After Donald Trump was elected as the 45th president of the United States, and Republicans held onto a majority of their seats in both houses of Congress, it became a forgone conclusion that the Affordable Care Act (ACA), better known as Obamacare, would soon be no more.
Favorability of Obamacare has begun to shift
Obamacare, which was signed into law by former President Barack Obama in March 2010 and fully implemented in the individual market in Jan. 1, 2014, has been a controversial law from the get-go. Kaiser Family Foundation's (KFF) near-monthly Health Tracking Poll shows that over a more than six-year period between 2010 and the November elections, there were just a handful of months where support for the ACA outnumbered those who had an unfavorable view of the law.
Even though Obamacare wound up lowering the uninsured rate to unprecedented lows, millions of Americans were miffed at other aspects of the law. This included the individual mandate, which required consumers to purchase health insurance, as well as the Shared Responsibility Payment, which penalized those who chose not to buy insurance. Others were irritated because they lost their health plans when insurers chose not to make their old plans ACA-compliant. And finally, there was angst about premium inflation. Premiums for benchmark plans (second-lowest cost silver plans) in the 39 states covered by HealthCare.gov rose by an average of 25% this year!
However, something interesting has happened with KFF's Health Tracking Poll now that Republicans have been working on an ACA replacement, known officially as the American Health Care Act (AHCA): Obamacare's favorability has been rising. In fact, a late April 2017 poll showed 48% had a favorable opinion compared to 41% with an unfavorable opinion. The 48% favorable opinion is tied for the third-highest reading ever, behind only March 2017 (49%) and Jul. 2010 (50%).
Here's what you can expect from Trumpcare
Why the shift? Republicans debuted an initial version of the AHCA in March, and earlier this month House Republicans narrowly passed an updated version of the American Health Care Act, which is being dubbed Trumpcare, by a narrow four-vote margin. Its passage moves the bill on to the Senate for debate. Though changes in the Senate are likely, it pushes at least one of Obamacare's metaphorical two feet out the door -- and people are getting nervous about change, just as they were nervous when Obamacare became the healthcare law of the land.
Here's a brief snapshot of what the AHCA will do:
- The individual and employer mandates, along with the penalties associated for not adhering to those mandates, would be repealed.
- Income-based subsidies would be replaced by an age-based tax credit.
- Medicaid expansion would be eliminated by the start of 2020, and Medicaid disbursements would be given on a per-capita basis to the states.
- Older adults could be charged five times as much as younger adults for monthly premiums, 67% higher than under Obamacare.
- $108 billion would be set aside to create a risk-pool fund for sicker patients.
- Insurers could tack on a 30% surcharge to the premiums of consumers who did not have continuous coverage in the previous year.
- Health savings accounts could see their annual contribution limits nearly double.
- The net investment income tax and Medicare surtax would be repealed.
- Children would be allowed to stay on their parents' plans until age 26, the same as under Obamacare.
- Obamacare's 10 essential health benefits clause stays, but the MacArthur Amendment would allow states to apply for a waiver to be excluded from this mandate.
There are other nuances, but this gives you a pretty good idea of what Trumpcare brings to the table. Admittedly, we could see changes from this outline above in the Senate, so that's worth keeping in mind.
Trumpcare vs. Obamacare: Which does the public prefer?
Now here's an important question: If given the choice between Trumpcare and Obamacare, which plan do you think the American public would choose?
With this question in mind, Public Policy Polling (PPP) recently published a 54-question survey (most of which dealt with healthcare issues) that definitively answered which health plan America prefers.
What would you rather have in place: the current Affordable Care Act, or the new American Health Care Act:
- Prefer the current ACA: 53%
- Prefer the new AHCA proposed by House Republicans: 27%
- Not sure: 19%
That's not even close! In terms of individual plans, 44% supported Obamacare, compared to 37% who opposed it, whereas 52% opposed Trumpcare versus 25% who supported it. Not surprisingly, there's a higher percentage of "not sure" votes for the AHCA since it's such a new bill and some people probably don't understand it fully as of yet.
What's more, when survey-takers were asked what should be done with the ACA, just 29% wanted to see Congress repeal it and start anew. Nearly two-thirds (64%) of those questioned wanted Congress to keep the ACA and merely fix what doesn't work.
Why the public fears Trumpcare
What is it about Trumpcare that's drawn such backlash from the public?
First, there's genuine concern that Trumpcare does little for those with pre-existing conditions. Even though the law keeps the insurance mandate in place requiring insurers to offer plans to everyone, even if they have pre-existing conditions, it offers more freedoms to insurers in how they price their plans. In other words, we could see a return to the pre-ACA days where insurers could charge people with diabetes, heart disease, cancer, or a myriad of other pre-existing diseases a lot more each month than someone of the same age and location.
Plus, with the essential health benefits waiver in place (the MacArthur Amendment), insurers have the potential to be on the line for even less in lifetime benefits, meaning potentially more out-of-pocket costs for consumers with pre-existing conditions.
The AHCA also won't help many lower-income folks. Moving from an income-based subsidy to age-based credits likely removes any ability for lower-income individuals and families to afford health coverage. Even if they manage to pay for the premium, medical care costs derived from visiting the doctor could be out of reach. Some of these costs are currently covered by Obamacare's Advanced Premium Tax Credit (which lowers monthly premiums for those earning less than 400% of the federal poverty level) and cost-sharing reductions (which reduces deductibles, copays, and coinsurance costs for those earnings less than 250% of the federal poverty level). However, under Trumpcare these subsidies disappear.
Lastly, older Americans nearing retirement could take a hit. The ability of insurers to charge up to 67% more to older adults than under Obamacare relative to younger adults, along with significantly lower subsidies in some cases, could cause many to hand over a lot more money for their medical care right before their retirement. It's not an ideal scenario when many seniors' nest eggs are already underfunded when entering retirement.
The easiest way to fix Obamacare
Interestingly enough, a poll from KFF found similar support for the ACA over Trumpcare. Some 91% of Democrats and 50% of Republicans believe President Trump and his administration should do what they can with Obamacare to make it work.
But how do you make a law work that has had numerous shortcomings?
If I were to single out what I believe to be its greatest shortcoming, I would risk irritating the younger generation of healthy adults and make major adjustments to the Shared Responsibility Payment (SRP).
The SRP is the penalty you pay if you don't purchase health insurance. In 2016, according to KFF, the average household SRP was estimated at $969. Though that sounds like a lot, premium data from HealthPocket shows that an unsubsidized bronze plan across the U.S. ran around $3,700 for the entire year in 2017. If I'm a healthy young adult who doesn't head to the doctor much, if ever, I'm going to take the penalty and save an estimated $2,700 a year. This wide gap between the SRP and actual full-year insurance costs is the prime reason healthier young adults didn't enroll.
Boosting the penalty associated with not purchasing health insurance would encourage younger adults to enroll. These premium payments are vital to offsetting the higher costs of treating sicker patients -- and since Obamacare requires insurers to accept all members, they've all dealt with their fair share of adverse selection since open enrollment began in Oct. 2013. Presumably, having the SRP more accurately reflect the cost of an insurance plan nationally would resolve most of the ACA's issues.
Of course, this is just one idea, and I'm sure we're going to see dozens more in the weeks and months to come. Healthcare in America is on the precipice of change -- the question is which way will the pendulum tilt.
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