Alternatives to the Affordable Care Act

Immediately after being sworn in as the 45th President of the United States, President Donald Trump signed his first executive order to begin dismantling the Patient Protection and Affordable Care Act (ACA), colloquially labeled Obamacare. While the order does not officially remove any of the ACA’s provisions, it is a powerful agenda-setting statement, affirming the President’s commitment to repealing and replacing one of Obama’s key domestic legacies.

Trump’s executive order upholds the ACA but calls federal agencies such as the Department of Health and Human Services to interpret Obamacare’s stipulations as loosely as possible. Agencies are to “waive, defer, grant exemptions from or delay implementation of any [ACA] provision or requirement,” according to the order.

According to a 2015 Gallup poll, Obama earned an 80 percent approval rating among members of his own party compared to a 14 percent approval rating among Republicans. Similarly, the ACA was supported by most Democrat congressmen and women; yet, the piece of legislation failed to receive a single Republican vote. Today, Republicans call Obamacare a failure and claim to be ready to replace the act with a superior alternative. Though the Republican’s plan has yet to be clearly articulated, based on their ongoing complaints of the legislation, several themes and possible policy routes have emerged.

In an attempt to implement universal insurance coverage, the Democrat’s plan was three-fold: regulate, mandate, subsidize. The ACA regulates insurance companies’ right to deny coverage to individuals with preexisting conditions, mandates that all individuals purchase insurance or incur a penalty and implements subsidies for these required insurance plans for those who can’t afford to pay. Many Republicans protest that the individual mandate should be repealed because it is an example of a big, intrusive federal government. Proponents of the ACA argue that without the requirement to purchase insurance, adverse selection prevails. This means that individuals with preexisting conditions will be more likely to purchase insurance while healthy individuals will be less likely to purchase a product they regard unnecessary. Subsequently, insurance companies raise premiums to cover their costs since more sick people are taking money out of the insurance pool than healthy people are contributing. Barring discrimination based on preexisting ailments, which conservatives largely support, becomes less relevant when these same individuals have to pay more for their insurance service.

Republicans also object to the federal subsidies for the ACA that largely fall on individuals from top income brackets. Instead of sending taxes to the overbearing federal government, there are conjectures that an Obamacare replacement will include a conversion of Medicaid into block grants, giving more autonomy to individuals and states to provide medical services. For instance, repealing the ACA would result in an average tax cut of 32,820 dollars for the top one percent of Americans. Republicans such as Tennessee State Representative Geoff Duncan plan to supplement these tax breaks with tax credits for what he deems the “four big C’s”—corporations, churches, charities and citizens—when they make donations to qualified rural hospitals. As for Medicaid reform, the ACA expands Medicaid funds that states can choose to accept or deny. Republicans claim that allocating identical fixed sums of money to each state will make states less dependent on the federal government and more able to serve the people who are closest to them. Block grants would make states more flexible and capable of creating “innovative Medicaid programs that will better serve their low-income citizens,” says Trump. However, Democrats decry rolling back ACA’s expansion of Medicaid funds and any transition away from Medicaid as an open-ended entitlement. Block grants would not require states to spend money on vulnerable populations and would force states to either find alternate sources of financing or cut medical services for those most in need.

However, until recent polls most Americans opposed the ACA. CNN’s new poll this month shows that only 22 percent of those polled saw their lives improved because of the ACA. A mere 14 percent of respondents declared health care as the most important affair facing the U.S. Yet, the ACA has helped insure 20 million Americans, and the nonpartisan Congressional Budget Office estimates that an Obamacare overhaul could cause 18 million of these Americans to lose their insurance in 2017 alone.

Any substantive changes to the ACA will require congressional action. However, Trump’s first executive order has already spurred uncertainty in the insurance market in which federal agencies, states, average citizens and insurance providers now must operate.

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