After six years of debates, lawsuits, public outcry and protests over the Affordable Care Act (Obamacare), opponents of the law – namely Republicans – will finally get a chance to change things when Donald Trump gets sworn into office on January 20, 2017. On that date, the Republican Party will take complete control of the entire federal government.
The president-elect has been campaigning under the promise that he will completely repeal Obamacare and replace it with something that's been dubbed Trumpcare. But before he can claim victory for altering healthcare reform, Trump must first face the obstacle that he cannot repeal Obamacare because he does not hold 60 seats in the Senate. Despite this fact, Trump does have some options. He may not be able to undo the ACA in one fell swoop, but he can seriously change key provisions of the law. Here's what might happen.
Obamacare included income-based tax subsidies that helped low-income families obtain afford health insurance. Consumers could find out their eligibility for those subsidies through the insurance marketplace. Because of these subsidies, millions of Americans were able to afford health insurance for the first time and get coverage for their families.
It's expected that Donald Trump will replace those subsidies with tax credits based on age and health at the time of the application for insurance. While these credits may help some people, they will leave the elderly and low-income families out of the running for affordable health insurance. To date, there have been few details on how Trump intends to offer cost-effective coverage for people without government assistance.
Under the ACA, Medicaid was expanded in states that chose to participate. Expansion came with heavy strings attached. To get federal money, states had to abide by a list of guidelines that some states found too difficult. In the end, Georgia and a few other states opted to not take part in Obamacare Medicaid reform because they felt it was too demanding on state resources.
Trumpcare will use block grants to help bolster Medicaid without putting any significant restrictions on how states spend the money. The point is to allow states to administer their Medicaid programs in the ways they feel serve their citizens best and keep the federal government out of it. The downside to this plan is that there may not be enough funding to continue with expansion plans, which would force millions of newly eligible Medicaid beneficiaries off of their health insurance – without recourse.
Expanding Health Savings Accounts (HSA)
An HSA is a pre-tax savings plan that allows you to save money for medical expenses not covered by insurance. Through specific tax laws and other procedural rules, Obamacare made it difficult for people with low deductibles to enjoy the benefits of HSAs. Trump wants to open up HSAs to everyone and allow anyone who wants to use them to set aside funds for medical costs.
Bypassing Standard Coverage
Obamacare places strict guidelines on what kind of coverage can be offered in today's health insurance market. The marketplace offers different levels of coverage, and each level has specific features. Consumers are not allowed to change those features in any way.
Donald Trump wants to allow consumers to customize their coverage to fit their lifestyle. There will be several different health coverage components that consumers will be able to add or subtract from their coverage under the Trumpcare system.
Selling Insurance Over State Lines
In the Obamacare marketplace, states regulate which companies can sell plans and how those plans are sold. This goes back to a long-held belief that states know how to best administer health insurance to their citizens, and that has prevented health insurance commerce from crossing state lines.
Trumpcare will allow companies to sell policies across state lines, which is a move that Trump hopes will lower premiums. More options mean bigger competition, and Donald Trump believes that better competition will keep premiums down. The Trump plan has made no provision for how companies will administer health plans in several different states given different licensing requirements and existing regulations.
Not all of the news regarding Trumpcare and federal income taxes is bad. Under Obamacare, medical expenses cannot be tax deductible until they reach at least 10 percent of a taxpayer's gross adjustable income. Aside from tax subsidies, health insurance payments offer no tax benefits.
In another sign that Trump may eliminate health insurance subsidies, Trump announced that he wants to allow everyone to be able to write off the portion of their health insurance that they pay, regardless of plan type or the amount that you pay. For people on Trumpcare programs who pay their own premiums, this could be a huge break.
Donald Trump's rallying cry on the campaign trail during the presidential elections was that he would repeal and replace Obamacare. But as he becomes more familiar with the realities of the office and how complex the system truly is, he is realizing that repealing Obamacare is not a possibility, at least not completely.
People can still expect major changes to the ACA as Trump and a Republican Congress work to reshape health care reform into an image that more closely resembles conservative beliefs. The major issue that we face as a country right now is knowing what that image might be.