In the aftermath of the 2016 presidential election, many different parts of life in the United States have come under scrutiny. One of these often-criticized aspects of life was Obamacare, which is also known as the Affordable Care Act. The ACA created a health care system that offered affordable, subsidized health insurance policies for millions of Americans who were uninsured or underinsured at the time the ACA legislation was brought into effect in 2013.
The American health care system has always been a bit contentious. The health care industry is worth billions of dollars and contributes greatly to the economy of the United States, sometimes to the detriment of the people who are seeking care and protection in the form of health insurance. Everyone has different ideas as to what a functioning health care system looks like, and there seems to be little room for compromise in the current political atmosphere.
Before President Trump was elected into office, he was already campaigning on a platform that would eliminate Obamacare in favor of his own healthcare policies. Obamacare has had a rocky reception in the United States, with many people not supporting its existence because it requires people to pay a penalty if they refuse to purchase health insurance. Despite the challenges Obamacare has faced, millions of Americans have received affordable health insurance in the last four years.
The shaky political situation has many people wondering how Trump will change the existing health care system in the United States. Although many of the specifics of Trumpcare aren’t known, here are some of the primary differences between Obamacare and Trumpcare.
Changes under Trumpcare
President Trump has made some statements about his plans for the American health care system he envisions. Some aspects of the health care industry will remain the same, as it is difficult to dismantle an infrastructure as large as the American health industry. Republicans in Congress have vowed to repeal the Affordable Care Act, also known as Obamacare, although Trump seems to be willing to work with parts of the Obamacare system that have been beneficial to American citizens seeking health insurance.
The following are the changes that Trump has said he will make to the existing health care system in the United States:
He will remove the individual mandate that requires all individuals to have health insurance. This, currently enforced with a penalty payment, has provided an incentive for people to either purchase a base level of insurance or pay the fee. Under Trumpcare there will be no penalty for people who don’t choose to purchase insurance.
The insurance providers who are featured on healthcare.gov will still be unable to discriminate against customers because of pre-existing conditions, but coverage could get more expensive. Insurance policies under the federal system will likely always be required to cover people with existing medical problems to increase the number of uninsured people who can afford insurance; however, the number of affordable insurance options for people with pre-existing conditions could decrease.
Trumpcare would allocate subsidies for health insurance based on a person’s age, not their income. Under Obamacare, 85% of applicants who signed up for insurance policies through the health care marketplace were subsidized.
Trump wants to change the way money is allocated to individual states for the growth and expansion of their Medicaid programs. Using a block-grant format, a certain amount of money would be given to each state so that they could use those funds for Medicaid as they see fit. Currently, there is an open-ended matching system in place for states’ Medicaid services, where the federal government equally matches the funds going into state Medicaid programs.
Trumpcare may allow people to deduct the full amount of their health insurance premiums from their federal tax returns every year. Under Obamacare, people can only deduct their medical expenses if they exceed 10% of a household’s adjusted gross income.
Along with changes to the tax structure, Trump would emphasize Health Savings Accounts, or HSAs with his health care plan. HSAs are tax-advantaged medical savings accounts that offer high-deductible health plans and require significant governmental funding to support. Obamacare has HSAs written into the legislation, but it has not proven to be a popular option for people seeking affordable health care.
Trump wants to expand the options people have for purchasing prescription drugs from overseas as well as open the pharmaceutical industry to smaller companies that will help drive costs down and increase competition among these companies. He would like to see more inexpensive, generic prescriptions on the market. President Trump also wants to allow health insurance companies to sell their policies over state lines. This is allowed under the ACA but hasn’t been implemented. Individual states have their unique health care systems and environments that make them different from one another, making policies specific to a location better for the residents of that place.
Although there isn’t a lot of concrete information about Trump’s plans for the health care system, experts have estimated that Trump’s changes to the health care industry will cost half a trillion dollars more than Obamacare over the course of a decade. Some of his changes would save money compared to Obamacare, and other changes would cost more. Based on Trump’s health care plan, 21 million people could lose their health insurance coverage.
Again, the numbers are hard to estimate because there simply isn’t enough information to allow people to know precisely what is happening with Trumpcare. The amount of money that would be spent on Trumpcare versus potential savings is hard to estimate when experts have little real data to work with.
The specifics of Obamacare
The Affordable Care Act was created so that more uninsured people and families in the United States would be able to afford a basic level of health care. Individuals can be insured through private insurance agents, through their employers, or through a government insurance program like CHIP, Medicare, or Medicaid.
Obamacare subsidizes health insurance costs for people with low incomes. Studies have shown that people who are only offered insurance plans with high deductibles, as Trump is proposing, will choose to forgo health insurance entirely.
The Supreme Court ruled that individual states oversee their Medicaid programs and that the federal government can fund those programs, but cannot dictate how each state chooses to spend their money. Trump’s block-grant program may serve to give more money to Medicaid, but the monetary amount that each state would get hasn’t been determined. States that chose not to expand their Medicaid plans left many people with no affordable insurance options whatsoever.
Health care legislation under the Obama administration caused a record slowdown in health care spending, culminating in its slowest growth year in 2015. By 2018, the Obamacare legislation would have levied a 40% tax on insurance companies charging high rates for their insurance policies.
Trump plans to change the tax structure of how people pay for healthcare and what can be deducted from federal taxes. Obamacare’s individual and employer mandate and the fees, exceptions, and subsidies offered by the federally funded health care system often cause confusion when it comes to filing taxes every year. There are more coverage options, but individuals are still overbuying or underbuying their insurance because, between healthcare and taxes, all this information is difficult to remember and implement.
Trumpcare and Obamacare, compared
There are a few aspects of the health care system that Trump and Obama agree on. One is price transparency when it comes to comparing insurance policies. Obamacare allows people searching for affordable health care options to compare prices of the policies being offered by multiple insurers, and this information can be broken down when you look at the specifics of what each policy is offering.
Trump wants to increase price transparency, although it is unclear how this would be accomplished differently than what the Affordable Care Act is already doing.
Between Obama and Trump, there has remained a gap in Medicare’s prescription drug coverage. Obamacare was making inroads to decreasing this gap, and Trump says he will close it altogether, but he has not mentioned how this will happen in his health care plan.
The Affordable Care Act is set to be repealed, but what will replace it is unknown. There have been many complaints and threats to repeal the Act since its beginnings six years ago; the road to health care reform isn’t paved, smooth, or even navigable in some places, or so it seems today. What is known is that people who were formerly unable to afford health insurance now can. Millions of Americans are insured and can anticipate a basic level of protection of their health, regardless of pre-existing conditions.
Seeing the problems in our existing health care system and working to fix those problems is easier than scrapping the entire structure and starting over. The American people need to know that they will continue to be able to afford health insurance in the future, regardless of who sits in the Oval Office. The Affordable Care Act isn’t perfect, but millions of people are protected because of it. There are many pieces of information about Trump’s health care plan that need to be clarified and researched thoroughly before voters trust him with an overhaul of the health care system.
Proposed Trumpcare Updates – American Health Care Act (AHCA) and Better Care Reconciliation Act (BCRA)
In March of 2017, Congress introduced the American Health Care Act of 2017 also known as Trumpcare with the intent to partially repeal the Patient Protection and Affordable Care Act. The Senate and House have not passed the bill. Revisions and amendments have been proposed, the latest version is known as the Better Care Reconciliation Act of 2017.
While there has been no complete replacement of Obamacare, there have been some changes under President Trump, through executive order, which eliminate parts of the ACA.
Let’s compare the ACA provisions with the new and proposed changes under Trumpcare (BCRA).
The Individual Mandate which under the ACA required everyone to have insurance or pay a tax penalty has been eliminated as of December 2017, the change taking effect in January 2018. The Congressional Budget Office stated they estimate that as a result of this order, there would be an additional thirteen million uninsured in the next ten years. Critics of the move cite that young healthy people now have little incentive to buy health insurance. Since insurance companies lose the pool of healthy insured, their payouts will be higher as those that remain insured do so because they need medical care. It is anticipated that the cost of health insurance will then rise.
Additionally, it is forecasted that since preventive care or care for chronic conditions will be reduced for those that have no insurance, this could lead to a health crisis down the line.
Employer Mandate – The ACA states that employers with at least fifty employees are required to offer health insurance to their workers. Under the BCRA proposal, the requirement would be eliminated.
Coverage of pre-existing conditions – The ACA prohibits insurers from excluding or charging more for insuring those who have pre-existing conditions. The same is true with the BCRA bill. However, insurance companies would receive funding to cover unexpected losses as a result of this requirement
Assistance for out of pocket expenses – Obamacare subsidizes expenses such as co-insurance and co-pays for those earning up to 400% of the Federal Poverty Level. Additional assistance is provided for those earning up to 250% of the Federal Poverty Level. Under the BCRA bill, cost assistance would not be as generous, and tax credits would be offered to those who make up to 350% of the FPL.
Essential Health Benefits – Currently under the ACA, all policies sold as a qualified plan must cover ten categories of Essential Health Benefits. Under the BCRA each state has the ability to define what are essential health benefits.
Premium Age Differences – The ACA allows insurers to charge older customers up to three times compared to younger customers. The BCRA allows insurers to charge up to five times, and allows the States to change this ratio.
Health Savings Accounts – Under the ACA, individuals can contribute up to$3,400 and families $6,750 into tax free HSAs. Under BCRA, those with incomes under $100,000 a year can put up to $7000 for individuals and $14000 for families in tax free health savings accounts; Those earning above that limit will be taxed on a sliding scale
Medicaid – The ACA provisions matching federal funds to states for anyone who qualifies with expanded eligibility to 138% for those with income at the poverty level. The BCRA proposes to end funding by 2024. The bill grants states the option to choose from different funding options and utilize per-capita caps or block grants, allows continuous funding and incentives to expand coverage by state
The BCRA and AHCA will evolve over time as the discussion among the different political parties continues. Even those within the same party disagree on different parts of the bills introduced. The battle is not over, health care reform is at the forefront of the current presidency, and until there is a majority vote between the Senate and the house of representatives, other changes and perhaps executive orders will continue to chip away at Obamacare. A good resource to keep up with what is currently on the table is found here.
Although there isn’t yet historical track record of the effect of Trump’s plans for the health care system, experts have estimated that Trump’s changes to the health care industry will cost half a trillion dollars more than Obamacare over the course of a decade. Some of his changes would save money compared to Obamacare, and other changes would cost more.
Again, the numbers are hard to estimate because there simply isn’t enough information to allow people to know precisely what is happening with Trumpcare. The amount of money that would be spent on Trumpcare versus potential savings is hard to estimate when experts have little real data to work with at this time.