely on Obamacare to provide an Advance Premium Tax Credit, which lowers their monthly premium payment if they're earning between 100% and 400% of the federal poverty level. Some also qualify for cost-sharing reductions (CSRs), which reduce the costs associated with visiting a doctor (i.e., co-pays, coinsurance, and deductibles). CSRs are doled out to people earning between 100% and 250% of the federal poverty level who also bought a silver-tier plan. Under Trumpcare, lower-income individuals and families probably won't receive as much financial assistance, which could impact their ability to buy health insurance.
The same could be said for older Americans, who are probably going to see their share of healthcare costs go way up, at least according to a Kaiser Family Foundation analysis. The AHCA allows insurers to charge older adults a monthly premium that's as much as five times higher than the premium younger adults pay, compared to a 3-to-1 maximum ratio under Obamacare. This move is likely an attempt by Republican lawmakers to make Trumpcare more sustainable over the long run.
Yet, in spite of some large groups of people being opposed to Trumpcare, it has a pretty good chance of passing in Congress, albeit with a few changes.
Trumpcare likely passes, but not all provisions are assured to stay
In a perfect world, Congress would get the 60-vote supermajority needed in the Senate to cleanly and neatly repeal Obamacare and pass the AHCA. But Congress is far from perfect.
Instead, Republicans are likely going to turn to a process known as reconciliation. Reconciliation allows lawmakers to pass legislation with a simple majority vote, which in the Senate means just 51 votes. Assuming all Republicans voted along party lines (which is far from a guarantee), the bill would get 52 votes and an easy passage. Chances are pretty good that 51 votes can be wrangled up in the Senate to pass the AHCA.
However, this doesn't mean the AHCA will necessarily pass in its current form. Reconciliation bills focus on components of law that directly impact the federal budget. You'll note the emphasis on "directly" in the prior sentence, because there is no black-and-white definition of what directly or indirectly impacts the federal budget. Thus, any provision that opponents of the AHCA believe doesn't directly impact the federal budget and want to challenge will have guidance issued by the Senate parliamentarian.
What issues are at risk of being excluded? For starters, the 67% increase in monthly premiums for older adults could be out. Allowing insurers to charge older adults more puts extra money into the pockets of the insurance companies, not the federal government. Yet, Republicans may argue that since older Americans are the cause of higher healthcare expenses, these increased costs are necessary to ensure the sustainability of Trumpcare for insurers over the long term.
Similarly, the 30% surcharge that insurers can tack onto the premiums of consumers who didn't have health coverage in the previous year heads to the insurance companies, not the federal government. Republicans could have a hard time arguing that this provision should remain in the bill during the reconciliation process. However, just like the ACA needed the Shared Responsibility Payment for those who didn't sign up for health insurance, Republicans believe they need the 30% premium surcharge to encourage younger adults to enroll.
Here's where things get tricky
However, as Vox.com recently reported, there is another option.
Typically, reconciliation involves three stages. First, spending targets are set for the upcoming year. Second, legislation is drafted that would allow lawmakers to hit those targets. And finally, the bill winds up on the Senate floor, where opponents challenge whether certain provisions directly impact the federal budget and get a ruling from the Senate parliamentarian.
Generally speaking, the views of the Senate parliamentarian are incredibly hard to predict. Nonetheless, the Senate almost always follow the guidance issued by the Senate parliamentarian. Now, here's where things get tricky. Despite this guidance, the final decision rests with the majority party in the Senate, which is the Republican Party. In other words, even if the Senate parliamentarian suggests a number of provisions don't directly impact the federal budget and should therefore be removed, Republican senators can ignore her advice and keep the AHCA fully intact. Nevertheless, it should be noted that ignoring the parliamentarian's guidance is extremely rare, albeit a handful of Republicans have suggested going this route to get the AHCA passed, if necessary.
This makes the passage of the AHCA seem almost assured, but somewhat messy, at this point.
Expect the debate to continue in the days and weeks to come.
The Motley Fool has a disclosure policy.