Obamacare Survives
ByNayyer Ali MD
After the unexpected triumph of Trump in November 2016, and the preservation of the GOP majorities in the House and Senate, it looked like the signature achievement of the Obama era, the Affordable Care Act, was set to be repealed and undone. The Republicans even spoke of repealing the ACA on day one of the Trump Presidency. But a funny thing happened on the path to repeal; when it finally came down to it, the GOP could not do it.
The ACA has been a wildly successful program. It added 20 million Americans to the insurance rolls, cutting the uninsured rate to the lowest level in history. If some recalcitrant red states had accepted the Medicaid expansion the coverage would have been even more complete. In addition to increasing the number of insured, it ended the ability of insurance companies to deny insurance to anyone based on pre-existing conditions, and it set a minimum standard of essential health benefits that all health insurance policies should provide. Before the ACA there were many policies with huge holes in their coverage, like not covering prescription medication, or outpatient labs and X-rays, or emergency room visits. It’s like buying a fire insurance policy that only covers for fires that start in the kitchen but not in the bedroom or garage.
For years the GOP has attacked the ACA on any basis they could find. The most common attack was that premiums and copayments in some policies were too high. This was a valid criticism, but the solution to that would be to increase the subsidies and reduce the out-of-pocket costs for patients.
However when the GOP got control of government in January they had no plan to replace the ACA with. They could repeal the law, but without a replacement it was clear that chaos would ensure in the individual insurance market, and millions of Americans who had gotten on expanded Medicaid coverage through the government, would be thrown off their insurance. For weeks Paul Ryan, Speaker of the House, promised a replacement. Trump himself had earlier said that the replacement for Obamacare would be wonderful, it would cost less, and it would cover everyone. But when the GOP rolled out their proposal, it was a farce. It turned out to be simply an 800 billion dollar tax cut for the rich paid for by taking away insurance from 24 million Americans.
This proposal had virtually no support from anyone. Liberals attacked Republican lawmakers at town hall meetings over the issue of repeal with no real replacement. Even major conservative think tanks and healthcare policy analysts could find nothing good about the proposal. Despite that Ryan and Trump tried to get it through the House. It already looked dead on arrival in the Senate, but even in the House it quickly ran into trouble.
The GOP controlled the House, but only if all its members voted the same way. If 21 voted against, they could not pass legislation. It turned out that there were well more than 21 votes against, coming from two different factions. A hard-right conservative faction (the Freedom Caucus) opposed the new proposal because it still provided modest subsidies for people to buy insurance, even though it was much less than the ACA. On the other side were moderate Republicans representing districts that Clinton won last year who were against the massive cutbacks in insurance leaving millions to fend for themselves. Any attempt by Ryan and Trump to make the deal more acceptable to one faction cost it with the other. In the end, they did not have the votes and the repeal bill was shelved. For now the ACA is the law, and it will become further entrenched as the years go by.
The ACA expanded coverage by doing three things. It expanded Medicaid to provide insurance for the working poor, who make up to 133% of the poverty line. It then allowed people making more than that to buy private insurance, but offered generous subsidies to make insurance affordable for the middle class. The subsidies don’t phase out for families until income goes above 100,000 dollars per year. To keep the insurance system working though, both healthy and sick people need to buy insurance. Fire insurance works because everyone has to buy it on property, not just those people whose house is already on fire. In health insurance, this was addressed by the mandate, requiring everyone to have insurance, or pay a tax penalty.
Trump now says his plan is to wait for Obamacare to “explode” on its own. Is the ACA in actual trouble? Not really. In most states that have been actively working to support the ACA and expand Medicaid as allowed by law, the ACA is working very well, such as California, New York, and Illinois. Premiums for insurance bought on the exchange cost about as much as the CBO predicted back in 2010 for 2017. For the first several years the premiums were underpriced, but after sharp jumps last year they are now in the predicted range. Overall, the ACA has also put in place cost control mechanisms that seem to be having an effect on overall health spending. The total spending on health care in the US is actually 200 billion dollars less per year in 2017 than the CBO predicted in 2010. In fact, total government spending including the cost of the ACA and Medicare and Medicaid, is less this year than was predicted back in 2010 for just the baseline spending without the ACA. While health costs rise every year, the ACA has bent the cost curve and slowed the rate of growth, which has huge implications for the long term fiscal health of the US.
Obama filled in one of the last missing pieces of the American social safety net. He did what Democratic Presidents since Truman have been trying to achieve without success. His legacy is now more secure, and the next time we have a Democratic President and Congress, the ACA could be further tweaked to be even more effective.
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