Updated July 31, 2017
5 Ways Obamacare Has Failed – How Trumpcare Can Fix These Problems
Ever since the Affordable Care Act (ACA or Obamacare) was signed into law on March 23, 2010, it’s been a polarizing law that encouraged both considerable praise and searing criticism. Republicans have launched several campaigns to repeal and replace Obamacare since it became law, but they have been largely unsuccessful in their quest to overturn the law or even garner bipartisan support for their efforts. In light of recent events, in which the Senate narrowly voted against a “skinny repeal” bill introduced by GOP leadership late on July 27, it seems prudent to mention a few of the significant failures of Obamacare – and how to address them without throwing the whole thing out the window.
A more sensible approach to healthcare reform might be to determine the ways in which Obamacare is failing and then offer constructive solutions to make it better with bipartisan input. Here are five ways that the healthcare law hasn’t worked and what we could do about them.
Problem: Too Little Consumer Awareness Of Health Insurance Options & How To Enroll
Solution: Educate Consumers With Facts – Strip Away Politics Entirely
When Obamacare was first introduced, opposition party members created so much confusion about the law that average Americans were uninformed as to how Obamacare could help them. When the initial computer system created to handle Obamacare registrations failed miserably in the first few months, many people gave up on Obamacare and claimed that it was failed from the start.
The Obama administration failed miserably in educating the public on how Obamacare allows people to choose their own coverage and create their own healthcare plan. This lack of education hurt enrollment for several critical years, eventually affecting the law’s chances of getting the enrollment numbers it needed to be sustainable.
Lawmakers need to create a bipartisan effort to educate the public on the benefits of Obamacare and what the ACA really offers. The key to helping Obamacare reach all of its goals is healthy enrollment numbers. But from year to year, many people simply allow their policies to automatically renew instead of checking out their options. A concentrated effort to educate the population on how to use Obamacare to their advantage could solve this lack of education problem. Knowledge, after all, is power.
And by “education,” we don’t mean propaganda, which is another way that proponents of the ACA failed the nation as a whole. Promotion is the key to getting the word out, but you need more than advertisements if you want people to sign up. Instead of ignoring obvious flaws in the system – like low penalties for not signing up and extremely high-deductible policies – the government should acknowledge the ACA’s shortcomings, work on fixing them and educate the public on how it plans to address their concerns.
Problem: The Middle-Class Isn’t Interested Enough In Obamacare
Solution: Attract Middle-Class Individuals and Families With Cost Efficient Plans
Even among middle-class Americans who understand Obamacare, there is a lack of interest in participating. High premiums and high deductibles are making many young, single Americans choose the individual mandate tax penalty over paying for insurance. Because of the high cost of premiums for middle-class Americans who do not qualify for tax subsidies to help with premium costs, enrollment for healthy Americans is not where it needs to be.
During her campaign for president, Hillary Clinton said she would recommend health premium subsidies for the working class to encourage more healthy Americans to buy into Obamacare. The idea of more subsidies turns the stomachs of many Republicans, but it would be a short-term solution. Obamacare is set up to lower premiums and deductibles with higher enrollment numbers. If money-based incentives cause millions of healthy Americans to enroll in the program, then costs would go down and the subsidies could be significantly reduced or even eliminated, once the system stabilizes.
Problem: The Tax Penalty Is Not Enough
Solution: Find More Effective Incentives
Americans who don’t have qualifying health insurance for a calendar year must pay a penalty on their annual income tax filing. This penalty comes from the individual mandate, and it was designed to encourage healthy people to invest in health insurance to avoid paying the fine. Where Obamacare failed in this respect is that the fine is simply too small.
The average individual insurance premium under Obamacare in 2016 was $321 per month, per insured. In 2016, the individual mandate tax penalty per individual was $695 or 2.5 percent of your annual taxable income, whichever was higher. There is a cap on that percentage. No individual can pay more than the average cost of a Bronze level plan’s premiums for the year.
Let’s say that you make $50,000 a year as a single person. At 2.5 percent of your taxable income, that puts your penalty fee for not having health insurance at just over $991 for the year. Now, compare that against the cost of an average insurance premium ($321 x 12 months = $3,825), and you can see why so many people, especially younger people who don’t think they need health insurance in the first place, opted to accept the penalty instead. Never mind the argument in favor of getting health insurance. For many people, it comes down to dollars and cents.
If Obamacare is going to impose tax penalties for not having health insurance, then they need to be more severe or more creative. The Senate healthcare proposal suggested imposing a six-month waiting period on people who let their policies lapse. Whether that’s a good idea or not isn’t clear, but at least it’s an effort to ensure that people are motivated to sign up and keep their coverage. Without strong penalties or creative enticements, there’s no incentive for healthy people to sign up before they get sick.
Problem: Restrictions In Place Preventing Or Inhibiting HEalth Insurance Innovation
Solution: Open Up Restrictions On States – Allow For Consumer Focused Deregulation
In 2016, the Obamacare health insurance marketplaces saw 12 out of 23 health insurance cooperatives disband and premiums skyrocket out of control. With participation in Obamacare waning, the deductibles for each policy also went way up in almost every marketplace. Obamacare also left all of the regulations regarding premiums and deductibles to each individual state. When it came right down to it, the insurance companies told states that either premiums would go up, or the insurance companies would pull out of the programs.
Obamacare has mechanisms in place to help compensate insurance companies for losses associated with participating in the online marketplaces. The problem is that there are no regulations on how much profit an insurance company can make, so the insurance companies can determine that the marketplaces are not profitable at any rate and pull out. To fix this, federal and state governments would need to reassess their relationships with the health insurance industry and its lobbyists. As one can imagine, making this type of deep-seated change would be next to impossible. But it’s worth a discussion given the fact that in some areas, people will have zero options for health insurance on an ACA exchange in 2018.
Problem: No One Is Using HSA’s Properly
Solution: Make HSA’s Easier To Use & Less Costly
One of the elements of the GOP health plan is to open up health savings accounts (HSAs) to allow Americans to save more tax-free money to pay for their health costs. One of the biggest failings of Obamacare was the lack of attention it paid to HSAs and how HSAs could reduce the overall burden of healthcare costs to every American. Generally, HSAs are seen as only benefiting those with the means to put money away in the first place. Americans are notoriously bad at saving money, but not always for lack of effort.
When it comes to altering Obamacare to make it more efficient for Americans, the GOP has the right idea. One Republican proposal almost doubles the amount of money Americans can put into HSAs, and it opens up new tax advantages for every American. It’s unclear why the Obama administration neglected to bolster HSAs while it was addressing healthcare reform, but allowing Americans more access to tax-advantaged HSAs is one sure way to fix some of what ails Obamacare. Another proposal suggests letting people use health savings accounts to pay for premiums and allowing families to share the account. These features might encourage more people to use them, thus driving down costs nationwide because unexpected medical care wouldn’t be such a catastrophic expense.
Obamacare is not perfect, but it has opened up health coverage to millions of the working poor who could not afford it before. Despite the good it tried to do, the Affordable Care Act still has many flaws, and it’s failed in several significant ways that drive up costs for a lot of people. However, instead of trying to repeal Obamacare by exploiting its failures, some experts think that it would make more sense to fix what is wrong with Obamacare and give the law the boost it needs to succeed.
Six Problems With The Repeal & Delay Of Obamacare
The House of Representatives passed a replacement for the Affordable Care Act (ACA), sending their bill, the American Health Care Act (AHCA), to the Senate for approval. Republican Senate members, behind closed doors, edited and amended the House bill, releasing their version in late June and calling it the Better Care Reconciliation Act of 2017. The bill is not only unpopular with Democrats, but some Republicans also say they will not vote for the measure in its present form.
On June 30, President Donald Trump reversed previous statements regarding the ACA in a tweet that suggested that if Republican Senators could not pass what they are currently working on, they should immediately “repeal, and then replace at a later date.” Throughout the campaign, several Republicans pushed for the repeal of the ACA and a delay in replacing it with something else. However, President Trump, days after winning the election, continued to claim that the plan was to repeal and replace the law concurrently. Experts say that repealing and delaying could lead to major problems with healthcare in the United States. Here are six problems with a repeal-and-delay approach.
Disaster in the Insurance Market
Insurance companies are already concerned about the uncertainty in the market. Republicans cannot agree on the best method for replacing the ACA, and Democrats refuse to get behind any plan that reduces the number of people who have obtained coverage since the passage of the ACA. Citing financial losses and uncertainty over the 2018 individual market, several key insurance companies have announced that they will leave the Obamacare exchanges.
In some states, people have just one option for insurance in the marketplace, limiting their coverage and premium options. For about 40 counties across the U.S., residents will have zero on-exchange options.
Analysts say that if the ACA is repealed without a replacement plan in place, the insurance market will completely collapse. Insurance companies will consider the risks too large due to political turmoil. Republicans who prefer repeal and delay say that the insurance market will remain the same while Congress works out the details, but insurance experts say that this thinking is naïve because the exchange markets will have been “ramped up” so that continuing will make no sense.
Significant Loss of Coverage
The Congressional Budget Office reports that the current version of the Republican plan would leave 22 million more people without health insurance by 2026 compared to the ACA. If the ACA was repealed with no replacement, that number could rise to 32 million. Even more troubling, 18 million people would be left with no insurance immediately if the ACA was repealed without a replacement plan. Republican lawmakers, especially moderate ones, are concerned by the loss of coverage for 22 million people, so it is unlikely that they will support eliminating coverage for an additional 10 million people over the next seven years.
Significantly Higher Premiums
If the ACA is repealed with no replacement in place, experts claim that premiums would rise by 25 percent the first year and would nearly double by 2026. The concern is that if the individual mandate that requires all Americans to have health insurance or face an IRS penalty is eliminated, the only people buying health insurance would be people with pre-existing conditions or older Americans who haven’t reached Medicare eligibility yet. When the individual mandate was implemented, it was believed that with more healthy people purchasing health insurance, premiums would be lower as they would not need to use health insurance as often as those who were already sick. The premiums paid by healthy people would cover higher claims for the elderly and sick.
Unfortunately, not as many healthy people purchased insurance as predicted, which led premiums to rise higher than expected. Republicans have long wanted to eliminate the individual mandate, saying that Americans should not be forced to pay for health insurance they did not want to purchase.
Elimination of Medicaid Expansion
A major problem with repealing the ACA with no replacement plan is that it would eliminate the Medicaid expansion created under the law. It would also eliminate subsidies to purchase private insurance. This could leave millions of people uninsured as they will be unable to afford even the most basic coverage offered by insurance companies. Many of those who receive coverage under Medicaid are children, the disabled and pregnant women. Eliminating the expansion without offering something in its place could force a significant portion of current Medicaid recipients out of the program.
Loss of Protections for Pre-Existing Conditions
Prior to the passage of the ACA, 13 percent of people who applied for health insurance in the individual market were rejected due to pre-existing conditions and 29 percent of people between 60 and 64 were rejected. The ACA made it illegal for insurance companies to deny coverage to anyone due to a pre-existing condition. People with medical problems also can’t be charged a higher premium because of their medical history. If the ACA is repealed completely, those protections would also be eliminated, leading, even more, people to lose coverage or be required to pay unaffordable monthly premiums.
Job Losses and Increase in Bankruptcy
The Milken Institute School of Public Health at George Washington University and the Commonwealth Fund predict that as many as 3 million jobs may be lost by 2021 if the ACA is repealed. At least 1 million of those jobs will be in the healthcare field while others would be related to loss of insurance that leads to less disposable income.
The Urban Institute estimated that there would be $1.1 billion in uncompensated care, which would mean that consumers who incurred those costs would be responsible for the payments rather than health insurance companies. This could lead those consumers to seek bankruptcy protection to get out from under medical expenses they simply cannot afford. A 2009 study found that over 62 percent of all bankruptcies in 2009 had a medical cause. There have been indications that the ACA may have reduced that number, but it’s difficult to determine how much the law has helped in that respect.
Although there are other issues with repeal and delay, including the fact that many healthy adults will choose to go without insurance after the mandate is eliminated, leaving them vulnerable to catastrophic injury or illness without protection, these are some of the most important issues that should be considered before eliminating the ACA with no replacement in place.
Could “Repeal and Delay” Actually Work? Here Are Six Reasons Why It Might
The passage of the American Health Care Act (AHCA) by the House of Representatives was met with criticism by most consumers, Republicans and Democrats alike, and the Senate, including Republicans who felt that the bill left too many people without coverage. As a result, the Senate amended and edited the bill, releasing their version in late June called the Better Care Reconciliation Act of 2017.
Unfortunately, the Congressional Budget Office reported that the Senate bill would leave even more Americans without coverage, leading members of the Senate in both parties vowing to vote against the bill in its present form. As a result, President Donald Trump took to social media, suggesting in a tweet that the Senate should simply repeal the Affordable Care Act (ACA), passed in 2010 under the Obama administration, and delay replacing it until a viable replacement can be created.
In a previous post, we highlighted six reasons why a “repeal and delay” approach to healthcare reform could spell disaster for the individual insurance market. Although many experts believe that repealing the ACA without putting anything in its place could be devastating to the American people, it is possible for the process to work. Here are six ways that repeal and delay could be successful.
Fulfilling Campaign Promises
Republicans have been promising to address the ACA since its passage in 2010. The recent struggle to get a replacement passed in both the House and the Senate indicates that even the Republican party is not in agreement with how healthcare in the United States should operate. By repealing the ACA and delaying implementation of a new program, Republicans can fulfill campaign promises, showing Americans who voted for them that they intend to improve the law. Although this benefits Congress more than the American people, it may improve the view some people have of politicians, who seem to make promises they fail to keep once elected.
Ability to Combine Multiple Plans
Democrats often say that Republicans have had eight years to create a better plan and that the current disagreement among their own party indicates that they have not taken the time to do so. The fact is that there are at least seven different plans that have been floating around Washington almost since the ACA was passed. Many of those plans are broad outlines with no specifics since it’s difficult to create a specific plan without knowing what will remain of an existing plan. By repealing the ACA completely and taking the time to combine plans, which include House Speaker Paul Ryan’s “Better Way” proposal, lawmakers could keep the best of each plan and merge ideas to create a permanent solution to healthcare reform.
As an added benefit, delaying replacement could give Republican lawmakers more incentive to work with their colleagues on the left. The Affordable Care Act was passed without bipartisan support, and it appears that GOP leadership is taking the same approach to reform this time as Democrats did in 2010. If both parties could find some common ground, healthcare reform might be more effective. Giving lawmakers more time to get together on this could result in a better, more universally supported proposal.
Reinstating Parts of the ACA
There are parts of the ACA that most Republicans agree were beneficial. One major benefit was coverage for individuals with pre-existing conditions. Almost everyone agrees that this coverage is essential and that it should continue under any new plan created. Even if the ACA is repealed, lawmakers can craft a new law that keeps this type of coverage intact so that those who have health issues already can still get coverage.
One of the key components to making sure that repeal and delay works is that no one loses coverage during the transition period. Some experts believe it could take up to three years for a new plan to be created, and Republicans want to be sure that no one loses coverage during that timeframe.
Lawmakers who are supporting repeal and delay say that they would include a transition period where those who obtained coverage under the ACA would retain that coverage until a new plan was in place. As long as their coverage does not lapse, consumers would continue to be covered under the same policies available under the ACA. Tax credits would remain the same and individuals could still shop for coverage in the marketplace.
Addressing Crumbling Aspects of Obamacare
The Affordable Care Act was signed into law in 2010 and implemented fully by October 2013. Since then, millions of Americans who lived without health insurance have gained access to affordable coverage through new options under the law. If you’re still unsure about how the ACA benefits you as a consumer and citizen, then you’ve come to the right place. We’ve compiled a summary of the Affordable Care Act, so that you can see how the new law impacts your life.
While Many Have Been Focused On The Possible Repeal of The Pre-Existing Conditions Clause, It’s The Ten Essential Health Benefits That Could Prove To Be Most Critical For The Average American Family.
10 Essential Health Benefits Under Obamacare
One of the most important provisions of the Affordable Care Act is the requirement that all health insurance plans created after March 23, 2010, offer 10 essential benefits, regardless of the coverage level or plan tier. Whether you buy a bronze plan or platinum plan, you’re guaranteed to have these 10 aspects of healthcare covered by your insurer. The 10 essential benefits are:
- Emergency services
- Hospitalization and surgery
- Laboratory testing
- Maternity care
- Mental health counseling
- Outpatient or ambulatory services
- Pediatric care
- Prescription drugs
- Preventive care and services
- Rehabilitative care and equipment
Access to preventive care not only allows people to afford routine checkups, but it also means that more people can avoid costly and serious medical conditions down the road. Plus, getting routine screenings for certain cancers can literally save lives. State and federal marketplaces offer only ACA-compliant plans, so you won’t need to worry about whether your new plan offers these features. If you sign up for an employer-sponsored plan, check to make sure it’s a compliant plan, since some companies still offer grandfathered plans under the old guidelines.
Note, “coverage” doesn’t necessarily mean “without cost.” You may still pay coinsurance or copayments when you receive certain services, like lab testing. Your insurance company has to cover these services, which means that the company will cover the bulk of the retail cost. However, you may still be charged a fee, depending on your plan.