Understand the big picture
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| Published: | 2017-Jan-23 |
| Last Updated: | 2021-Jun-17 |
| Principal Writer: | Barry Shatzman |
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Concurrent Resolution FY2017
2017 (SConRes3)
(2018) California v. Texas (prev. Texas v. US)(2015) King v. Burwell
(2014) House v. Azar
(2012) NFIB v. Sebelius
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What is this about?
Ever since the Patient Protection and Affordable Care Act (ObamaCare) was enacted in 2010, Republicans in Congress have been attempting to dismantle it.
When Donald Trump assumed the presidency in 2017, he joined those attempts. Trump promised a plan to replace it, but never specified what a replacement health care policy might be like.
Efforts persist, even in 2021 with Democrats controlling both houses of Congress and the presidency. The most serious threats to the law now come via the courts.
In this discussion we'll explain attempts to dismantle ObamaCare and what it could mean to you..
To better understand what health care public policy is about, read our discussion.
ObamaCare provides previously unattainable protections
ObamaCare continues the nation's basic model for health care in that insurance companies pay for a portion of our health care using money we pay to them as premiums.
It adds several protections, however...such as limiting the amounts many people need to pay for health care, and the types of care insurance policies must cover.
ObamaCare added several tangible protections that did not exist before. These protections include...
o If you are diagnosed with a serious health problem (such as cancer), your insurance company cannot rescind your policy.
o Insurance companies cannot limit the amount they will pay over the lifetime of an insured person.
o Health insurance plans must pay for preventive procedures such as colonoscopies and mammograms.
o Insurance companies must spend at least 80 cents of every premium dollar on health care services. They cannot take more than 20 percent of premiums for profit and overhead.
o Insurance companies must justify large rate increases.
o The federal government subsidizes part of the cost of premiums to those who earn less than 4 times the federal poverty level. It adds additional financial assistance for those who make less than 2.5 times the federal poverty level.
o It offers virtually free health care to those with incomes less than the federal poverty level, through Medicaid Expansion.
ObamaCare also requires that most people obtain health care insurance. This requirement has became known as the mandate.
How would the law be affected?
The components of ObamaCare all are interwoven, so breaking one has the potential of seriously impacting the entire health care policy.
For example...
Medicaid
Prior to ObamaCare, each state had its own criteria for Medicaid eligibility.
Medicaid Expansion allowed states to increase coverage to anyone earning less than the federal poverty level at little cost to the state. With no federal money to pay for Medicaid Expansion, health care for those Americans who were not covered before ObamaCare would again be uncovered (unless a state decided to now pay for coverage it didn't pay for before).
Subsidies
The federal government helps people pay for insurance through subsidies. So if an insurance company is charging $1,000 a month for a policy and the government's subsidy is $700, you would pay only $300.
If Congress cancels those subsidies, you would need to pay the entire $1,000 in order to keep your coverage.
Mandate
The mandate to maintain coverage is enforced by the tax penalty for not having it. If that penalty is eliminated, many might choose to go without coverage - especially those who consider themselves to be in good health. From an insurance company's point of view, that would mean less income to cover the expenses of the less healthy customers who remain. Those expenses would be covered by raising premiums for their remaining customers.
Eliminating the tax penalties on large employers who do not offer health care insurance to their employees means that fewer employees will get insurance from their employer. They will need to buy insurance on their own (effectively a pay cut) or go without coverage.
Taxes
Many of the cost benefits of ObamaCare (Medicaid Expansion, subsidies) are paid for by extra taxes on those with very high incomes and on certain companies in health-care related industries. Eliminating these taxes would mean the federal government would need to find the money to pay for these benefits from somewhere else (or not pay them).
The effect of these things combined would make insurance unaffordable for most people - while those earning very high incomes would save money on their taxes.
Fewer insured, higher premiums
The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) studied what would happen if ObamaCare were to be dismantled this year. The largest effects would start next year, as insurance companies and people already have plans locked in for this year.
They estimate...
o In 10 years, one out of every five Americans under age 65 would be uninsured.
o In 2018, premiums for plans purchased on the exchange would increase by 20 percent over what they already are projected to increase.
o Premiums would double over the next 10 years.
o With fewer people buying insurance (mostly the least healthy who cost insurance companies the most), insurance companies would leave the market - reducing competition.
o Half of the U.S. population would live an an area that had no insurers offering policies on the exchanges.
Click here to read the Congressional Budget Office analysis.
The healthiest could buy coverage outside the exchange
The previous section discusses health coverage plans purchased through a state's exchange. Unless ObamaCare is repealed, those plans still would need to cover everyone - regardless of their health situation.
Without the mandate, people would be free to buy policies outside the exchanges. Those policies, however, might not cover things such as preventive care that ObamaCare requires. They also would be able to discriminate against those with pre-existing conditions - making insurance for those people even more costly.
When ObamaCare was being debated, President Barack Obama famously said people could keep their plan if they wanted. That turned out to be untrue for many, because their plans did not cover the essential health benefits that Obamacare requires.
Plans to replace ObamaCare offer fewer protections
There have been, and continue to be, a wide range of proposals to replace ObamaCare as the country's healthcare policy.
They include a 2016 policy analysis by Rep. Paul Ryan and a 2015 bill proposed by Rep. Tom Price (Price later became secretary of Health and Human Services, which would administer any health care policy).
A few concepts in these proposals are common to several other proposals...
o Insurance companies would be allowed to sell policies outside of their state. Each state regulates its insurance companies - some providing more protections than others. This would allow all insurance companies to be based in states that offer the fewest consumer protections because they still would be able to sell to employers and residents in states with more protections.
In our discussion of health care policy, we list criteria that we feel should be used to evaluate any national health care policy.
Click here to read Price's proposed policy.
Click here to read Ryan's proposed policy.
Click here to continue to the next section of this issue...