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Repealing Obamacare

A string of endless changes appear to be on the horizon for Obamacare in the upcoming months.

EDITOR’S NOTE: This is one of three articles by different staff writers covering the repeal of the Affordable Care Act.  The other two can be found here and here.

President-elect Trump has vowed to dismantle the Patient Protection and Affordable Care Act (“Obamacare”) as one of his first official acts after taking office.  He insisted that Congress repeal the Affordable Care Act and replace it instantaneously with another healthcare law.  “Obamacare has been a catastrophic event,” he stated in an interview.  “I feel that repeal and replace have to be together, for very simply, I think that the Democrats should want to fix Obamacare. They cannot live with it, and they have to go together,” he added.  The President-elect’s statements put the legislators in the difficult position of coming up with the replacement version of the law when the Affordable Care Act initially, took about two years to pass.

However, the Republicans are uneasy about repealing the law without a clear replacement framework.  Some Senate Republicans have pressed to delay the deadline for committees to produce repeal legislation until March, and several House Republicans are also demanding that the pace slow down. “In an ideal situation, we would repeal and replace Obamacare simultaneously, but we need to make sure that we have at least a detailed framework that tells the American people what direction we’re headed,” said Senator Susan Collins of Maine.

“Like the majority of Republican proposals, Price’s plan wants to give refundable tax credits to those who buy policies in the individual market.”

The person that will likely have a major impact on the Trump Administration’s effort to repeal Obamacare is Tom Price, Donald Trump’s choice as Secretary of the Department of Health and Human Services.  He is one of the few Republican lawmakers with a detailed plan on how to replace Obamacare.  His most recent bill, the “Empowering Patients First Act of 2015,” bears many resemblances to Trump’s vision for health care reform and to House Speaker Paul Ryan’s overhaul proposal.

Like the majority of Republican proposals, Price’s plan wants to give refundable tax credits to those who buy policies in the individual market.  Price lays out how much people would receive.  The credits would be adjusted by age, ranging from $1,200 for those age 18 to 35, to $3,000 for those age 50 and up. This provision would help enrollees who make too much money to receive Obamacare’s federal subsidies.

First, Price’s plan would change the amount of income-based subsidies enrollees may receive.  Middle class Americans — a single person earning more than $47,520, or a family of four with an income of at least $97,200 — have complained about the high cost of unsubsidized Obamacare premiums.  Under Obamacare, lower-income enrollees receive subsidies that can lower the cost of coverage to just under 10 percent of their annual income.  Obamacare’s subsidies are much more generous for those who qualify.  For example, if a twenty-five year old male earns $25,000 a year, he can receive an average of $1,920 in subsidies to pay for the benchmark Obamacare plan, which will cost an average of $3,624 in 2017, according to federal data.  However, under Price’s plan, he would only receive $1,200 to offset that price.

“President Trump stated that he would maintain some level of protection for low-income adults, but Price’s plan does not mention any substitute.”

Likewise, a family of four earning $60,000, would receive an average of $8,232 in Obamacare subsidies, to pay for a benchmark plan costing an average of $13,080.  That family would receive only $6,000 under Price’s plan, assuming there are two parents between the ages of 35 and 50, and two children under the age of 18.  People with even lower incomes — individuals with incomes below $29,700 or a family of four with an income below $60,750 — receive additional subsidies to lower their deductibles and co-pays under the Affordable Care Act.

Another way Price’s Plan proposes to change the Affordable Care Act is the elimination of Medicaid expansion that would accompany a repeal of Obamacare.  President Trump stated that he would maintain some level of protection for low-income adults, but Price’s plan does not mention any substitute.  Older Americans would also likely see their premiums rise under Price’s plan.  The Affordable Care Act currently restricts insurers from charging older enrollees more than three times what they charge the young.  Price’s plan eliminates that rule.  While Americans older than 50 would receive larger tax credits than younger folks, it would likely not cover the same share of the deductible.

The “Empowering Patients First” bill incentivizes and protects Health Savings Accounts (“HSA”).  Health Savings Accounts allow participants with high deductible health plans to make tax deductible contributions for current and future health care expenses.  Any savings not used can remain invested and grow tax-free.  One of the goals of HSAs is to entice more people to enroll in high-deductible plans, which are deemed to slow the growth of health care spending, since consumers must shell out more from their own pockets.

Price would provide a $1,000 one-time refundable tax credit for contributions and would increase the amount people could sock away in these accounts, up from the current $3,350 for individuals and $6,750 for families.  He would broaden eligibility, protect the accounts from bankruptcy proceedings and allow older Americans to transfer their required minimum distribution from their retirement accounts into their HSAs.  HSAs are typically used by wealthier Americans who have extra funds to put away.  They do not help those struggling to afford their premiums and out-of-pocket costs.

“The plans were similar to individual insurance policies, but often had waiting lists, higher premiums, and large deductibles.”

Similar to other Republican plans, Price’s plan would require carriers to insure Americans with pre-existing conditions as long as they are continuously covered.  Further, under the “Empowering Patients First” plan, enrollees will need to maintain coverage for at least 18 months to avoid any surcharges.  Those who do not meet that criteria can be charged up to 150 percent of the standard rate for two years.  Price would also use high risk pools to provide coverage for those with pre-existing conditions who could not get policies on the individual market. In addition to current funding, Price’s plan would provide $1 billion annually over three years. This is significantly less than Ryan’s plan, which calls for $25 billion in funding over 10 years.

Covering the majority of uninsured Americans with pre-existing conditions through a national high risk pool would cost an estimated $178 billion a year.  High risk pools were largely shut down after the Obamacare exchanges became operational in 2014. Prior to that, 35 states maintained high-risk pools for their sick residents.  The programs varied, but generally the state created a non-profit association to contract with an insurer to administer the pool.  The plans were similar to individual insurance policies, but often had waiting lists, higher premiums, and large deductibles.  These pools also lost a lot of money: roughly 50 percent of their operating costs had to be subsidized by the state.

The Republicans have signaled the proposal that lower-income folks would still be taken care of. “Let me be clear,” Representative Cathy McMorris Rodgers, the chairwoman of the House Republican Conference, told reporters, “No one who has coverage because of Obamacare today will lose that coverage.  We’re providing relief.  We aren’t going to pull the rug out from anyone.”

However, anyone earning between 138 percent and 400 percent of the federal poverty level, could lose the financial assistance they have become accustomed to  Obamacare.  It is important to point out that Trump’s proposals could change between now and his first 100 days in office.  Even members of Trump’s own party in Congress have been critical of his healthcare plan, so some degree of compromise may be in order.  But, it is pretty clear that Trump’s plan is headed down a markedly different path from where President Obama took healthcare over the past few years.

Olga Ivanushko, Staff Writer
About Olga Ivanushko, Staff Writer (13 Articles)
Olga Ivanushko is a third-year law student and serves as a Senior Staff Writer for the Campbell Law Observer. Olga is originally from Belarus, but has lived in Hollywood, Florida, then Raleigh, North Carolina for the past 13 years. She earned BA in Political Science from the University of North Carolina at Chapel Hill. Between undergrad and law school Olga worked as a paralegal at a plaintiffs’ medical malpractice and personal injury firm in Chapel Hill, North Carolina. After her first year in law school, Olga interned at the North Carolina Medical Board. Olga now interns with the Honorable John M. Tyson at the North Carolina Court of Appeals.