With the election of Donald Trump to the presidency, many people are wondering what will become of the Affordable Care Act (ACA), otherwise known as Obamacare. The program, which covers people not insured through their employer, has been a disaster virtually from the first day of its tenure.
In the six years since the ACA was enacted, its insurance premiums have risen 22 percent per year on average, with up to 92 percent increases for particular states coming in 2017.
The many promises that President Obama made when he introduced the ACA — that you would be able to keep your doctor; that your family’s premiums would go down by up to $2,500; and that there would be no associated tax increases — were outright lies. The whole premise of Obamacare — that so many young and healthy people would pay into it that costs would be kept low for sick people — was flawed.
In reality, young people were loath to sign up for Obamacare when it was established, and now that its premiums are so high, enrollees complain that it’s cheaper to pay the penalties for not being insured under the program than to pay its costs for routine health maintenance. The only time Obamacare actually makes a difference, critics claim, is when someone is catastrophically ill, and this is relatively rare from a statistical perspective.
Of the 23 insurance “co-op” exchanges that Obamacare established at its inception, only 11 will remain in 2017; the others have gone belly-up. And of the exchanges that will be left, nearly one-third will have only one insurer in them. Fewer insurers and fewer exchanges mean less coverage for consumers. The health care plans that are being offered by the exchanges are very pared down and often resemble Medicaid.
By now, the government’s Congressional Budget Office had estimated that 21 million people would have signed up for the co-op exchanges; the real number is something like 12 million. And of those 12 million people, more tend to be on the sicker side than the healthier one. While some people are able to qualify for government subsidies to pay for Obamacare’s costs, detractors argue that the subsidies aren’t substantial enough.
From an insurer’s point-of-view, Obamacare has been a huge money loser. Most major insurance companies have lost hundreds of millions of dollars supporting the program, and many of these firms are pulling out of it due to losses.
“The individual insurance market does not feel stable at all,” stated Janet S. Trautwein, CEO of the National Association of Health Underwriters. “In many states, the individual market is in a shambles.” Aetna, United Healthcare and Humana are just a few of the healthcare insurers that have stopped offering coverage under Obamacare in multiple states.
The government promised huge payments to insurers to make up for losses in the “early years” of the Obamacare program, but it hasn’t yet made many of those payments or paid as much as what’s been needed in many cases to reduce premium increases.
By now, it should be abundantly clear to most observers that Obamacare is a failure, and it needs to be repealed, discarded and replaced as soon as possible. Fortunately, Donald Trump and Mike Pence have plans to do exactly that, and their proposed policies involve allowing federal regulations and government coverage requirements to be loosened.
Initially Trump has proposed doing away with the mandate that everyone must purchase health insurance. People could establish their own health savings accounts, and insurance would be purchasable across state lines.
Instead of an open-ended financial commitment to Medicaid patients, Trump and Pence would provide a block grant to states that would allow them to determine how much to give to low-income residents. Trump and Pence would also like insurance payments to be tax-deductible.
Despite the changes, one Obamacare provision that’s likely to remain is coverage for those with pre-existing conditions. For those people who are indigent or close to it, Trump wants the government to pay for medical care in emergency situations. As Trump puts it, “We’re not gonna have people dying on the streets.”
Trump also would like the government to be able to negotiate drug prices with pharmaceutical firms directly. Currently, Medicare rules do not allow program to negotiate drug prices; the pharmaceutical firms simply tell the government how much the medicines cost, and the government cuts a check. This is a practice that needs to end.
Not all of the details of Trump’s replacement health plans have been spelled out yet. But as the date of Trump’s inauguration gets closer, you can be sure that more specifics of his health care plans will emerge, almost certainly to be followed by battles in Congress over them.
Regards,
Ethan Warrick
Editor
Wealth Authority
