Republicans are having a hard time agreeing on how and when to repeal Obamacare. The Patient Protection and Affordable Care Act (ACA) is difficult to unravel because it was designed to alleviate a problem too costly for the government alone to fix. The health care law was passed to make medical care more accessible for low-income Americans and those with pre-existing conditions. This was to be done largely by socializing the costs and spreading the burden among a much broader segment of the healthy population. This is not unlike a pyramid scheme, where a broad base of people at the bottom get ripped so a few at the top can benefit.
Republicans have it within their power to use a process known as budget reconciliation to repeal Obamacare provisions that involve the budget, with a simple majority vote. For example, Republicans can repeal the taxes, fees and appropriations that fund the ACA. The individual and employer mandates, with associated penalties, can also be repealed. What Republicans cannot do is repeal the costly insurance regulations that drive up premiums for most people. That would require the help of perhaps a dozen skeptical Democrats.
Dismantling the ACA using budget reconciliation alone would get messy. Repealing both the sliding-scale exchange subsidies and the cost-sharing reductions for low-income enrollees would likely cause more than three-quarters of Obamacare enrollees to drop their plans. If Republicans scaled back the enhanced Medicaid matching rates to that of non-expansion beneficiaries, many states would withdraw from Medicaid expansion. Within a couple years following repeal (without replace) the individual market would implode under the weight of adverse selection, since only the sick would benefit despite paying sky high premiums.
President Trump issued an executive order on January 20 directing his administration to “waive, defer, grant exemptions from, or delay…” whenever possible to the “maximum extent of the law.” It is hard to know what this will really achieve. Many believe this move was intended to destabilize the ACA and hasten its demise without Republicans getting blamed, while others believe it was symbolic gesture with no other purpose.
The best known provisions of the ACA include an individual mandate, an employer mandate, subsidies to help moderate-income people afford coverage and Medicaid eligibility expanded to include working-poor single adults. Young adults could also stay on their parents’ employer plans until age 26. Other prominent provisions include changes in insurance regulations for coverage purchased in the individual market. For instance, medical underwriting was replaced with the regulations known as guaranteed issue and community rating. This meant individuals could not be charged more or turned away due to pre-existing conditions; premiums could only vary by geographic location and age. In addition, maternity coverage was mandated in the individual market and women’s premiums could not differ from men’s. The ACA also did away with limited benefit plans and plans that do not include an essential benefit package. In the process the ACA banned plans with annual and lifetime caps on benefits.
These provisions have a sinister purpose. They were designed to socialize medical care using backhanded regulations. Obamacare intentionally makes most people much worse off to benefit a few selected individuals. At its core the Affordable Care Act is an income redistribution scheme based on health status and wealth. The goal of the ACA is to force healthy (non-poor) individuals to shoulder most of the care for the least healthy 20 percent of the population (who consume 80 percent of medical care). The ACA is also designed to make taxpayers subsidize much of the care for those with modest incomes. Granted, actuaries will tell you all forms of insurance are designed to pool risk but the re-distributive intent of the ACA seems more deliberate. The provisions collectively have the effect of maximizing the transfer of wealth from younger, healthier enrollees to mostly older, sicker individuals.
Who are the biggest losers? Healthy people and women age 55 to 64. According to analysis by Mark Pauly at the University of Pennsylvania, women in this age group can expect to pay about 50 percent more for health insurance and care out-of-pocket than prior to Obamacare. These women get stuck with cross-subsidizing younger women of childbearing age and subsidizing late middle-age men who didn’t take care of themselves.
Of course, nobody really wins the health insurance lottery by getting sick. Unfortunately, premiums are too high because ACA proponents specifically wanted society to be especially generous with other peoples’ money. The process of repealing & replacing Obamacare is difficult because it involves deciding how much of your money should go towards your own medical needs; and how much should subsidize others whose health is more precarious than yours.