President Trump headed into the Oval Office on the promise of repealing and replacing the Affordable Care Act (ACA), which is better known as Obamacare. Yet, more than three months into the Trump presidency, the ACA remains firmly entrenched as the health law of the land.
This isn't, of course, for a lack of effort to replace the ACA. In early March, President Trump and his Republican colleagues debuted a replacement known as the American Health Care Act (AHCA), which some pundits have dubbed as "Trumpcare." However, the AHCA was never put to vote in the House because it couldn't garner enough support from Republicans. Some Republicans felt the AHCA didn't go far enough to distance itself from Obamacare, while others felt it went too far and disadvantaged lower-income folks.
Trumpcare 2.0 has been released
The failure of the AHCA to move to vote and Trump's insistence that lawmakers focus on tax reform was viewed by many as an indication that health reform was dead, at least for a while. But, that's not proven to be the case. Republicans have, behind closed doors, been working on adjustments to the AHCA that will allow it to appeal to more GOP lawmakers. Remember, Republicans control both houses of Congress and the presidency, so if lawmakers voted strictly along party lines and the budget reconciliation process were used, the GOP could get its bill passed.
Last week, Trumpcare version 2.0 was released.
The new health plan looks almost identical to the first, but with one key change. Before we dive into the change, let's rehash the key components of what the AHCA would do.
- It would completely repeal the individual and employer mandates, along with the penalties associated with Obamacare and not buying health insurance.
- Income-based subsidies would be replaced with tax credits based on age.
- States could keep Medicaid expansion until 2020, but future Medicaid distributions would be done on a per-capita basis.
- Allows insurers to add a 30% monthly premium surcharge to consumers who didn't have continuous health insurance coverage in the prior year.
- It nearly doubles the amount that can be put away into a health savings account annually.
- Insurers would be allowed to charge older adults up to 67% more in monthly premiums compared to what they charge younger adults under Obamacare.
- The net investment income tax and Medicare surtax would both be eliminated.
- Children under the age of 26 would be allowed to stay on their parents' health plan.
- Obamacare's minimum essential health benefits clause would remain in place. Additionally, there would be no lifetime cap on spending associated with essential health benefits.
- Persons with pre-existing medical conditions can't be turned away by health insurers.
Here's the major change proposed by the new health bill
The major difference between the initial plan above and the newly leaked Republican health bill is that it would allow states certain waivers should they choose to exempt themselves from essential health benefit requirements or community rating rules.
According to the leaked document via CNBC, states would be able to apply for and receive this waiver if they can,
Attest that the purpose of their requested waiver is to reduce premium costs, increase the number of persons with healthcare coverage, or advance another benefit to the public interest in the state, including the guarantee of coverage for persons with pre-existing medical conditions.
Why the change? Freedom Caucus Republicans had refused to support the initial version of the bill because it retained a number Obamacare's Title 1 regulations. These are the mandates that govern what the insurance industry can and can't do. Initial estimates have suggested that the addition of state waivers could sway a good number of these lawmakers to a "yes" vote, giving the bill enough momentum to reach the Senate. There it'll likely undergo a few more changes.
Allowing states the ability to decide whether they apply for these waivers, which is really similar to ruling from the Supreme Court that allows states to decide whether or not to expand their Medicaid programs, also might take some of the heat off Congress if things don't go well.
You're probably not going to like the new health bill
Ultimately, though, this change isn't good news for the consumer. Let's take a look at why you're probably not going to be happy with Trumpcare 2.0.
If a state were able to prove any of the conditions above and wanted exemption from some of the AHCA's key provisions, here are some the scenarios that could occur:
- Persons with pre-existing medical conditions would be offered insurance, but they would likely find themselves lumped into a high-risk insurance pool within their state that may require them to jump through more hoops before getting the care they need.
- States could significantly reduce the number of essential health benefits insurers would be required to keep on their plans. Though this would presumably reduce monthly premiums for healthy individuals, it also narrows the liability of insurers with regard to the lifetime cap on essential health benefit spending.
- States would also be free to reduce the percentage of local providers an insurer would be required to keep on its plan. This would allow for narrower networks, which would probably lower costs for insurers, but limit choices for the consumer.
- Insurers would be allowed to charge different prices to consumers based on more than just the five current ACA factors (age, location, plan tier, single or family plan, and whether you use tobacco). Healthy and sick people of the same age could be charged radically different prices.
In other words, these changes would allow certain states to mold their own health plans, which would almost certainly be a boon to the insurance companies, and would likely pass along higher out-of-pocket costs to the consumer. Even with lower premiums, we could be talking about substantially higher costs when it comes to receiving medical care via higher deductibles and copays.
There's not a lot for consumers to like about this new provision, albeit it may make the AHCA more sustainable for insurance companies over the long run since it passes along these added costs to the consumer.
For now we can only watch and wait to see if Trumpcare 2.0 is put to vote.
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