Contrasting the Affordable Care Act (Obamacare) with the Newly Passed Republican Replacement Measure

On March 6, 2017, the Republican Party unveiled a policy framework for reforming and restoring the Affordable Care Act, also known as Obamacare (Spitalnic, 2017). The Republican Party described the bill's position as a step toward fulfilling the Republican Party's pledge to Americans to dismantle and replace the Affordable Care Act with Trump's proposed health care legislation, also known as the American Health Care Act (AHCA) (Spitalnic, 2017). Although there are some inconsistencies between the American Health Care Act and Obamacare, most Republicans contend that they are insufficient and vow to bring further amendments to the new replacement bill. Under the Affordable Care Act, approximately eleven million Americans are covered by Medicaid in the country's 31 states that embraced it (Obama, 2017). Besides, an additional twelve million Americans buy private health insurance through the use of the government-sponsored markets that provide subsidized premiums, a situation which puts the rate of the uninsured at 9 percent, the lowest in American history (Obama, 2017). On the other hand, the unbiased Congressional Budget Office projects that the Republican replacement bill will have 24 million fewer Americans accessing health insurance than the Affordable Care Act by the year 2026 (Spitalnic, 2017). This paper compares and contrasts the Affordable Care Act (Obamacare) and the Republican Replacement Bill (American Health Care Act), which recently got passed in the U.S House of Representatives.

Similarities Between the Affordable Care Act and the Republican Replacement Bill

One of the similarities between the Affordable Care Act and the American Health Care Act is that they both cover pre-existing conditions. Under Obamacare, all the health insurance companies are required to provide coverage for pre-existing conditions, a provision which remains in the American Health Care Act (AHCA) (Obama, 2017). On the 4th of May 2017, Trump made a promise to make an amendment that would allow the government to spend $8 billion in funding high-risk pools (Spitalnic, 2017). Pools offer health coverage to Americans who have been locked out of the personal insurance market due to various pre-existing conditions, and their services get subsidized by state governments (Obama, 2017).

Besides, the AHCA will allocate about $115 billion towards the Patient and State Stability Fund under the amendment. Such allocations will allow the government to provide subsidized health coverage to the most expensive patients. The idea behind such a provision is to offer coverage to such people while keeping the premiums lower for the healthier patients by removing such sicker or expensive patients out of the insurance pool (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017).

Under the Affordable Care Act, Americans who use healthcare marketplaces and make less than $48,000 per year are entitled to subsidies to enable them to buy insurance (De La Torre, 2016). Similarly, under the Republican Replacement Bill, Americans would still get subsidies, which would benefit individuals who make less than $75,000 per year. Additionally, adult and college-aged young people will remain on their parents' plan until the age of 26 under both Obamacare and the American Health Care Act (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017).

Like Obamacare, the recently passed Republican Replacement Bill does not provide for lifetime cap (Spitalnic, 2017). Before the introduction of the Affordable Care Act, several health care plans set a lifetime limit, which was a maximum coverable amount of dollar in the plan. The Affordable Care Act (ACA) prohibited such limits, and the American Health Care Act also prohibits it (Obama, 2017). Additionally, both the ACA and the AHCA provide tax credits to individuals who buy insurance (Spitalnic, 2017). The ACA’s tax credits are based on an individual’s income level, while the Republican benefit plan bases mainly on family size and age (Spitalnic, 2017).

Differences Between the Affordable Care and the Republican Replacement Bill

Under the American Health Care Act, the expansion of the Medicaid will be phased out. Before the enactment of the Affordable Care Act, it was impossible or difficult for single low-income adults in several states to access health coverage through Medicaid (Obama, 2017). The Obamacare expanded the Medicaid program to provide coverage for adults, a situation which contributed significantly towards driving down the rate of uninsured individuals in the United States (Obama, 2017). Under the American Health Care Act, the Medicaid coverage expansion will only be valid until the year 2019, after which no newly eligible Americans will be added to Medicaid rolls (Spitalnic, 2017). Besides, since individuals on Medicaid coverage usually cycle in and out of the plan due to changes in their incomes and employment situations, there is likely to be a significant drop in Medicaid coverage under the AHCA (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017).

Additionally, the Republican Replacement bill would cut or reduce the taxes for the wealthy Americans (Obama, 2017). The Affordable Care Act included tax increases for the wealthy Americans so as to pay for its health coverage expansion. However, according to a projection by the Congressional Budget Office, the AHCA would get rid of such tax increments as it includes tax reductions that amount to about $883 billion, with a majority of the beneficiaries being the wealthy (Obama, 2017). The ACA was one of the best means of redistributing wealth from the rich to the poor; the American Health Care Act will reverse that (Obama, 2017).

Under the AHCA, Americans buying health insurance on their own will receive tax credits based on their family size and age as opposed to their income level (Spitalnic, 2017). The ACA's tax credits are primarily based on an individual's income level, as well as their geographical locations since the insurance premiums vary with regions (De La Torre, 2016). The Republican Replacement bill will primarily base its tax credits on age (Spitalnic, 2017). The tax credits will increase as the recipients get older, and eventually get phased out for families making above $150,00 or individuals earning more than $75,000 per year (Spitalnic, 2017).

One of the primary ways in which the ACA increased insurance coverage to Americans was the extension of the Medicaid program to include additional millions of low-income Americans (Obama, 2017). Before the enactment of the ACA, the Medicaid cover entitlement got restricted to particular groups of low-income Americans, including the disabled, the blind, and pregnant women (Obama, 2017). The enactment of the ACA opened up the Medicaid program to every American whose annual earnings are below 138 percent of the country's set poverty line (Obama, 2017). Under the American Health Care Act, the sign-ups for the Medicaid program will end on the 1st of January 2020, and further Medicaid program enrolments will freeze as states will no longer sign up new enrollees for the program (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017).

Additionally, the AHCA has other significant changes to the Medicaid program outside the expansion plan. The Republican Replacement Bill will convert the Medicaid program into ‘per capita cap’ system by allowing states to receive huge sums of money from the federal government for every enrollee (Spitalnic, 2017). Also, under the Republican bill, states will have the opportunity to receive a block grant, amount of money untethered from the number of individuals involved in the Medicaid program. Such an arrangement is different from the current funding of the Medicaid program (Spitalnic, 2017). Under the current ACA, the federal government has an unrestricted commitment to paying all the bills of a Medicaid enrollee, irrespective of the size of the bills (Kantarjian, 2016). Under the AHCA, the block grant will increase and eventually weaken the Medicaid coverage protections for both the parents and children (Obama, 2017).

As opposed to Obamacare, the American Health Care Act does not mandate that every American citizen will get health insurance coverage or pay a fee. The AHCA cancels the individual mandate, which was one of the least popular provisions of the Affordable Care Act (Spitalnic, 2017). Instead, the AHCA provides for a different way of punishing individuals make the decision to remain uninsured (Spitalnic, 2017). The AHCA requires Americans who fail to maintain a continuous health coverage to pay a heavy fine whenever they seek for reentry into the insurance market. For example, if employees go straight from insurance to their own policies, the insurer has to charge them a standard rate without taking into account the cost of their conditions (Obama, 2017). However, if such employees had coverage lapses longer than 63 days, the insurers could charge them a premium surcharge of 30 percent. They would then have to pay such a higher premium for a complete year before resuming to the standard rate (Obama, 2017).

Additionally, that is also the point where such individuals could face higher costs for being sicker patients. The people who enter into individual insurance market without existing health coverage will be evaluated by various health plans to determine their expected costs. As a result, the insurers may charge sicker patients higher annual premiums before they return to the regular rate (Obama, 2017). In other words, the AHCA encourages healthy individuals to buy coverage. However, there is a great concern that such a provision could end up discouraging healthy persons from buying insurance since they would get discouraged by the higher prices (Obama, 2017).

Currently, the Affordable Care Act restricts the amount of money that insurers can charge their oldest individual market enrollees (Pasek, Sood, & Krosnick, 2015). According to the ACA, insurers can only charge their oldest enrollees three times the amount charged on the youngest enrollees, which reduces the premiums for individuals in their 50s and 60s (Pasek, Sood, Krosnick, 2015). The people falling in such an age group faced extremely steep premiums on the individual insurance market. However, the American Health Care Act will get rid of such a regulation by allowing health insurers to place higher charges on their oldest enrollees of up to five times the charges placed on the youngest enrollees (Spitalnic, 2017). Such a change provided for in AHCA increases the overall number of covered individuals, but end up removing the older people from the insurance market as premiums rise (Spitalnic, 2017). According to Christine Eibner, a RAND Corporation’s economist, such a policy would reduce a 24-year-old’s premiums from $2,800 to about $2,100 and increase a 64-year-old’s premiums from the current $8,500 to about $10,600 (Spitalnic, 2017).

Additionally, while young Americans might have less expensive premiums and fewer enrollment restrictions under the AHCA, older American citizens could struggle to buy health insurance in such a market, since their costs would increase (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017). The old American citizens represent a group of people with the tendency of having more urgent health care attention, and they could be in worse situations without health care than the young American citizens (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017). That is contrary to the Affordable Care Act that did not only expand the coverage but expanded it to Americans who greatly require health care (Pasek, Sood, & Krosnick, 2015).

The Affordable Care Act requires health insurers to provide coverage for essential benefits, including emergency services, pregnancy, outpatient care, hospitalization, rehabilitation, as well as maternity and newborn care (De La Torre, 2016). Other essential benefits that the ACA requires insurers to cover include prescription drugs, substance abuse treatment and mental health, diagnostic and laboratory tests, wellness and preventive services, as well as pediatric care, including vision and dental services for children (De La Torre, 2016). Such benefits under the ACA are of great significance, especially to the women, since they allow for the coverage of birth control and various routine services at no charge in the form of preventive care (De La Torre, 2016). On the other hand, the recently passed Republican replacement bill repeals such essential benefits provided by the ACA at the federal level and returns such responsibilities to the state governments, where it was previously before the enactment of the ACA (Obama, 2017). The Republicans argue that they are not guaranteeing consumer protection, but that most consumers could find insurance plans with reduced premiums without federal requirements. For instance, an older married couple may not get interested in an insurance plan that offers maternity benefits (Spitalnic, 2017).

Also, under Obamacare, health insurers can charge their old enrollees no more than three times the charge placed on young adults as mentioned earlier (Kantarjian, 2016). The ACA, therefore, benefits the older adults who have a higher likelihood of developing illnesses and makes the coverage costly for young Americans, who are less prone to illnesses (Kantarjian, 2016). Besides, Obamacare tax credits that assist in paying premiums are dependent on the income and insurance cost in the local communities. The Affordable Care Act, therefore, provides a cost-sharing subsidy aimed at assisting low to moderate income Americans with out-of-pocket health expenses, thereby reducing deductibles from thousands of dollars to hundreds of dollars (Pasek, Sood, & Krosnick, 2015). On the other hand, the recently passed American Health Care Act allows insurers to charge their older enrollees up to five times the amount charged for young adults, and the tax credits are dependent on age (Spitalnic, 2017).

Under the Republican Replacement Bill, Americans aged above 60 years but still too young to access Medicare are entitled to receive $4,000, which is twice what an individual under 30 years old would receive. Still, various groups argue that the combination of less aid and higher premiums for people with moderate incomes translates to older adults’ age tax (Spitalnic, 2017). There is a great concern that the AHCA’s age-based tax credits might not be suitable for some parts of the United States that face challenges of high medical costs (Spitalnic, 2017). The American Health Care Act also repeals the cost-sharing subsidies provided for in the Affordable Care Act (Obama, 2017). However, the House Republicans admit that more work needs to be done so as to improve the benefits of older adults under the American Health Care Act (Spitalnic, 2017). In fact, House Republicans have taken legislative steps to free up more funds that the Senate can tap for such improvements. Additionally, the House Republicans have allocated a huge insurance market stability fund for state governments so as to ensure the provision of a cost-sharing subsidy if the States so decide (Spitalnic, 2017).

Under the President Obama's Affordable Care Act, both the federal and state governments share the cost of insuring the low-income Americans (Obama, 2017). The amount of money that the federal government allocates to every state varies depending on the level of medical care that Medicaid patients receive in each state (Obama, 2017). On the other hand, the Republican replacement bill provides for a block grant or a per capita cap that would replace the current system. Under the Republican Replacement Bill, every state would be entitled to a fixed amount of money annually, which would increase by a given percentage depending on the inflation rate (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017). Additionally, since the subsidy under the Affordable Care Act is tied to an individuals’ income levels and the insurance cost in their areas, low-income Americans are the most beneficiaries (Obama, 2017). On the other hand, under the Republican Replacement Bill, the subsidy amounts would be tied to an individual's age as opposed to income levels, a situation which would provide the least assistance to low-income Americans (Spitalnic, 2017).

With Obamacare, the subsidies get applied automatically to enrollees monthly insurance bills as opposed to having to wait for a discount (Kantarjian, 2016). However, under the American Health Care Act, such subsidies would not be dependent on the cost of insurance, and therefore individuals living in high-cost regions would not receive as much help as in the case with the ACA (Spitalnic, 2017). Additionally, under the Affordable Care Act, American citizens can access health insurance even when they are sick, a provision which put an end to the insurers' practice of denying coverage to individuals with pre-existing health conditions (Kantarjian, 2016). The Republican Replacement Bill eliminates the guaranteed coverage to people with pre-existing medical conditions, though not explicitly. The recently enacted American Health Care Act will allow states to waivers from various consumer protections (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017).

Under the Affordable Care Act, health cover providers in the United States have no authority to impose additional charges on sick consumers for coverage. The insurers cannot place lifetime or annual limits on coverage (De La Torre, 2016). On the other hand, under the American Health Care Act, states would have the authority to scale back benefits that insurers have to cover. That therefore allows the insurers to reintroduce lifetime or annual limits on certain coverages due to the manner in which the law is structured (Spitalnic, 2017). Besides Obamacare makes it mandatory for insurers to provide a basic set of benefits to consumers, including prescription drugs and maternity care, while the Republican replacement bill would allow insurers to impose additional charges on sick people, thereby making medical coverage unaffordable and inaccessible to some people (Obama, 2017).

Various Affordable Care Act marketplaces, such as the HealthCare.gov, allow individuals who do not receive health benefits at their workplaces to compare different plans. All the available plans in the marketplaces are required by the Act to provide a basic set of benefits, including mental health services, hospital care, as well as prescription drugs (Kantarjian, 2016). On the other hand, it is currently not clear how the marketplaces, under the American Health Care Act, would work since health insurers might decide to provide health plans that do not give the same set of benefits described under Obamacare (Spitalnic, 2017).

Additionally, the Republican replacement bill would impose new restrictions on medical plans relating to abortion coverage and would cancel funding for Planned Parenthood, thereby significantly affecting low-income women (Spitalnic, 2017). Under the Affordable Care Act, insurance companies have no authority to impose more charges on women than men for a similar health plan (De La Torre, 2016). However, under the Republican replacement bill, insurance companies may place more charges on women (Spitalnic, 2017).

Moreover, under Obamacare, Planned Parenthood gets federal funding for various medical services required by Medicaid patients, including family planning (Kantarjian, 2016). On the other hand, Medicaid program would no longer provide such benefits under the American Health Care Act. Such a situation would adversely impact a huge number of low-income women in the United States since about 80 percent of Planned Parenthood patients receive incomes that are either at or below 150 percent of the federal poverty level (Spitalnic, 2017). Besides, the Medicaid program, under the American Health Care Act, would not provide funding for any health care facility that offers abortion-related services, including Planned Parenthood (Obama, 2017).

The Republican replacement bill would get rid of most of the taxes provided for in the Affordable Care Act to subsidize insurance. The Republican Replacement Bill does not include any form of a new tax aimed at offsetting the loss of revenue (Ranji, Salganicoff, Sobel, & Rosenzweig, 2017). Under Obamacare, various medical device makers and insurance companies, which benefit from new customers, pay more taxes in the same way as taxpayers with annual incomes above $250,000 (De La Torre, 2016). However, under the American Health Care Act, such taxes are eliminated, and therefore both the insurance service providers and Medical device makers, as well as the wealthy Americans would experience significant tax reductions (Spitalnic, 2017).

Conclusion

In overall, the Republican’s replacement plan appears to benefit high-income and healthy individuals as opposed to low-income and sicker people as in the case with the Affordable Care Act. The replacement plan (American Health Care Act) would make a broad range of changes to what various health insurers can charge consumers who buy insurance in the individual market, as well as decide on what types of benefits their insurance plans have to cover. In general, such changes could be more beneficial to healthier and younger customers, who need cheaper and skimpier benefit packages, than for the older and sicker population who significantly rely on the benefits provided under the Affordable Care Act.



References

De La Torre, D. (2016). The Affordable Care Act: The Replacement for the Employer Sponsored Health Insurance Tax Exclusion. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.2645384

Kantarjian, H. (2016). The Affordable Care Act, or Obamacare, three years later: A reality-check. Cancer, 123(1), 25-28. http://dx.doi.org/10.1002/cncr.30384

Obama, B. (2017). Repealing the ACA without a Replacement — The Risks to American Health Care. The New England Journal Of Medicine, 376, 297-299. http://dx.doi.org/10.1056/NEJMp1616577

Pasek, J., Sood, G., & Krosnick, J. (2015). Misinformed About the Affordable Care Act? Leveraging Certainty to Assess the Prevalence of Misperceptions. Journal Of Communication, 65(4), 660-673. http://dx.doi.org/10.1111/jcom.12165

Ranji, U., Salganicoff, A., Sobel, L., & Rosenzweig, C. (2017). Ten Ways That the House American Health Care Act Could Affect Women. The Henry J. Kaiser Family Foundation. Retrieved from http://www.kff.org/womens-health-policy/issue-brief/ten-ways-that-the-house-american-health-care-act-could-affect-women/

Spitalnic, P. (2017). Estimated Financial Effect of the “American Health Care Act of 2017”. Centers for Medicare & Medicaid Services, 1-30. Retrieved from https://www.cms.gov/Research-Statistics-Data-and Systems/Research/ActuarialStudies/Downloads/AHCA20170613.pdf