TrumpCare vs. ObamaCare
What is Different About the American Health Care Act (TrumpCare) and the Affordable Care Act (ObamaCare)?
An Introduction to ObamaCare and TrumpCare
This plan didn’t pass the House, but it is very likely that we will see aspects of it on the table again (after-all it is mostly “the Better Way” plan Ryan has been behind since before Trump got in office).
In other words, although “TrumpCare” does do some of what Trump promised on his site, the bulk of it wasn’t created by Trump; rather it is a House GOP budget bill that tries to accomplish a wishlist of Republican ideas in line with TrumpCare as found on DonaldJTrump.com.
Although we don’t know if a future version will pass, or what other changes might be made, we explain everything we know so far below, including how TrumpCare is different than ObamaCare.
We’ll update this page as we know more.
IMPORTANT: It is vital to note that this unpassed (so far) plan is unofficially phase 1 of 3 phases. That means although selling across state lines, transparency reform, and litigation reform aren’t in it, and even though it doesn’t undo many key ACA provisions, it doesn’t mean Republicans don’t have those agenda items in mind. With that said, phase 1 (the TrumpCare below) focuses on budget items (so there are certain cuts and certain provisions that wouldn’t make sense in this bill). If you want to know everything planned, consider checking out our original review of the “Better Way” plan.
TrumpCare Vs. ObamaCare: A Summary of What is Different Between ObamaCare and TrumpCare
The American Health Care Act (AHCA) keeps a lot of the Affordable Care Act (ACA) in place, but it changes a lot too.
Keeping in mind that the bill is still being debated and everything below is subject to change, the basics of what TrumpCare does can be summarized by saying TrumpCare (the American Health Care Act):
- Repeals the mandates for both individuals to pay a fee for not having coverage and for large employers to insure their employees. Technically, it repeals the fees for the individual and employer mandates, not the mandates themselves.
- Freezes Medicaid funding to states beginning in 2018 or 2020; exact dates are being discussed.
- Eliminates most of ObamaCare’s taxes on those with higher incomes, employers, and industry.
- Replaces tax credits and out-of-pocket assistance based on income with tax credits based on age although some income-based assistance, like Medicaid, remains.
NOTE: One thing to note early on here is that this plan cuts small business tax credits and cuts assistance for seniors who are not on Medicare. Neither of these is in-line with past rhetoric from Trump or the GOP.
TIP: Selling across state lines, litigation reform, transparency, and so much else is not included in this bill. It may be included in future bills, but it is not here. Sometimes the term “TrumpCare” is used to describe the overarching strategy of Republicans or all Trump’s campaign promises. Learn more about TrumpCare as a broad term, for this page we’ll focus on what is on the table and what passes (updating this all as time rolls along).
The Cost of TrumpCare According to the CBO, The Uninsured Rate Under TrumpCare, and the Controversial Planks of TrumpCare
TrumpCare also does some very controversial things in its current iteration, some of which go against Trump’s campaign promises of “more coverage” and “not letting them die on the streets” (as that quote was referring to Medicaid and certainly tens of millions are going to lose access to Medicaid).
For example, it defunds Planned Parenthood, takes away demand from healthcare providers (by creating tens of millions of uninsured), it takes away funding states could have used for state-based healthcare solutions, and takes large amounts of cost assistance away from Seniors who haven’t reached Medicare age.
However, on the plus side, it leaves some very important provisions of the ACA in place (as we’ll note below) and fixes a few things like the fee associated with the mandate and cost assistance for those between 400% – 600% of the poverty level.
The plan has a price tag that comes in under the ACA according to the Congressional Budget Office, saving $337 billion over the decade. However, it does this by leaving 52 million without coverage by 2026 (it increases the uninsured by 24 million by 2026 for a total of 52 million). The plan shifts much of the savings to tax breaks for the wealthy and notably, could have saved substantially more money if its only ends were economics.
We will discuss pros and cons, but these are the basics.
TrumpCare Vs. ObamaCare: The Major Provisions TrumpCare Changes
To illustrate what else TrumpCare does and doesn’t keep we have used a list of the key basic provisions of the Affordable Care Act and then have crossed out what TrumpCare changes (see the original list for the ACA here):
TIP: It is important to note that the current bill is designed to address budget items only, and some of the following are not budget-related. Some of these provisions could still be repealed down the road in planned Second and Third repeal phases.
ObamaCare’s benefits, rights, and protections include:
- Letting young adults stay on their parents’ plan until 26
- Stopping insurance companies from denying you coverage or charging you more based on health status
- Stopping insurance companies from dropping you when you are sick or if you make an honest mistake on your application
- Preventing gender discrimination TIP: TrumpCare doesn’t remove all gender discrimination bans or bring back a ratio for women, but it does change a lot for women.
- Stopping insurance companies from imposing unjustified rate hikes
- Doing away with lifetime and annual dollar limits
- Giving you the right to a rapid appeal of insurance company decisions
Expanding coverage to tens of millions by subsidizing health insurance costs through the Health Insurance Marketplaces(HealthCare.Gov and the state-run Marketplaces) TIP: Open enrollment and healthcare.gov will continue, but some details have changed, including those related to cost assistance. Expanding Medicaid to millions in states that chose to expand the programTIP: Medicaid expansion is frozen, so it will no longer be “expanded.” Providing tax breaks to small businesses for offering health insurance to their employeesTIP: Small employer tax breaks are gone. Requiring large businesses to insure employeesTIP: The mandate to offer coverage to full-time workers is gone.
- Requiring all insurers to cover people with pre-existing conditions
- Making CHIP easier for kids to get (questionable)
- Improving Medicare for seniors (questionable)
- Ensuring all plans
cover minimum benefits and ten essential benefits including free preventive care, OB-GYN services with no referrals, free birth control, and coverage for emergency room visits out-of-network. TIP: The requirement to cover OB-GYN, birth control services, and other essential benefits on all plans are some of the benefits, rights, and protections that all Americans lose, but that women lose specifically.
UPDATE ON ESSENTIAL HEALTH BENEFITS: After discussions between Republicans it looks like Essential Health Benefits will be cut. This could mean cheaper plans for some (as insurers would be able to offer fewer benefits), but could also mean that people won’t know what they are getting when they buy coverage. They could end up, for example, picking a cheap plan and then realizing it doesn’t cover any of the services they need.
UPDATE ON MEDICAID AND OTHER CHANGES: Changes were made to the bill as the Tuesday Group, Freedom Caucus, Trump, and Ryan’s conservatives cut deals. Under the changes Medicaid can have work requirements, the Essential Health Benefits may be removed, states will be able to offer more help to seniors (not at ACA levels, but still worth noting), and a few other subtle things will change. Learn more about the policy changes and the new CBO scoring (only slight changes were made), but they do matter.
ON DEFUNDING MEDICAID: Federal funding for Medicaid continues for states that expanded coverage under the Affordable Care Act through 2019 (or 2017 depending on the final bill; this is subject to change). However, starting January 1, 2020, federal funding to those states will continue but be frozen based on how many were covered by the end of 2019 (or 2017). Then, beginning in 2020, Medicaid funding to states will be a fixed amount based on the total number of Medicaid enrollees (per capita), and not based on the actual cost of Medicaid services provided to individual recipients. This will decrease the number of people eligible for Medicaid over time, especially as the population increases over time. This means, logically, more and more of our poorest will be without healthcare options each year (or the quality or cost of coverage must go down), but it also means spending will be kept in line.
TrumpCare Also Does the Following
The following are some of the major changes made by the AHCA:
- The Individual Mandate stays, but the fee is retroactively repealed starting December 31, 2015. That means people won’t be charged a fee for not having coverage (although there is a fee paid directly to insurers for 12 months for buying back in).
- The Employer Mandate stays, but the fee is repealed. That means fewer full-time employees will be offered coverage as there will be no penalty for not offering coverage.
- The mandate is “essentially” replaced by a Continuous Coverage Provision. Insurers will be required to charge 30% more on premiums for 12 months for those who have a gap in coverage of 63 days or longer.
- Medicaid funding will be frozen by 2020 (date subject to change), and a high-risk pool of sorts will be implemented. This pool helps to offset the newly uninsured. TIP: See details. This issue is complex. Many of the uninsured come from this provision.
- Tax credits will start being based on age rather than income starting in 2020. The new tax credits will be flat ($2,000 for individuals up to age 29 and increase in $500 increments until capping at $4,000 for individuals age 60 and older). Credits will be gradually reduced for individuals with yearly incomes exceeding $75,000 and for households that earn over $150,000.
- Employees won’t have access to tax credits, but after 2020 the new age-based credits can be used for any individual health insurance policy regardless of where it’s purchased.
- Metal tiers and some minimum benefit standards are removed. Thus, the line between catastrophic coverage and major medical coverage will be blurred. TIP: this could mean “junk plans” could once again be sold. It could also mean lower costs, especially after tax credits for those without high Medical costs.
- Ratios for what seniors can be charged by insurers for premiums increase from three times what the youngest enrollees are charged to five times.
- Planned Parenthood will be Defunded; funding would be given to Community Health Centers instead. Many of these do not yet exist and would have to be created.
- The Medicare Part A Tax increase of 0.9% over $200,000 for an individual or $250,000 for a family would be repealed.
- The Medicare Tax on Investment Income of 3.8% over $200,000 for an individual or $250,000 for a family would be repealed.
- Contribution limits for Health Savings Accounts (HSAs) will be increased substantially, but one still needs a High Deductible Account and the money to fund it.
- The Annual contribution limit to health Flexible Spending Accounts (FSAs) will be repealed. The ACA capped this limit.
- The 40% Excise Tax “Cadillac” on high-end employer-sponsored health plans is suspended for tax years 2020 through 2024. This has already been kicked down the road by Democrats and Republicans.
- The 10% tax on tanning beds would be repealed.
- The $500,000 Annual Executive Compensation Limit for Health Insurance Executives will be repealed.
- The tax on brand name drugs will be repealed.
- The tax on health insurers will be repealed.
- The 2.3% tax on medical device manufacturers will be repealed.
The Bottomline on TrumpCare
The bottom line on the ACA vs. AHCA is perhaps best expressed by the following points:
- The American HealthCare Act gives Americans making between 400% – 600% of the poverty level, large employers, young healthy people, and industry a break in costs via tax cuts and deregulation.
- The plan presents some real complications for the sick, poor, low-income workers, seniors, and women due to reduced assistance and the defunding of planned parenthood, higher age ratios and less assistance for non-Medicare seniors, the freezing of Medicaid Expansion, and the focus on tax breaks and HSAs over assistance.
- Healthcare providers will lose countless patients, and this could cause a health ,care provider crisis.
- Young people are not incentivized to get plans and this could cause a problem with insurance.
- Employees who just got coverage and small employers will lose assistance, but large employers won’t be burdened with the complexities of choosing between health care and full-time employees.
Thus, the bottom line here is that the law reduces costs for the wealthy, healthy, and young and substantially raises costs for many in other demographics.
The middle class won’t notice much difference unless they get sick and go without coverage. Our poorest people, women, seniors, and low-wage workers will see some new hurdles.
Those with higher incomes will most certainly benefit.
FACT: Single policyholders in the non-group market stand to see premiums that are 15% to 20% higher than under current law, however as the years roll along, costs are projected to come down to prices as much as 10% than the current law. To be fair, this would be true for the ACA too. The prices were projected to spike and then to go down. That is not being acknowledged by Trump or Ryan who instead choose to use terms like “death spiral.”