Trumpcare

DEFINITION of 'Trumpcare'

Trumpcare is the colloquial name for the American Health Care Act (AHCA), a proposed replacement for the Affordable Care Act – commonly known as Obamacare – that House Republican leadership unveiled on March 6, 2017. This proposal was also known as "Ryancare," since it was initially spearheaded by Republican Speaker of the House Paul Ryan. President Donald Trump lent his support the plan the day after it was made public, and he pressured wavering Republican lawmakers to vote for it.

That push was unsuccessful, however. The House delayed a vote on the bill on March 23, the seventh anniversary of Obamacare's signing, when Republicans were unable to gain sufficient support for it; they indefinitely pulled the proposal the following day. Speaker Paul Ryan told reporters following the decision, "Obamacare is the law of the land" and said the party would "move on to the rest of our agenda."

Obamacare passed in 2010 without a single Republican vote in the House or Senate, and Republicans tried an estimated 62 times – according to MSNBC – to repeal the law during the Obama administration. Trump campaigned on a promise to "repeal and replace" the law, calling it "dead" and "a disaster."

Despite their unified determination to replace Obamacare, however, Republicans had trouble building support for concrete legislation. Trump campaigned on promises that were apparently drawn from a bill drafted by Health and Human Services Secretary Tom Price. Some of these did not appear in the AHCA bill, however, leading Trump to tweet on March 7, "Don't worry, getting rid of state lines, which will promote competition, will be in phase 2 & 3 of healthcare rollout."

The AHCA met with stiff opposition from the ultraconservative House Freedom caucus, whose 29 members could easily defeat the bill (the Republicans could only lose between 21 and 23 votes and still win the vote, depending on the count). Party leaders amended the bill to reflect some of the caucus' demands, running the risk of alienating moderate Republicans by doing so. The Koch brothers, influential Republican donors, promised to donate only to 2018 campaigns of representatives who vote against the AHCA.

BREAKING DOWN 'Trumpcare'

As originally unveiled on March 6, the American Health Care Act would have repealed the individual mandate, which imposes tax penalties on those who don't acquire health insurance. The penalties would have been scrapped retroactively to January 1, 2016. Penalties on large employers who do not provide health insurance would also have been eliminated, effective as of the same date.

The individual mandate is intended to prevent young and healthy patients from going without insurance, a trend that could cause a "death spiral" should the worst-case scenario come to pass: That would be when young, healthy customers leave the insurance pool. Then, the remaining  pool would be older, sicker and thus more costly to cover. The result would be higher premiums, which would drive still more patients to forgo insurance, and so on until the market ceases to function. To avoid this outcome, Republicans aimed to replace the individual mandate with a 30% penalty on premiums for those who let their insurance lapse

The bill would have modified tax premium credits so that, beginning in 2020, the credit would be based solely on age, with eligibility phasing out at higher income levels. Older, lower-income customers would have seen their premiums shoot up under this arrangement, according to the Congressional Budget Office: A 64-year-old making $68,200 per year would have seen healthcare premiums fall by 5%, while someone of the same age making $26,500 would have seen them rise by 759%.

Obamacare vs AHCA: subsidies for nongroup health insurance
Individual with $26,500 annual income (175% poverty level)
Current law Premium Tax credit Net premium paid
21 years old $5,100 $3,400 $1,700 
40 years old $6,500 $4,800 $1,700
64 years old $15,300 $13,600 $1,700
AHCA Premium Tax credit Net premium paid Change
21 years old $3,900 $2,450 $1,450 -$250 (-15%)
40 years old $6,050 $3,650 $2,400 +$700 (+41%)
64 years old $19,500 $4,900 $14,600 +$12,900 (+759%) 
Individual with $68,200 annual income (450% poverty level)
Current law Premium Tax credit Net premium paid
21 years old $5,100 $0 $5,100
40 years old $6,500 $0 $6,500
64 years old $15,300 $0 $15,300
AHCA Premium Tax credit  Net premium paid Change
21 years old $3,900 $2,450 $1,450 -$3,650 (-72%)
40 years old $6,050 $3,650 $2,400 -$4,100 (-63%)
64 years old $19,500 $4,900 $14,600 -$700 (-5%)
Source: Congressional Budget Office (CBO)

The Kaiser Family Foundation produced an interactive map of county-level changes in premiums under this proposal compared to current law. Whereas a 60-year-old patient making $20,000 per year pays 5% of his or her income in every county under Obamacare, the ratio would have surged to over 100% in some counties, particularly in Arizona, Nebraska, Alaska and Tennessee.

The bill would have barred the use of tax credits towards plans that pay for abortions, with exceptions for rape, incest and situations that endanger the mother's life. It would also have prohibited federal funding for Planned Parenthood for one year from the date the bill was enacted.

It would have relaxed the prohibition on insurers charging older patients more than three times what they charge younger ones, widening the ratio to five times.

The AHCA would have increased contribution limits for Health Savings Accounts (HSA) to $6,550 for individuals and $13,100 for families, up from $3,400 and $6,750 currently; it would also have eliminated annual contribution limits to Flexible Spending Accounts. It would have suspended the "Cadillac tax" on high-cost employer-provided group health insurance from 2020 – when it is scheduled to go into effect under Obamacare – to 2024 and have eliminated most other taxes imposed by Obamacare.

The original bill would have stopped the expansion of state Medicaid programs after 2020 and capped federal funding for state Medicaid programs based on spending per enrollee in 2016. Following opposition from the House Freedom Caucus, the bill was amended so that states would have had to stop Medicaid expansion immediately, rather than in 2020. States would have been able to require that able-bodied recipients work and give them the option of receiving Medicaid funding through block grants, as Trump promised on the campaign trail.

The bill would have kept several popular provisions of Obamacare, including a provision preventing insurers from denying coverage based on pre-existing conditions and another that allows children to stay on their parents' plans until age 26. 

The main Republican opposition to the bill came from the House Freedom caucus and centered on the 10 "essential health benefits" written into Obamacare, which individual and small-business plans must cover. These include mental-health and maternity coverage, which caucus members want to scrap. According to the Hill, Republicans planned to amend the bill to allow states to set these benefits

Affordable Care Act section 1302 via obamacarefacts.com

Effects on Insurance Coverage

The Congressional Budget Office (CBO), a nonpartisan research arm of the legislature, published an analysis of the proposal on March 13, which found that 18 million more Americans would be without health insurance in 2018 under the AHCA, compared to the forecast under current law, a figure that would rise to 24 million by 2026. Altogether 52 million people would be without insurance in 2026, compared to a forecast of 28 million under Obamacare.

Much of this reduction in coverage would have come from eliminating the individual mandate, which would lead younger and healthier customers to go without insurance. The increase from 2018 to 2026 would largely have come as a result of changes to Medicaid. 

The CBO estimated that premiums would initially rise as a result of younger patients going without insurance. They would be about 15% to 20% higher than projections under current law in 2018 and 2019, but would fall to around 10% below projected premiums under Obamacare by 2026.

The CBO's original analysis forecast that the AHCA would reduce the federal deficit by $337 billion from 2017 to 2026, mostly by cutting federal spending on Medicaid by $880 billion. Following the amendments made to the bill, the CBO updated its analysis to say that the deficit would fall by $150 billion. It did not alter its estimates of insurance coverage.