Insight into a Potential GOP Replacement for Obamacare


Everyone knows about it and everyone has an opinion on it; that is, the Affordable Care Act, otherwise known as ObamaCare. Donald Trump is set to become president of the United States and with Obama on his way out, the Republican-controlled Congress is moving forward with legislation to repeal and replace Obama’s signature piece of legislation.

While Republicans in Congress have been very adamant about repealing Obamacare over the years, they have not proposed a concrete replacement. Now, the Republicans’ day has finally arrived. On Monday, Senators Susan Collins and Bill Cassidy are introducing legislation that will replace it; however, their proposal it quite vague.

Collins asserts the replacement bill would place the decision back into the state’s hands, where they can either choose to keep the ACA or explore “alternative routes”. Furthermore, Cassidy claimed that up to 95% of people would be covered through their proposal by granting the power back to the states, which would give all eligible people health insurance unless they chose forego coverage.

Clearly, these are very abstract details of their plan, so let us look at the potential specifics of a Republican healthcare law.

Congressman Tom Price from Georgia, who has been selected as Donald Trump’s nominee for the Secretary of the Department of Health and Human Services has been developing a plan to replace Obamacare. The three core proposals of his plan include tax credits for those without employer coverage, replacing Obamacare’s pre-existing conditions clause, and expanding health savings accounts.

Providing tax credits for those without employer-provided coverage would in theory create “tax fairness” for employees that do not have access to services such as Medicare, Medicaid, or employer coverage by creating a “refundable” tax credit. This credit would mean the money that is owed comes off people’s income tax obligation. If your employer doesn’t give you insurance the government will give you a tax break, but it will not go as far as the financial subsidies offered under the ACA, which averages $3,500 per case.

The GOP has long been focused on making the healthcare market consumer-driven, which they believe would ultimately lead to lower premium costs. By expanding health savings accounts, patients would be encouraged to take into account the value of what they are getting in the marketplace. An individual or an employer can contribute to these accounts,which are commonly used for routine healthcare expenses. But, these tax-free accounts have a number of restrictions within them and Price’s proposal seeks to broaden their guidelines. One of these expanded guidelines could be allowing employees to make tax-free deposits into an HSA (health savings account) regardless of coverage.

The most controversial aspect of Price’s plan is replacing a clause in the ACA that forces insurance companies to accept any type of person with a pre-existing condition. Thousands, if not millions of people with pre-existing conditions have gained coverage through the ACA, so the Republicans must come up with a competent replacement for this clause if the public is going to accept it. What Price suggests is implementing state-based-high-risk pools for people that cannot gain healthcare coverage. These pools would create some type of safety net for those people with pre-existing conditions that cannot gain coverage through the individual marketplace. However, if continuously covered for 18 months through the individual market, Price says insurance companies would include a pre-existing condition exclusion within the coverage. If not continuously covered for 18 months, an insurer may exclude covering a pre-existing condition. The Republicans argue this would create incentives for citizens to obtain healthcare coverage and keep it so their pre-existing condition would be eventually covered. On the other hand, if uninsured, people would be referred to these state-based-high-risk pools. Basically, the federal government would be funding “targeted welfare” at the state level.

Pools like these have a history in the United States; 35 states had them prior to the ACA being passed and there was mixed results on their effectiveness. The best example of its success resides in Minnesota, but other than that their viability is still up for debate. A study conducted in 2014 by the Commonwealth Fund claimed these pools are not a sufficient alternative to the ACA because they are ridiculously expensive to administer, coverage is far too expensive for patients, and their benefits are mediocre at best. Also, the study went on to say implementing this pool system would result in higher state/federal costs along with less patients receiving coverage. Republicans consistently argue that the costs of the ACA are too high, and there may be some merit to that, as premiums are expected to increase by 25% in 2017, but there is no certainty the pools will result in lower premiums.

Honestly, the ACA does have some flaws. The Supreme Court ruled in 2012 that the states did not have to comply with the expansion of Medicaid, leading to low-income Americans buying private insurance due to the individual mandate. Moreover, major insurance companies have moved away from Obamacare because less people signed up than expected. This explains the drastic increase in premiums across the board.

The ACA is by no means perfect, but it has signed up approximately 20 million people for health coverage and eliminated rejecting patients with pre-existing conditions. I believe this is a huge step in the right direction regardless of the criticisms of the law. However, there is no doubt the law can be adjusted to make the cost of healthcare less expensive for everyone. My hope is that the Republicans come up with a rational replacement for Obamacare if it is indeed going to be repealed.

During the Obama administration, the gridlock in Congress could not have been more evident; Obama passed the ACA without bipartisan support, which explains the immense Republican opposition to it. It is obvious the ideological differences and Obama’s tactics played a huge factor in the urgency to repeal this law, but Congress must put that to the side and recognize if they do not have a sufficient replacement in mind, then millions of people could potentially lose health coverage.

–Contributed by: Bobby Amendola


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