President Trump has repeatedly promised that his alternative to the Affordable Care Act, otherwise known as Obamacare, would increase access, lower costs, and provide better health care. Yet the replacement plan outlined by House Republicans last week will achieve none of these things. And that’s according to just about every health care analyst who has taken a look.
House Speaker Paul Ryan and other GOP leaders, themselves, have so little faith in their plan that they released it and tried to ram it through committees like a runaway freight train before the document could even be scored by the nonpartisan Congressional Budget Office.
It’s easy to understand why. The CBO, on Monday, concluded that 14 million Americans would lose their health insurance next year under the GOP plan, and that the number would to rise to 20 million within three years. By 2026, 24 million fewer Americans will be insured than at present, effectively putting the U.S. uninsured rate back to where it was before implementation of the ACA.
For all its faults, the Medicaid expansion and subsidies in the ACA have made insurance either free or relatively inexpensive for tens of millions of Americans.
Such provisions, however, will vanish or grow much stingier under the GOP plan. Here are just some of the ways that the Republicans take a mediocre government program and make it far worse:
‰ The plan significantly reduces the tax credits that have made it possible for millions of Americans to pay for health insurance under the ACA. The GOP plan offers credits in most cases, ranging from $2,000-$4,000 per year, depending on your age. That will increase the costs to most Americans currently helped by the ACA by thousands of dollars a year in many cases, particularly for Americans age 50-64. They won’t be able to afford the kind of coverage they can under the ACA, so the vast majority will either drop it, or buy cheaper, lower quality plans with higher deductibles and other out-of-pocket costs. This is hardly a win for most Americans.
‰ It eliminates the mandate on large businesses to provide insurance coverage to employees. There’s no way to know at this point how many businesses will choose to drop coverage as a result, but some certainly will, and in almost every case the workers who lose health coverage will be those least able to afford to buy coverage on the individual market.
‰ Rather than an individual mandate to buy insurance, the GOP plan allows insurance companies to charge you up to 30 percent more if your coverage lapses. This is the incentive to keep people buying insurance who might otherwise decide it’s too expensive. As a stick, it’s a lot heftier than the mandate, since the cost of a 30-percent hike in insurance premiums would be higher for most people than the current fine for failing to buy coverage.
‰ It changes the way Medicaid is paid for, and will put far more of the burden on the states than in the past. Indeed, the plan is expected to shift $800 billion in Medicaid costs to the states over ten years. Most won’t be able to afford that extra cost, so they’ll tighten eligibility rules and throw millions off of the program. Indeed, that’s exactly what the CBO projects. And it won’t be just poor working age folks suffering the effects. As Medicaid funding withers under the GOP plan, it will impact nursing homes, the elderly, and the disabled, which are the populations predominantly served by the program.
‰ It reverses the redistributive effect of the ACA. Because the focus of the ACA has always been on health care, many folks never recognized its positive impact on reducing income inequality in the U.S. The ACA took a tax nip from those with extremely high incomes and used the money to provide premium support to average working stiffs. This, of course, drove the GOP crazy. So their replacement plan eliminates those taxes on the wealthiest Americans, saving those in the top 0.1 percent a whopping $197,000 a year, according to estimates. It also bases the size of someone’s health care tax credit on their age, rather than income, so the plan in many cases would provide more help to wealthier people than the poor. Think of the GOP plan as Robin Hood in reverse.
‰ It will increase pressure to turn Medicare into a voucher program. Taxes assessed by the ACA have extended the fiscal solvency of Medicare until 2028, according to the latest projections put out by the program’s trustees. By eliminating those taxes, the GOP plan would put the program into insolvency as early as 2024. This is one of the reasons that AARP recently came out against the GOP plan. They recognize that creating a Medicare funding crisis is consistent with the Republican leadership’s desire to turn Medicare into a voucher program.
Republicans argue that their health care plan will actually work out, by making health insurance more affordable due to lower premiums. Their plan allows insurance companies to charge older customers up to five times more than younger ones. Currently, the ACA allows a variance of only three times, so this will mean higher premiums for middle-aged Americans who don’t yet qualify for Medicare.
This is one way that the GOP plan might actually lower premiums. By making them so expensive for middle-aged Americans, the GOP plan is expected to push many of them out of the insurance market—because they can’t afford it anymore. This will make the overall insurance pool younger and healthier, which should eventually translate into lower premiums, at least for younger Americans. But that will be slim comfort to the millions of middle-aged Americans, many of whom actually need health insurance, who won’t be able to afford it.
The GOP will also allow insurance companies to sell insurance policies that cover less, which will mean more out-of-pocket costs for those buying such insurance. The ACA had set minimum standards for policies, to guarantee that insurance companies weren’t selling “insurance” in name only, and Republicans correctly noted that this meant the insurance cost more.
According to the CBO, the GOP plan would reduce the deficit by about $337 billion over ten years. It does so, however, by shifting nearly a trillion dollars in costs currently borne by the federal government to the states and to hospitals and clinics, which will see a jump in their uncompensated care. And, of course, the GOP plan will leave tens of millions of Americans without health coverage, so the federal government will pay out less in insurance subsidies than it does today.
Even many more moderate Republicans recognize this is false economy. Anyone can cut the deficit by forcing federal costs onto others, and by forcing millions of Americans off of health insurance. And that’s one reason the plan faces an uphill fight in the more moderate Senate.
For the White House, the plan is a political loser. It bears no resemblance to the “fantastic” insurance plan that will cover everyone that President Trump assured voters he’d deliver. As usual, Trump over-promised and under-delivered— at least when it comes to average Americans. The fabulously wealthy get a glorious tax cut under this plan, but for millions of Americans, including many who voted for Trump, it’s back to the bad old days of no health insurance, and a federal government that is happy to ignore the problem.
For Trump, it’s one big broken promise.