One of the signature legislation under President Obama is
the Affordable Health Care Act (ACA) or widely known as Obamacare. If you have
not read my article explaining Obamacare yet, I would suggest you follow the
link here to get some background information http://odecon-1.blogspot.com/2014/12/the-rise-of-obamacare.html.
Just do it, will you?
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Let’s be honest, Obamacare is not perfect. No social policy,
especially of this magnitude and profound effect to the society, would be
perfect in any possible way. However, one of the proud thing that Obamacare has
achieved that it helps expand the health insurance coverage to an additional 20
million Americans who were not insured before the bill was passed. That is a
lot of people getting insured which means it has helped save many lives and
prevented many families from going bankrupt. Let’s face it: healthcare is
America is very expensive. Another benefit of Obamacare is that it prevents
insurer from rejection health insurance coverage based on pre-existing
condition (a medical condition that you have before you get health insurance
coverage). Additionally, young adults can stay under their parents’ health
insurance until they are 26. ACA also provides subsidy if a person over the age
of 26 do not receive health insurance from their employer and cannot afford to
buy health insurance.
Obamacare seems like a pretty sweet deal, but it also comes
with a cost. You see, one of the problems caused by Obamacare is the rise in
insurance premium. As more sick people getting health insurance coverage and
the healthy ones are reluctant to buy the health insurance (some would choose
to pay penalty), insurance companies have to increase the insurance premium to
cover for the medical expense, operation expense and to make profit. Let’s take
a look the rise in health insurance premium in some of the states in the U.S.
Insurance premium in Arizona has risen by 116 percent in a year. (http://www.washingtontimes.com/news/2016/oct/28/key-facts-about-rising-arizona-health-insurance-pr/).
Another problem is that some insurers choose to leave their operation in some
counties in some states in the U.S. For example, from Paul Ryan’s presentation,
we can that insurance options are disappearing fast because insurers are
leaving some counties behind. An increasing number of counties in the U.S. only
has one insurer.
The Republicans have been wanting to repeal Obamacare for
years now. There has not been a better time to get rid of this controversial
bill, since the Republicans are controlling the White House, House of
Representatives and Senate. But the problem is what kind of healthcare plan are
they going to replace Obamacare with? After months of hearing the talk of
repealing and replacing Obamacare, now we can learn about the Republicans’
plan. Paul Ryan proposes a new healthcare bill and it is called American Health
Care Act. Here is the summary that I can briefly discuss. I don’t claim to be
an expert, as I have to admit: some parts of the new bill is very confusing and
need further research to have a better understanding. But I’ll try my best to
explain it.
What remains from Obamacare?
Okay, we’ve talked about the problems of Obamacare and here
are the solutions that the Republicans believe will fix it. But let’s first
start with which main features of Obamacare are still in the AHCA. First,
children are allowed stay under their parents’ health insurance until they are
26. Second, insurance companies will not be able to reject coverage for people
with pre-existing conditions. Okay, so Republicans do agree with some of the
benefits of Obamacare.
What is new?
Now let’s discuss what is new.
No Individual Mandate
The controversial individual mandate (you need to buy health
insurance or pay a penalty) is gone. Many Republicans hate Obamacare because of
this individual mandate. They think that it’s the government restricting
freedom of choice and telling people what to do. From our article on Obamacare
(did you follow the link above?), there is good reason for making people buy
health insurance. The health insurance system needs those healthy individuals
to also buy health insurance which is a way to pay for the unhealthy
individuals. The whole insurance market system will collapse if only unhealthy
people buy the health coverage.
Risk Pool
As for those with pre-existing condition, AHCA proposes a
model where those with pre-existing conditions will be grouped into one risk
pool. The insurance premium (the money you pay to get health insurance
coverage) for this pool must be very high, since they have a higher chance of
getting sick and requiring medical attention. According to AHCA, this risk pool
will receive support from the state budget with the support from the federal
government to subsidize this risk pool. AHCA also proposes that states should
have a re-insurance program for those with pre-existing conditions. Those who
benefit from this proposal is the healthy one, because as unhealthy individuals
are removed from the healthy pool, the insurance premium for this low-risk
group should stabilize or even decrease.
Medicaid, Tax Credit and Health Saving Account
As for the Medicaid (a social program to support poor people
and disabled people), the federal government will send per capita block grant
to the states which Paul Ryan believes is a way to give back power to the
states. The poor who can’t afford health insurance may see a huge drop in their
health subsidy. Instead, there will also be a tax credit for those who do not
receive health insurance from their employers. The tax credit ranges from
$2,000 to $14,000 based on age. AHCA also expands health saving accounts (HAS)
for families as well.
Whether AHCA will help lower insurance premium, provide more
options and provide quality health care to its citizen, as promised by Paul
Ryan, remains to be seen. Well, the outcome will be in a few more years. But
first, the bill will need to be passed by the House of Representatives and
Senate first. So far, it’s not very popular among both the Republicans and
Democrats. Rand Paul calls it Obamacare Light. Others call it Obamacare 2.0. There
are always winners and losers of a social policy. As for now, the losers seem
to be the poor people who can’t afford health insurance and those with pre-existing
conditions.
