Obamacare vs Trumpcare: Will Trump be Able to Repeal the ACA?

May 23, 2019

America. Land of the free, home of the brave—and the financially strapped.  Reports show that the U.S. has an overwhelming number of citizens filing for bankruptcy due to high medical costs.

And while health care seems to be at the forefront of most political debates, politicians have yet to take definitive actions to bring down these spiraling healthcare costs.  One of former President Obama’s landmark legacies was to overhaul healthcare law to make costs more equitable. But many people question the efficacy of Obamacare.  Trump is among the naysayers and is doing all in his power to derail Obama’s Affordable Care Act (ACA).

As the debate rages, people line up on either side.  Some love Obamacare, some hate it.  Why?  Let’s take a look at the fine details of opinions on both sides of the aisle. We’ll start by defining Trumpcare and Obamacare.  Then we’ll weigh the pros and cons of each and make a brief comparison to see which demographics benefit from the different plans and why. 

Obamacare Basics

The ACA is intended to provide bulk subsidization of a wide range of healthcare costs by both the government and insurance companies so that out of pocket costs and monthly premiums become affordable – hence the name. Obamacare has been praised for a lot of things — eliminating prejudice for those with preexisting conditions, extending the aging out year for dependents, and incorporating more inclusive plans. One of the main ideas behind the program is to ensure that a devastating diagnosis, like cancer, won’t financially cripple anyone. It offers broad coverage that extends to a lot of different conditions.

Pros of Obamacare

  • No discrimination against preexisting conditions. The ACA aims to bar insurers from treating those with previously diagnosed conditions unfairly.  This means they can’t deny coverage or charge excessive premiums. Without health insurance, a cancer diagnosis could cost hundreds of thousands—if not millions—of dollars (depending on the type of cancer and the treatment required). Few individuals can absorb these debts without emptying out their financial coffers or turning to charity or local funding options. 
  • Elimination of lifetime limits on healthcare costs. This means as long as you’re requesting enrollment, an insurer has the obligation to accept you, even if you’ve already run a high medical tab. Thus, even if you have millions of dollars in health expenses, you can’t be turned away. Many carriers used to have a $100,000 limit.
  • Kids can stay on their parent’s health insurance plan until they reach 26 years old. That’s up from age 18 or 21, depending on the state.
  • Thanks to more equitable distribution of costs, more Americans have been insured than at any other point in U.S. history.

Cons of Obamacare

  • High premiums. The Affordable Care Act isn’t so affordable. This is partly because Obamacare works by pooling sick and healthy people into the insurance market. Costs are shared so that no one group bears the entire burden. Despite high premiums, studies show that the average out-of-pocket costs have gone down – though by roughly the same amount as the increase in premiums.
    Obama insisted that once the markets settled, premiums would fall, but that doesn’t seem to be happening.  Some argue that Trump has tampered with the original design, keeping this hope from crystallizing.
  • Pay for benefits you might not need. Obamacare has 10 essential health benefits that insurance companies must cover, including mental health and substance abuse, maternity and newborn care, and rehabilitative care. You can see how frustrating it can be for a 27-year-old single man with no addiction or plans to have kids to have to pay for healthcare benefits that he does not need.
  • You can be fined if you don’t pay your premiums. The ACA is intended to cover year- round insurance, so missing payments without getting an exemption can get you a fat financial penalty.

Trumpcare Fundamentals

Trumpcare is just a moniker for the American Health Care Act. And to be clear, even though it was passed in Congress under Paul Ryan, it never became law because the Senate—even after several modifications—was unable to pass it into law. So what’s seen as Trumpcare right now is a series of executive actions aimed at reversing the bulk of the ACA—even though it’s still in place.

Bottom line? There’s what Trump considers the ideal MAGA (“Make America Great Again”) healthcare plan—which hasn’t been enacted— and then there’s what’s in effect right now, which is a combo of executive actions with the ACA.

Pros of Trumpcare

  • More choices with regards to healthcare plans, which means less government involvement. Trumpcare offers waivers to states so they can have autonomy over what to include in their plans.
  • Lower cost. Cheaper, less comprehensive plans mean lower premiums. Younger people appreciate this.
  • Valid from 2019, hardship exemptions can be claimed to avoid a tax penalty—even without proper documentation.

Cons of Trumpcare

  • Plans are less comprehensive. Some insurance companies now offer plans that are essentially junk plans.
  • Blocks federal funding for the expansion of Medicaid

Obamacare Vs. Trumpcare

  • Individual Mandate – the ACA requires all Americans to have healthcare or pay a fine, while the unpassed Trumpcare doesn’t. Trump has been able to bypass this by expanding the penalty exemptions, so the individual mandate is rendered ineffective. Note that the individual mandate is how Obamacare hoped to pay for healthcare.
  • Employer Mandate – under Obamacare, employers are required to provide healthcare for full time employees or pay a fine, while Trumpcare doesn’t require large businesses (mostly corporations) to do so.
  • Essential health benefits – all plans must include 10 essential health benefits under the ACA, while Trumpcare waived this requirement for states.
  • Medicaid – Obamacare expanded it to all states, while Trumpcare has frozen this initiative, with the intention of repealing it later on.
  • Cost sharing – older people are expected to pay five times the premium of younger adults under Trumpcare, but the maximum charge under Obamacare is three times.
  • Cost to the government – if Trumpcare is fully implemented, it would save the government more than $400 billion in a decade, but leave more than 20 million Americans uninsured. While Obamacare would increase the nation’s debt, but also increase the number of insured citizens by over 20 million.
  • Preexisting conditions – these are protected by both healthcare plans, though Trumpcare gives insurers more freedom to set higher prices.
  • High risk pool – this was eliminated by Obamacare in the form of shared responsibility payment, while Trumpcare set aside funds for high risk pools.

Which Healthcare Plan do Americans Prefer?

Polls conducted when the Trumpcare plan was initially released showed that Americans heavily favored the ACA, despite rising premiums. This is arguably why Trumpcare has failed to become the law of the land.

Something about insurers having more freedom to set prices, Medicaid being frozen, and the cancellation of the employer mandate for corporations must have rubbed people wrong. Because no matter how Trump tries to frame it, his plan can’t seem to get enough traction.  The bottom line is that it would benefit wealthy individuals and corporations, while leaving more than 22 million people without healthcare.

 

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Obamacare vs Trumpcare: Will Trump be Able to Repeal the ACA?

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