January 27, 2017
Repealing Affordable Care
The signature achievement of the Obama Presidency was the passage of the Affordable Care Act (ACA) in early 2010, also known as “Obamacare”. The ACA was an expansion of health insurance to the tens of millions that went without insurance in the old system.
This has been a longstanding goal of Democrats going back to Harry Truman in the 1940’s. Republicans have blocked meaningful expansion of health insurance for decades, most notably when they knocked down President Clinton’s attempt to expand coverage in 1993.
The ACA became law because the Democrats had 60 senators in 2009, allowing them to overcome a GOP filibuster that otherwise allowed the minority party to block legislation with just 41 committed senators. Ever since then the Republicans have been calling for the repeal of Obamacare, and declaring it a disaster that harms the American people.
In real life, the ACA has reduced the number of uninsured from 44 million to 27 million. Of those, about 12 million are eligible for either Medicaid or subsidized private insurance, but have not bothered to sign up. Of the remaining 15 million, about 10 million are undocumented immigrants, which the ACA does not help, and about 3 million are in Republican states that refused to expand Medicaid to cover the working poor. This was purely an act of spite against Obama, as the Federal government was paying for 90% of the cost of Medicaid expansion.
While most industrial democracies have some form of national health care that covers all residents, the US has a patchwork quilt of coverage. The bulk of the population gets covered through employers, who provide insurance for their workers and dependents. They are not required to do so by law, but almost all large and medium sized companies provide insurance for full-time workers. For the retired and elderly, the US covers them through the Medicare program. This is paid through a tax on income, with the bargain that current workers will be covered by the program when they retire someday, or become disabled. For the poor, Medicaid is available, but the Medicaid program is Federal-state partnership, and the generosity of Medicaid varies greatly between the states. Medicaid also covers all pregnant women without private insurance, and the SCHIPS program provides Medicaid coverage for children without private insurance.
This patchwork covered 85% of the population, but it still left tens of millions without insurance. To cover them, the ACA did two things. First, it expanded Medicaid to cover all the poor, including those who were working and making an income up to 133% of the poverty line. Most of the working poor had low paying jobs that did not provide health insurance, so this expansion closed that gap.
Second, the ACA required insurance companies to sell policies to all, without discriminating on the basis of pre-existing illnesses. Before, insurance companies would just refuse to sell policies to anyone with significant chronic illnesses, who could be predicted to result in high health care costs. But to force the insurers to cover everyone, Obama needed everyone to buy insurance. Otherwise, people would wait till they got sick, and then buy insurance. This would make as much sense as being able to buy fire insurance on your home after it has caught fire. Insurance only works if a large pool of well people all buy into it, providing the funds that allow the sick to be covered.
There was one last problem to also fix. People of moderate means would still find health insurance too expensive to buy. To make it possible for them to get insured, there would have to be subsidies for middle-class citizens buying insurance. This is what happens on the ACA “exchanges”. Families with incomes up to 100,000 dollars can get help with the cost of their policies.
The Republicans have wanted to repeal Obamacare since the day it was passed. But now it is a fully functioning law. The Congressional Budget Office estimated that a repeal of Obamacare would result in 18 million losing insurance in the first year alone, and a total of 26 million losing insurance by 2024. This would inflict severe hardship on millions of Americans.
The Republicans are now in a confused situation. They have criticized Obamacare for years, but now they must deal with the reality of what they will do in its place. They cannot just turn the clock back to 2009. Few Americans think insurance companies have the right to cherry-pick who they will insure. And there will be many stories of illness and bankruptcy that will be thrown at the GOP feet if they repeal the law. The answer for the GOP is to “replace” Obamacare with something else that will keep everyone insured. But could that possibly be? The GOP has never put forward any concrete plan that creates the kind of coverage the ACA did. And from the sidelines, President-Elect Trump states that “everyone will be covered” under the replacement. Will Trump and the Congressional Republicans even agree on a replacement strategy?
The ACA expanded coverage to millions. Among those are many poor Whites that live in Red states and voted for Republicans and for Trump. But they don’t want to lose their health insurance. It may turn out that repealing and replacing Obamacare will be beyond the capacity of the Republicans.
