American Health Care Act (Trumpcare) Finally Rolls Out

Wealth Care at its finest

With only seven years to craft replacement legislation, Mitch McConnell, Paul Ryan and company have finally slapped together a plan to repeal the financial guts of the Affordable Care Act — and replace it with a plan of their own making. Their offering feels a lot like a kid erasing someone’s name from the top of their homework and handing it into the teacher as if you did the work — with some important exceptions.

Remember the individual mandate? Republicans hated that so much they shut down the government for Democrats refusing to repeal it. Naturally, their plan includes a 30% rate hike to the consumer if they go without insurance for more than two months in a row — feels a lot like a mandate, right?

Remember, only the financial considerations of the ACA are vulnerable to the budget reconciliation process, which is how the GOP is getting around the Democratic filibuster. The meat of the draft replaces the ACA’s subsidies with refundable tax credits based on age. This is a regressive credit, as older individuals tend to be wealthier. The draft attempts to address this by reducing credits for households making over $150,000 and eliminating them for households making over $215,000. Determining income was the most difficult part of administering the ACA, and Trumpcare will face some of the same challenges with these measures.

Another fundamental element of the ACA was the Medicaid expansion. Four Republican senators from states that expanded Medicaid have stated they would not support the draft plan in its current form — losing those four votes effectively would kill the legislation. From the other side of the party, hard-line conservatives have expressed concerns that the bill doesn’t go far enough in repealing the ACA. Who would have thought health care could be this complicated?

Where conservatives will be pleased, however, is the repeal of almost all ACA-related taxes. The Medicare payroll tax, the reduction in what Americans can deduct for out of pocket medical expenses is gone, along with the restriction forbidding the use of HSAs and FSAs to purchase over-the-counter drugs. The medical device tax is removed along with all penalties from the individual and employer mandate — current and retroactive. This plan shifts much of the financial burden to the states, and critics are concerned that states cannot afford the increase.

These tax repeals are nice, but they come with a cost. Namely, Medicare’s trust fund. This plan would reduce solvency by 3.5 years.

The full financial implications of this plan have not yet been released by the Congressional Budget Office, but the expectation is that it will result in a tremendous swell to the deficit. Frighteningly, Republicans aren’t asking for CBO estimates of the cost.

It’s not immediately clear who this bill is designed to placate — hard-line conservatives pan it for being Obamacare 2.0, and moderate Republicans don’t like it for how it burdens states with Medicaid bills and fails to address out of pocket costs for consumers. Democrats claim the measure will strip healthcare from millions of Americans. The bill is a compromise mixed with a series of concessions built on a framework of half-measures.

The bill still faces debate internally and staunch resistance from Democrats, and a populace that is warming to Obamacare now believes that it might be taken away. The American public will watch, and wait. Trump has promised consumers they can have their cake and eat it, too. “We’re going to have insurance for everybody,” Trump said in press conference on Jan. 11. “We’re going to have a healthcare that is far less expensive and far better.” Will this mish-mash of plans deliver?