What’s Going to Happen to Obamacare?

Donald Trump has just been sworn into office as this country’s 45th president, and Barack Obama is a private citizen once again. Now that Obama is gone, will his signature legislative achievement follow close behind him?

If conservatives have their way, the Affordable Care Act (ACA), commonly known as Obamacare, will be a blip in our nation’s history. Under Obama, the Republican-controlled House of Representatives voted more than 60 times to repeal the ACA, and during his presidential campaign Trump repeatedly vowed to get rid of it.

Of course, this is all easier said than done. Many parts of the ACA are very popular, including the provisions that prevent insurers from denying coverage based on pre-existing conditions, and those that allow parents to keep their children on their coverage until age 26.

As a result, Republicans have often touted a “repeal-and-replace” approach, although their proposals for “replacement” have ranged from hazy to non-existent.

The reason for this is that the ACA is a “three-legged stool,” and all three legs are needed to keep the stool standing. The first leg, as described above, is “guaranteed issue,” i.e., insurers are required to offer coverage to all those who apply, regardless of condition, and for roughly the same price.

However, in order for this to work, healthy people must be given an incentive to buy insurance – the second leg of the stool. If insurance was optional, healthy people would forego it because the pool of sick people would drive costs up, resulting in a death spiral. Thus, the ACA has an “individual mandate” that requires people to obtain insurance.

Third, subsidies must be offered to low-income citizens to ensure that the system is capturing the greatest number of people, which in turn keeps premiums low.

Some people have proposed keeping one or two of these legs, and eliminating the others. However, studies show that this won’t work (stools don’t stand on just two legs), and most Republicans are aware of this. So they are now in a bind – they have promised to “get rid of Obamacare,” but to do so they would have to eliminate the provisions people like.

So what will happen? It’s too early to say, and Republicans have already started backtracking on some of their promises. For example, many are now arguing for “repeal-and-delay” instead of immediate replacement.

Many suspect Congress will have little choice but to simply make some cosmetic changes to the system, without fundamentally upsetting the three-legged stool. They will then claim that the new system is the “replacement” for Obamacare they promised all along. Perhaps they will call it “Trumpcare.”  Stay tuned…

 

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