Healthcare cost in the United States has gradually grown over the years to the extent that it has become impossible for certain groups to afford healthcare. As a result, recent administrations have focused on providing affordable healthcare to the majority of Americans. However, the difference in American political parties governing philosophies has led to the development of different plans for affordable care. It is the reason why in the past nine care the country has had two significant acts designed namely the Affordable Care Act (ACA) and the American healthcare Act (AHACA) (Smith, 2018). However, most people are left wondering about the differences between and the overall impact from a policy and a budget perspective.
ACA, passed in 2010, was meant to mandate health insurance for all U.S citizens. The ACA made changes to define the concept of minimum coverage, developed mandatory requirements for citizens to enrol for coverage and expand subsidies offered by the federal government for all households classified under middle-income. Trumpcare was established under President Trump administration and was meant to repeal ACA partially.
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Each of these cares has were developed to make care affordable to all Americans. Despite the same aim, the two show significant differences. According to Smith (2018), Obamacare is known to penalize persons who can afford ACA coverage but decides not to purchase cover. The penalty is known as the individual mandate. ACA expects all persons who can provide the coverage to afford and to make continuous monthly payments. However, there are multiple ways for an individual to be exempted from the mandate. The penalty is paid when someone who has defaulted and is paid while filling for federal tax return. The penalty paid is $695 per individual up to a value of $2,085 or 2.5% of household income. The penalty applies the higher in either of the two penalties.
AHCA takes a different approach by eliminating the individual mandate penalty. Consumers who can pay for the coverage are offered financial incentives. AHCA also propose that insurance companies are allowed to charge a penalty of 305 on consumers who take a gap of more than 63 days to purchase a cover. The penalty would apply for 12 months (Smith, 2018).
According to Smith (2018), ACA played a crucial role in expanding federal subsidies to assist consumers in affording premiums healthcare insurances. The grants meant that consumers would receive reduced cost for coverage based on an individual's income. It said that in all states if the income of a household was in the range between 100% and 400% of the federal poverty limit, the consumer qualified for a reduced cost of health insurance through the tax credit.
The AHCA would still use a similar approach that links subsidies to income, but a few changes would be implemented (Smith, 2018). For example, AHCA would set the household limit below 350% of the federal poverty limit. AHCA would employ a formula that would tie subsidies numbers to a comprehensive plan that is far less, which would mean lower subsidies.
Each of the two plans has pre-existing conditions for the consumers. Both AHCA and ACA plans had conditions in place that required people to purchase coverage before instead of waiting until they get sick to get one. ACA pre-existing conditions is the penalty that necessitates consumers to buy and retain healthcare coverage. The penalty is the individual mandate. The ACA also states that if a person coverage gap exceeds 63 days, they are obligated to pay a tax and the insurance coverage cannot be renewed until the following enrollment (Smith, 2018).
Pre-existing conditions for AHCA outline that States have the authority for waiver application to establish their own rules aimed at encouraging resident consumers to maintain coverage. AHCA also has a condition in which consumers who keep their coverage will not be required to pay higher prices for insurance based on whether or not the individuals have pre-existing conditions. AHCA, however, gives states a chance to change the laws affecting persons who do not maintain continuous payment for coverage (Smith, 2018). The condition provides the countries with the power to charge consumers who have cover gaps in higher premiums or those who have pre-existing conditions.
The two plans had differing ideas about the ten essential health benefits. The Obamacare plan required every marketplace policy offered was needed to cover the ten essential health benefits which required even bronze premiums to have some base level coverage. The ten essential health benefits which each coverage was needed to cover include emergency services, outpatient services, hospitalization, laboratory services, pediatric services, prescription medication, maternity and newborn care, mental health, and preventative and chronic disease management services. The AHCA allows states to decide on whether they will need insurance coverage to cover all ten essential health benefits mentioned above (Smith, 2018).
Each of the two plans would have a significant impact on the budget. Estimated budgets by the Congressional Budget Office showed that ACA would lead to the rise of the federal deficit by about $350 billion which would increase the federal spending by $1.15 trillion between 2012 and 2021 ( Blahous, 2012) . By 2018 Obamacare cost an estimated $685 a year to subsidize healthcare insurance in the United States. Comparing the time before Obamacare and after the enactment of the ACA, the government was forced to spend more in healthcare. For example, the federal government had raised the budgetary spending in Medicaid and health from 23% of the total budget in 2011 to 27% in 2016. If enacted, AHCA would have a reduced $337 billion federal deficit over ten years between 2017 and 2026. The total amount saved would include $323 billion and $13 billion saved on-budget and kept off-budget consecutively ( Congressional Budget Office, 2017) . For the same period, an estimated $1.2 trillion would be the total reduction in outlays and $0.9 trillion of revenue reduction. The most significant saving of the AHCA would come from Medicaid outlays reduction and eliminating the subsidies for the ACA ( Holahan et al., 2017) . Trumpcare aimed to lower the spending by the federal government that was being incurred from the ACA.
One of the most significant differences between the two plans is the establishment of the Federal Invisible Risk Sharing Program. The AHCA has created the program intending to help cover health insurance companies in providing cover for consumers with high medical costs. The risk pools remain invisible because people in this pool do not know they are classified in the risk pool. The ACA employed a different system that would reimburse insurance companies for any cover for enrols that exceeded $45,000 per year. Under the program, insurance providers were needed to identify patients that were thought to be high-risk and place them into a high-risk pool in advance. (Smith, A. 2018).
References
Blahous, C. (2012). The Fiscal Consequences of the Affordable Care Act. Retrieved from https://www.mercatus.org/system/files/the-fiscal-consequences-of-the-affordable-care-act_1.pdf
Congressional Budget Office, (2017). American Healthcare Act. Retrieved from https://www.cbo.gov/publication/52486
Holahan, J., Blumberg, L. J., Buettgens, M., & Pan, C. (2017). The Impact of the AHCA on Federal and State Medicaid Spending and Medicaid Coverage: An Update. Retrieved from https://www.urban.org/sites/default/files/publication/90991/2001313-the_impact_of_the_ahca_on_federal_and_state_medicaid_spending_and_coverage_update.pdf
Smith, A. (2018). Trumpcare vs. Obamacare - Comparing Two Healthcare Plans. Retrieved from https://www.firstquotehealth.com/health-insurance-news/trumpcare-vs-obamacare
