Over the years, Republicans have made numerous attempts on the life of the Affordable Care Act, some of which have been partially successful. Medicaid expansion was one instance where Republicans succeeded in removing the mandate of expansion, which ultimately resulted in the formation of a coverage gap in states that did not expand Medicaid. Other attempts, fortunately, were primarily unsuccessful. However, now with Republicans in full control of the U.S. Senate, a new repeal and replace attempt is brewing, and the GOP has another alternative to replace the law that has connected 16.4 million people to affordable health insurance.
With King v. Burwell, Obamacare might lose some potency without its trademark subsidies, and Republicans will choose this time to present some major changes as a part of its Repeal and Replace campaign. Let’s find out what the latest alternative is about.
1) End of Individual and Employer Mandate – With the repeal, Republicans want to end the Individual health insurance mandate and Employer mandate. With this, individuals would no longer be required to have health insurance and employers would no longer be required to offer coverage under the law.
2) Introduction of Consumer Protection in the System – With the replacement law, the concept of consumer protections under Obamacare will be retained. As per these protections, there will be a guaranteed renewability of their coverage, adults up to 26 years of age would be able to stay on their parent’s plan, and there will be no lifetime limits. Currently, Obamacare limits the cost ratio between younger and older consumers at 1:3, but the Republican alternative will increase this to 1:5. Although that will result in increased premiums for older people, younger people will have a reason to enter the insurance markets at lower health insurance premium.
3) A System of Default Enrollments will be Introduced – States will have the option of initiating default enrollments for people who are eligible for tax credits under the proposed law. This would ensure that uninsured will have a default enrollment without going through the cumbersome exchange process, but would not be mandated to have insurance because there will be no Individual Mandate.
4) State Managed Risk Pools for Uninsured – For people who decide to go uninsured, state run risk pools will take care of insurance coverage. These risk pools will be high risk, no certainty pools and people will have no assurance on coverage options and cost of coverage. The premise of this risk pool is an adequately funded program that will ensure coverage for the uninsured.
5) No More Non-Discrimination on the basis of Preexisting Conditions – A major aspect that could result in the undoing of this new potential replacement, preexisting health conditions will feature in insurance premiums again, and people could face high insurance premiums or no coverage if they do not meet certain requirements if they have a preexisting condition. If a person is continuously insured for at least 18 months, he can get affordable insurance even with preexisting conditions, but otherwise, people could be looking at high insurance premiums if they suffer from a chronic ailment.
6) Affordability through Balance in Risk Pools – Through inculcation of preexisting medical conditions back in the risk pools, Republicans want to have a stable risk pool where people with preexisting medical conditions will not jack up the prices for those in search of affordable coverage. By having a state-run uninsured pool, the Republican alternative further solidifies this mechanism of keeping insurance costs in check by having continuous coverage. With the proposed tax credits, covered in the next part of this post, consumers should be able to have health insurance in the ballpark of available credits. With this move, Republicans ensure continued affordable coverage in the absence of Obamacare.
These initial replacement aspects demonstrate that the Republicans are looking at balancing the risk pools by moving out the unhealthy people and bringing in healthier people. Although this looks good on paper, it is not entirely reassuring, especially considering the fact that state-run risk pools won’t be ready for the burden, and insurance costs are not just governed by a balance between young and old. In the next part, I will cover the proposed tax credits by Republicans and their potential in replacing Obamacare subsidies.