Health insurance is undoubtedly one of the most important topics in the US public discourse. However, the issue is quite contentious regarding the interplay between the Affordable Care Act (ACA) and the American Health Care Act (AHCA). Ever since President Trump’s government’s inauguration, the debate on modifying ACA, dubbed Obamacare, has taken multiple twists and turns. Sadly, most of the conversation is undeniably founded on socio-political grounds, which informs the predictable stances taken by Republicans and Democrats in Congress. Regardless of what one thinks about the conflict, it remains clear that neither Obamacare nor Trumpcare (AHCA) has exhaustively addressed American health insurance woes. However, a sober inquiry into the debate reveals that HCA might be too ambitious and shortcoming for the current health coverage status quo.
Summary of the AHCA
Ever since its inception on March 23rd, 2010, by President Barrack Obama, the ACA has dramatically impacted US healthcare insurance and funding. The Kaiser Family Foundation estimates that as of May 2017, more than 20 million people directly benefitted from ACA, including Jeff Genes, the viral republican Cancer Survivor (KFF, 2017). At the very core of ACA are three goals: Make healthcare insurance more affordable, expand the Medicaid program, and support innovative medical delivery programs for the benefit of everyone regardless of age and income. On the other hand, the AHCA, the futuristic alternative of ACA, was first tabled to the House of Representatives in 2017 March.
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As passed in May 2017, the AHCA allowed for three vital provisions by individual States, on top of the March version: Freedom to set the age rating above 5:1, let insurers use the patient’s health status to determine premiums, and to inculcate other health benefit parameters beyond those constitutively provided by both ACA and AHCA (Glied et al., 2017). With that in mind, AHCA roots for a more outstanding balance between premium subsidies and fines for not buying any insurance cover.
Another notable element of the repeal is that in raising the tax-free contribution bar, it encourages the use of Health Savings Accounts. The 30% late enrolment penalty on individuals whose plans lapse for 63 or more days before re-enrolling is also a bold move. However, the Act increases credit limits for salaried young adults from 150% above the poverty line (Blumenthal & Collins, 2017). As such, the rise in costs due to marginal restitutions might be trivial, given that just about 5 to 10 percent are individual market customers while the rest are residents.
Significant Differences between ACA and AHCA
While AHCA is not a repeal of ACA, it makes the following notable adjustments to ACA: It revises ACA’s income-based subsidies with age-based metrics, adjusts age-based rating from 3:1 to 5:1, and converts Medicaid funding to a per-capita allocation, among other conspicuous changes (Blumberg et al., 2019). The indented replacement of ACA with AHCA is naturally prone to conflicts informed by philosophical, economic, and political interests in the inner working mechanisms of the two programs.
ACA and AHCA also significantly differ in their approach to tax credits. Unlike ACA, which is based on income, AHCA bases on age. The latter also intends to defund Planned Parenthood programs – which means women will not be funded by Medicare when subscribing to plans that allow for abortion. Similarly, given that AHCA enables individual States to adjust the tax rating, senior citizens in some Counties might be required to pay higher insurance policies even if Medicaid covers them.
Also, while ACA sets no minimum tax credit or subsidy amount paid by the government, AHCA sets a floor of USD2,000 per year for young, single adults and USD14,000 for a family, inclusive of older adults (Urban Institute, 2017). Luckily, with AHCA, individuals can buy a plan that excludes benefits they do not want (such as mental health). At the same time, ACA limited all qualified health plans to include the ten essential health benefits.
Potential Impacts of AHCA on the healthcare system
Implementation of AHCA is projected to cause sweeping changes to the healthcare system. For instance, the Kaiser Family Foundation predicts a fall in health insurance enrolment by 14 million by 2026, and an increased federal deficit by USD38 billion in the same time frame (KFF, 2017). As a result of the shift in demarcations of tax rates and income bars, healthcare providers could lose many clients. The anticipated repeal of the cost-sharing subsidies will further increase the deductible ration, making the health policies less appealing for consumers.
Federal Caps introduced by AHCA will dictate difficult choices for Low-Income Medicare Beneficiaries. The Commonwealth Fund warns that with AHCA, States with instituted generous programs might be forced to recall them because of stringent funding. For example, Virginia anticipates readjusting the per capita gap for disabled and aged populations to USD29,000 – moderately below their average spending (Commonwealth Fund, 2019). The average yearly enrolment is projected to USD37,000 for community-based services and slightly above USD56,000 for people with disabilities.
Income-wise, AHCA might disfavour the majority. The rationale is that older and lower-income individuals and those living in high premium areas like Arizona receive less assistance. The RAND Organization documents that about 66% of healthcare insurance buyers are below 250% of the federal poverty level (FPL), with a swooping 44% below 150% (RAND, 2019). Also, only 25% of the enrolees are above 55 years, meaning the majority would be left vulnerable.
However, insurance firms, their CEOS, and the wealthy are the winners under the AHCA. Mann & Orris (2017) estimate that by 2022, at least USD6 billion will flow from insurance buyers directly into the hands of executives and conglomerates. The logic is quite simple – under AHCA, not only can companies raise premiums as they like, but they can also institute deductions based on performance. The firms also benefit from the repeal of health insurance tax once provisioned by ACA, allowing for dedicating more funds into administrative functions.
Why AHCA failed to gain support
The AHCA failed on the single and most important basis that it left millions of Americans without health care coverage. Ideally, the AHCA was set to undo the hard-earned benefits of the ACA. The most pressing issue of AHCA was that one qualifies for subsidies and discounted premiums based on age, which was nothing short of retroactive. Lyamah (2017) reports that over 63% of Americans were opposed to AHCA on the basis that it rolled back ACA’s expansion that has seen people in over 31 States below 138% of FPL affordably access healthcare. Also, the Bill’s implementation of per capita caps meant the program would be unresponsive in outbreaks and epidemics.
Policy Changes due to President Trump’s executive powers
In October 2017, President Trump issued an executive order requiring the Cabinet to ratify rules that would modify AHCA to allow small businesses to collectively buy health insurance through strategic health plans (Federal Register, 2017). The order sought to restructure that Act to expand its reach on companies using Health Reimbursement Arrangements (HRAs). However, the order did not hold ground since it did not significantly direct changes to the existing legal health setup but instead sought to coerce businesses to follow alternate paths that were only time-bound.
In December 2019, a federal court panel ruled that to overturn ACA’s mandate on the basis that Congress set the mandate tax to zero (KFF, 2017). The ruling came just months after Congress passed a bill that eliminated ACA’s tax penalty for not obtaining health insurance. Notably, the ACA stands on shaky grounds, with Republican state attorneys general attempting shots at its replacement. While the Trump administration works around the clock to dissolve ACA, the truth remains that no sane replacement has been offered so far. For as long as the health coverage markets are unstable and subscriptions are shrinking, the resounding influences by President Trump and the Republican divide only serve the palliative effect, without any definitive future as of yet.
To sum up, the deliberation of repealing ACA in favour of AHCA effectively boils down to political goodwill. It is quite undeniable that the majority of right-minded opinion favours the continuation of Obamacare, on the very basis that it serves the right interests of American health insurance. While it would be misinformed to say AHCA is misplaced, not many would be bold enough to justify its implementation with the current enrolment, income and tax band, and age structure data. As such, the Trump administration ought to practice further caution and diplomacy in swapping the two insurance models.
References
Blumberg, L. J., Holahan, J., Buettgens, M., Gangopadhyaya, A., Garrett, B., Shartzer, A., ... & Arnos, D. (2019). Comparing Health Insurance Reform Options: From “Building on The ACA” To Single Payer . New York: Commonwealth Fund, October, 16.
Blumenthal, D., & Collins, S. (2017). Where both the ACA and AHCA fall short, and what the health insurance market really needs. Harvard Business Review . 12(9), 36-41.
Federal Register. (2017, January). “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal .” (Executive Order 13765 of January 20, 2017). Retrieved from https://www.federalregister.gov/documents/2017/01/24/2017-01799/minimizing-the-economic-burden-of-the-patient-protection-and-affordable-care-act-pending-repeal
Glied, S., Ma, S., & Borja, A. A. (2017). Effect of the Affordable Care Act on health care access. Issue Brief (Commonwealth Fund), 13, 1-11.
Lyamah, J. (2017). “ Why did the American Health Care Act Fail?” Friends Committee on Legislation . Issue Brief. 8, 12-17.
Mann, C., & Orris, A. (2017). AHCA Would Affect Medicare, Too . Issue Brief (Urban Institute), 11, 1-9.
RAND Corporation. (2019). “The Future of U.S. Health Care: Replace or Revise the Affordable Care Act?” Retrieved 15, September 2020 from https://www.rand.org/health-care/key-topics/health-policy/in-depth.html
The Kaiser Family Foundation. (2017, April 27). “ Premiums and Tax Credits Under the Affordable Care Act vs. the American Health Care Act: Interactive Maps .” Retrieved 15, September 2020 from https://www.kff.org/interactive/tax-credits-under-the-affordable-care-act-vs-replacement-proposal-interactive-map/
The Kaiser Family Foundation. (2017, May). “ Summary of the American Health Care Act.” Issue Brief. Retrieved 15, September 2020 from http://files.kff.org/attachment/Proposals-to-Replace-the-Affordable-Care-Act-Summary-of-the-American-Health-Care-Act
