The clock is ticking on the Affordable Care Act (ACA), which is better known as Obamacare – but it's been ticking for a far longer period than anyone had imagined since President Trump won the Nov. 8th presidential election.
Trump had campaigned for dozens of issues, but repealing and replacing Obamacare was pretty much at the tip-top of his list. Trump regularly cited Obamacare's rising premiums as a reason this country needed change. Indeed, benchmark silver plans (the second-lowest cost silver plan) for the 39 states covered by HealthCare.Gov rose by an average of 25% in 2017. There had also been more criticism than approval of Obamacare throughout much of Barack Obama's presidency.
Enter sweeping healthcare reforms, stage right
Yet, when Republicans introduced the American Health Care Act (AHCA) in March and the idea of change began to sink in with consumers, Obamacare's favorability ratings soared. The AHCA, which is being aptly referred to as Trumpcare, would lead to a number of substantive changes from the current system. Here's a quick rundown of the most important differences:
- It would repeal and replace the individual and employer mandates, as well as the Shared Responsibility Payment.
- Income-based subsidies would be removed and replaced with age-based tax credits.
- A $108 billion fund would be created to help stabilize the insurance market for high-risk patients through 2026.
- Older adults could be charged up to 67% more for premiums relative to younger adults compared to Obamacare.
- Medicare would be parsed out to states on a per-capita basis, and Medicare expansion would end at the beginning of 2020.
- The minimum essential health benefit requirement stays, but states would have the option of applying for a waiver from these essential health benefits (known as the MacArthur Amendment).
- Insurers would be allowed to tack on a 30% premium surcharge to consumers who didn't have continuous coverage in the previous year.
- Health savings account contribution limits would nearly double.
- Children would be allowed to stay on their parents' plan up until age 26, which is the same as under Obamacare.
Though there are other nuances, these are the key points. Trumpcare passed the House by the narrowest of margins in early May after two notable revisions (the addition of the MacArthur Amendment and the Upton Amendment, which added $8 billion to the high-risk patient fund), and now moves onto the Senate.
Here's why Trumpcare is causing indigestion for many
The sticking points of Trumpcare, and the primary causes for concern, are what this plan might do to low-income folks, those with pre-existing conditions, and the elderly.
The elimination of the Advanced Premium Tax Credit, which provides a subsidy that lowers monthly premiums for folks making between 100% and 400% of the federal poverty level, and cost-sharing reductions, which lower the copays, deductibles, and coinsurance costs associated with a visit to the doctor for folks making between 100% and 250% of the federal poverty level, will hurt. Without these subsidies, low-income folks may struggle to afford health insurance. Even if the age-based tax credit helps them pay their premiums, they probably won't be able to afford their portion of fees associated with going to the doctor.
It's a similar story for persons with pre-existing conditions. Although Trumpcare keeps the mandate in place requiring insurers to accept all patients, regardless of whether they have pre-existing conditions or not, it gives insurers more freedom to price their policies. This could mean patients with pre-existing conditions paying substantially higher premiums once again, as well as insurers leaning on higher deductibles to pass along medical costs to the consumer in an under-the-radar way.
The elderly are also facing some potentially hefty costs under Trumpcare. Even though the age-based tax credits of $3,500 and $4,000 for those in their 50s and 60s, respectively, are incrementally higher than what younger adults are receiving, it's nowhere close to the subsidies they're receiving under Obamacare. Considering that insurers will be allowed to charge older adults more under Trumpcare than under Obamacare relative to young adults, lower-income seniors could wind up paying over half of their annual income just toward their premiums – and that includes the tax credit – per the Congressional Budget Office's (CBO) latest scoring of Trumpcare.
Overall, the CBO forecast a 23 million-person reduction in coverage under Trumpcare over the next decade.
Could the Senate scrap Trumpcare and start anew?
Interestingly enough, some of the steepest criticisms of Trumpcare are coming from within the Republican Party.
Last week, Sen. Richard Burr (R-NC) essentially called Trumpcare "dead on arrival" in the Senate, and predicted that a healthcare bill is unlikely to be passed in 2017. In an interview with WXII 12 News in North Carolina, Burr was quoted as saying that the AHCA is "not a good plan," and that "at the end of the day, this [healthcare] is too important to get wrong."
For those who many not recall, Republicans are attempting to pass the AHCA through a process known as reconciliation. Reconciliation allows lawmakers to pass bills that impact the federal budget with a simple majority vote, which means 51 votes in favor in the Senate. Republicans hold 52 seats, leaving them essentially no margin for error. With Burr and other Republicans voicing their displeasure with Trumpcare as it currently stands, the bill is indeed dead on arrival.
At one end of the spectrum, conservative Republicans believe the AHCA doesn't do enough to repeal Title I regulations associated with Obamacare. Title I regulations are the mandates that govern what insurance companies can and can't do. For instance, the mandate requiring they accept all persons, regardless of whether they have a pre-existing condition or not, is a Title I regulation.
At the other end are more moderate Republicans who are concerned that Trumpcare would remove too much of Obamacare's progress in lowering the uninsured rate. Since its implementation, the uninsured rate fell from 16% to about 9%, per the Centers for Disease Control and Prevention. These moderate Republicans have specifically been worried about the removal of subsidies for low-income individuals and families.
The easiest solution for the Senate might be to start over and rewrite practically the entire bill. In fact, CNBC recently reported that Republican senators have been meeting in private to discuss "crafting their own bill."
What might a rewrite look like? It's tough to say at this point because of the two very different ideology's coming to the table from within the Republican Party. However, one interesting idea that has been proposed, according to The Wall Street Journal, is the taxation of employer-sponsored health plans. Right now, employers receive a healthy incentive to offer generous coverage to their employees. Scaling that back would save the federal government money, but it could potentially increase premiums for the tens of millions of Americans who receive health coverage through an employer. Either that, or it could incent employers to stop offering health coverage altogether, or to offer less generous plans.
About the only certainties we have at the moment are that: 1) the AHCA isn't going to pass in its current form in the Senate, and 2) Obamacare remains the health law of the land until Republicans can find a middle ground.
Where we go from here is really anyone's guess at this point.