The Obamacare replacement plan, which is clearly President Donald Trump’s bill, is a dumpster fire because it repeals very little of Obamacare. Conservatives are livid about it, but that won’t stop Trump from attempting to ram it through Congress as is.
Here are the nine biggest problems with Trumpcare.
1. It leaves the pre-existing conditions mandate in place while repealing the individual and employer mandates. As bad as those mandates are, they are the funding mechanisms for insurance companies to cover those with pre-existing conditions. With those funding mechanisms gone, premiums will skyrocket even further since without those mandates, people will be incentivized to wait until they’re sick to buy insurance, resulting in insurance companies being hampered by an insurance pool of mostly-sick Americans without enough healthy people to pay for it. That’s the equivalent of waiting until your house has burned down before purchasing fire insurance. Therefore, not only will premiums soar, employers will likely drop health coverage altogether due to the higher premiums.
2. Seniors will be adversely affected by the changes listed above. Erick Erickson explains in The Resurgent how Trumpcare is essentially “a death panel for senior citizens”:
Under the Republican plan, senior citizens can be charged up to five times higher than young people who can enter an insurance plan with a pre-existing condition. By keeping the pre-existing conditions provision, which causes rates to increase, along with the permitted increase in senior citizen insurance costs, the Republicans will price a large number of seniors out of the insurance market.
To be sure, insurance companies should be able to charge whatever they want to charge, but requiring the pre-existing conditions coverage distorts the market and will harm seniors through even higher rates.
Proponents of the bill will likely counter that Trumpcare’s tax credits will help offset these premium increases to seniors, but the tax credits are actually a major problem, as explained below.
3. Trumpcare’s tax credits would essentially create a new entitlement program. Daniel Horowitz explains in Conservative Review that Trumpcare’s age-based tax credits are worth $2,000 for the young and $4,000 for the old, even reaching as high as $14,000 for families.
“It is a massive new entitlement for middle-income and lower-income Americans,” writes Horowitz. “It would apply in full for families earning up to $150,000, and then phased out $100 per thousand dollars earned over that threshold. Thus, a family could theoretically get some sort of subsidy well into the $200,000-plus income level.”
Additionally, healthcare policy-wonk Avik Roy points out in Forbes that these tax credits are actually “far more generous than Obamacare’s” subsidies and undermine Medicaid reform because “there’s a huge benefit cliff as someone moves from below the poverty level (Medicaid subsidy of $6,000 a year) to above the poverty level (GOP tax credit of $3,000 a year, at median age).” Consequently, states will be reluctant to repeal Obamacare’s Medicaid expansion. The tax credits will also likely result in employers dropping coverage since a lot of their employees will be eligible for the tax credits. They will also increase the debt and further distort the market, as the credits will “hide the true cost of care from consumers, making them less price-sensitive and more likely to overconsume,” per Michael Tanner.
4. Trumpcare implements a 30 percent surcharge on those who decide they no longer want to have insurance. The surcharge is an attempt to replace the individual and employer mandates as a funding mechanism for pre-existing conditions, but it’s not going to work. As Roy noted, premiums will likely be costlier than the 30 percent surcharge under the Obamacare replacement plan.
“Let’s say you decide not to buy insurance, then you have a heart attack and then buy health insurance,” Roy wrote. “Your health care consumption is going to be way higher than 30 percent above normal. So the AHCA [American Health Care Act] effectively mandates insurers to sell you coverage at a loss.”
The other problem with the surcharge is from a liberty standpoint: Trump and the GOP are subscribing to the left-wing premise that the government has the right to compel individual activity when it comes to purchasing a product. Instead of mandating people to buy insurance under Obamacare, Trumpcare would force individuals to remain on insurance or face a fine, a concept that is still tyrannical by nature.
5. The Medicaid expansion will remain in place until 2020. Medicaid can still be expanded before then, which would further strain a budget-breaking program that is riddled with problems.
6. The “Cadillac” tax will not be repealed. The 40 percent tax on lavish insurance will be delayed from 2020 to 2025, but the fact that it won’t be repealed will not help soaring premiums.
7. Trumpcare provides a bailout to insurers. Tanner notes that the replacement bill provides “a subsidy for covering sick and expensive patients.”
“At first read, this provision looks a lot like Obamacare’s insurer bailout, which Republicans, led by Marco Rubio, took such pride in killing,” writes Tanner.
8. Illegals will be eligible for Trumpcare. Horowitz points out that Trumpcare actually has “weaker verification language” for screening illegals than Obamacare does, as Obamacare allowed officials “to check immigration status against Social Security numbers.” Trumpcare will not require that because of the reconciliations process being used to ram through the bill, creating a massive loophole for illegals to obtain Trumpcare, thus creating a bigger hole in the debt.
9. If passed and signed into law, it will be a political albatross for the Republicans. Obamacare has long been a political weapon used against Democrats and was a massive factor in the Democrats’ electoral losses. However, if Trumpcare passes, then, as Horowitz writes, “Republicans will own it.” The premium increases, higher debt, etc., will all be blamed on the Republicans, providing the opportunity for the Democrats to claim that Obamacare’s repeal worsened the health care system and that the only answer is a single-payer health care system, something that Trump has previously championed.