What is the difference between Trumpcare vs. Obamacare?
Which one is better?
What is the pros and cons between the two?
difference between Trumpcare vs. Obamacare
The passing of the American Health Care Act marks Trump's first legislative victory since taking office, the BBC reports, although the bill will now need to get through the Senate.
Democrats and other opposing voices say it will leave millions uninsured, with some predicting the bill will founder or have to be rewritten in the Senate for that reason.
Republicans were chafing to get rid of former president Barack Obama's Affordable Care Act (ACA) before it even came into place in 2010. But what are the differences between that bill and the Republicans' replacement?
Number of uninsured people
Obama: There were 47 million uninsured Americans in 2010 before the introduction of Obamacare, according to Bloomberg. That number is now 28 million, The Independent says – and that number would likely remain stable if the Affordable Care Act was kept in place over the next ten years.
Trump: The nonpartisan Congressional Budget Office (CBO) has not yet calculated the effects of the latest version, but a March report of an earlier draft found 52 million people would likely be left without insurance by 2026 – almost double the number of those under Obamacare.
Penalties for the uninsured
Obama: All uninsured people pay a tax penalty.
Trump: Those who are uninsured for more than 63 days must pay 30 per cent more on their insurance premiums for one year.
Employee insurance
Obama: Companies with more than 50 employees have to provide health insurance or pay a fine.
Trump: Companies don't have to provide insurance.
Pre-existing conditions
Obama: Insurers cannot deny coverage or charge more to those with pre-existing medical conditions
Trump: States can dodge granting pre-existing coverage provided they set up high-risk insurance plans for people whose conditions see them priced out by normal insurers.
Essential benefits
Obama: All plans need to provide for certain health conditions or services, such as women's health, cancer treatment, prescription drugs, counselling.
Trump: States can choose which benefits are mandated and which can be left out entirely.
Medicaid (provides coverage to very low income people)
Obama: Expanded insurance for poorer individuals.
Trump: Starting in 2020, federal funding for Medicaid expansion will be cut.
Taxes
Obama: Raised Medicare taxes for those earning over $250,000 and introduced a range of new taxes to pay for the ACA from medical device manufacturers, drug companies, tanning salons, high-end insurers, and investment income. The ACA also provided tax credits for low-income individuals who buy coverage on government-run marketplaces.
Trump: The new bill repeals most of the Obamacare-related taxes. Tax credits are based on age and there will be no more tax credits for health-related costs not covered by insurance.
What stays the same
Children are still allowed to remain on their parents' policies until the age of 26. Insurers are also not allowed to set annual or lifetime limits on the amount they reimburse people for pregnancy and childbirth, doctors' services, prescription drug coverage and other essential health benefits.
Trumpcare is a nickname for the American Health Care Act (AHCA), a replacement plan for the Affordable Care Act (ACA or Obamacare) that was written by Republicans in the House of Representatives.
important to review the pros and cons of Trump Care so that the U.S. can work toward a more comprehensive policy.
List of the Pros of Trump Care
1. Trump Care would reduce the federal
deficit.
One of the primary benefits that Trump Care would provide is an
immediate reduction in the federal deficit. The General Accounting
Office estimated that the switch to this method of providing
healthcare insurance would save about $15 billion per year, or $150
million between 2017-2026, which was the evaluation period for this
legislation. That means the government could put those funds toward
something that would benefit people in other ways without reducing
the leverage of government spending on the medical services and
prescriptions markets.
2. It would eliminate the individual
mandate.
Under the laws that provided Obamacare, an individual mandate
required that every household have some form of health insurance.
If you didn’t have any coverage, then you were subject to a “fine,”
which the Supreme Court ruled to be a qualifying tax that Congress
was permitted to pass under the current law.
The individual mandate was one of the most unpopular components of the new healthcare exchanges. The payment in 2016-2018 was $695 per adult and $347.50 per child, up to a total cost of $2,085 for each family OR 2.5% of hour household income above the tax return filing threshold. You had the choose the most expensive option and then pay 1/12 of the fee for each full month someone in your family went without care.
3. Trump Care would allow for an increase in HSA
contributions.
Another advantage of Trump Care is that it provided a healthy bump
in the amount of money that people could contribute to their health
savings account. The family plan would rise from $6,750 to $13,100
for a family. That would make it easier to pay for medical expenses
because this money would not be taxed. As long as you used the
funds for qualified medical expenses, then the value of your
earnings could go further. And, unlike other savings plans, an HSA
does not force you to forfeit unused funds at the end of each
year.
Trump Care would have also reduced the tax penalty from an early withdrawal from 20% to 10% of the amount taken. You would have the option to purchase over-the-counter medication with your HSA funds as well, which was not something that Obamacare permitted.
4. It would repeal many of the consumer taxes that are
on medical equipment.
Obamacare instituted a series of different taxes that would apply
to various items that may be necessary for personal treatment.
These items included medical devices and equipment, some
prescription drugs, and even some health insurance plans. Trump
Care would work to eliminate these taxes over time, creating an
almost complete repeal of the added costs. Although this would
effectively gut some of the benefits of the previous policies, the
goal was to replace them with other benefits that could happen over
the next term of Congress.
5. Trump Care gave insurers the option to compete across
state lines.
The passage of Trump Care would have given health insurers the
option to offer policies from a different state. The current
structure of the industry forces agencies to be licensed in every
state where they do business. The American Health Care Act of 2017
would let them sell in any state if they were licensed in their
home state to do business. By offering this advantage, the goal was
to create an increase in competition that would allow the market to
start lowering prices for consumers.
6. There were subsidies in place for people with
preexisting conditions.
Under Trump Care, insurers in states with community rating wavers
could vary their premiums based on an enrollee’s preexisting
conditions if there was a gap in services of 63 or more consecutive
days in the previous year. Then the change in cost would apply to
the entire plan year. The AHCA earmarked $100 billion to all states
for a variety of purposes, including the subsidizing of high-risk
pools. Another $15 billion was made available for a federal risk
sharing program, and then another $15 billion went for maternal and
newborn care, substance abuse services, and mental health.
Qualifying individuals with an income below $75,000 per year would receive a flat-tax subsidy that could benefit their financial situation as well. If you made $1 over that amount, then you would receive less help, and that would have made it more of a challenge to keep your policy.
7. Many of the popular provisions for the Affordable
Care Act were kept.
Despite the dislike of the financial aspects of Obamacare,
Republicans were hesitant to trim some of the most popular options.
That includes the provision to allow children to stay on the
policies of their parents until the age of 26. This feature and
others made it much easier for the families who could afford
insurance on the exchanges or received it from their employer to
manage their expenses over time.
8. The cost of health care services was a tax deductible
expense.
Trump Care would replace the idea of subsidies for consumers by
offering tax credits on the back end of their finances at the end
of the year. This action, combined with the subsidies for those
with preexisting conditions and other benefits, would work toward
keeping a cost-neutral profile for low-income consumers. This
advantage would have variable results based on the exchanges found
in each state, but Republicans felt like the structure would help
most people cope with the changes in healthcare structure.
9. There were positive changes to the employer
requirements and provisions.
Trump Care would have eliminated the tax penalty that large
employers paid under the Affordable Care Act. It even would have
made that benefit retroactive to January 1, 2016, which could have
injected a lot of cash back into the corporate economy. At the same
time, the low-wage small employer’s tax credit was repealed as
well, which would have helped to keep the government receiving the
necessary funding to limit the damage to the overall federal
deficit.
Although this would have put more pressure on small business owners, it would have put them back into the position they were in before Obamacare was passed in the first place.
List of the Cons of Trump Care
1. The proposal would eliminate millions from health
insurance policies.
The goal of Trump Care is to provide more free-market access to
healthcare and the overall insurance market. One of the ways that
the legislation tried to accomplish this outcome was to become more
stringent with how Medicaid and Medicare operate. The estimates
from the General Accounting Office suggested that the elimination
of the individual mandate would produce 24 million more people in
the country who were unable or unwilling to secure a policy for
themselves or their family.
2. Trump Care would waive many of the essential benefits
in the previous system.
Trump Care wanted to remove the list of essential care options from
the standard policy because they were services that some people
would never use. Why would a male need to have OB/GYN care? The
issue here is that the standard set of services help to subsidize
the care that everyone receives. Some people don’t require mental
health care access either, right? Under the Obama Administration,
every state was required to provide care, but Trump Care allows for
a waiver to exclude people from these requirements. Each state
could even draft their own set of rules to follow, creating a new
patchwork of care systems.
3. It would increase the cost of healthcare access for
people with preexisting conditions.
One of the reasons why Obamacare was revolutionary was that it
eliminated the problems with preexisting conditions that some
patients had. Before the original overhaul of the care system,
patients had to present a certificate of coverage to prove that
they had previous coverage. If that document was not available,
then their cost of care would rise. Some insurance agencies could
even deny a policy if there were certain health issues in that
person’s history.
Trump Care would make it more expensive for people in this situation to access the care that they need. Later versions of the plan would offer subsidies to those struggling with costs, similar to what Obamacare already provides, but it would also eliminate some of the caps on premiums that were in place.
4. The cost of care for seniors could be significantly
higher.
Under the rules of Obamacare, insurance agencies were given
permission to charge an older adult up to three times more than
what they would ask a younger person to pay for the same coverage
options. When looking at the final draft of Trump Care, that figure
would increase to a cap of five times the amount of a younger
person.
The reality of this disadvantage is profound. If a young person could purchase a catastrophic plan for $100 per month, the same high-deductible policy could cost $500 per month for some senior citizens. With over 40% of Americans already living paycheck-to-paycheck and medical costs exceeding Social Security benefits, this issue could force a lot of families into bankruptcy just to care for themselves.
5. Trump Care would also rollback the Medicaid expansion
authorized by the Obama Administration.
One of the ways that the Obama administration worked to increase
healthcare insurance coverage in the United States was to give the
option to states to expand their Medicaid offerings. It was an
under-estimation of the number of families that would qualify under
this idea that led to many of the shortcomings found in that plan.
Trump Care would cut the funding that allowed for this expansion to
occur, making it more of a challenge for many families to get the
care that they want or need. There may still be some state benefits
available to low-income households, but it would create more people
who fall through the cracks too.
This structure would have the fixed per capita cap replace the current funding model. Although it would generate about $33.7 billion per year, it would largely come from a reduction in Medicaid and the elimination of Obamacare subsidies for non-group health insurance. Medicaid expansion funding would have ceased by 2020.
6. Health Savings Accounts are still your money going to
your healthcare.
When Republicans announced the ideas offered by Trump Care, one of
their key points was an increase in the amount that could go to a
health savings account. The current amount is $3,400 per person and
$6,750 for families. This option would let individuals save $6,550
or $13,100 for families with a high-deductible insurance policy.
These funds get taken out of your paycheck before taxes, allowing
you to invest funds in a way that is similar to an IRA.
There are two issues here with this disadvantage: (1) there is no way to guarantee that your money will increase; and (2) it isn’t a subsidy because it is your cash. Most families can’t afford to stash $13,000 away, even pre-tax, to care for their qualifying medical expenses.
7. Surcharges for letting coverage lapse were part of
Trump Care.
One of the least popular provisions of Trump Care was the cost
increase that people could experience if they let their current
policy lapse for a specific amount of time. The reason for this
provision is simple: someone could stop paying for their insurance
when they were healthy, and then start a new policy if they had to
go to the doctor for some reason. This disadvantage could cost some
consumers up to 30% of their premium in extra costs. There would be
added charges for those who had a preexisting condition in this
situation. The potential for subsidies to cover these extra costs
was significantly minimized as well.
8. Trump Care targeted abortion providers with its
legislation.
Conservative evangelicals have abortion as one of their top
priorities to stop. Trump Care worked to accommodate this segment
of the base by effectively cutting the funding to Planned
Parenthood because of the amount of money they received for
subsidized care to low-income women. New Title IX rules prevent
funding to any agency that makes an abortion referral, which means
this disadvantage went into effect anyway. Plans were in place with
the ACHA to cut or restrict coverage to private companies that
would cover a similar service too.
The only exception to this issue if federal funding was part of your healthcare plan was if the abortion was needed to save the life of the woman, incest, or rape. You could not have a qualified plan that covered abortion services otherwise.
9. There is no reduction in the copays or deductibles
under Trump Care.
Another reason why Trump Care struggled to catch on was the fact
that any individual using cost-sharing assistance would be subject
to the full amount of out-of-pocket expenses allowed by their plan.
There were zero reductions in the deductibles or copays that came
from accessing medical care as well. That means your cost per month
could go up dramatically If you were in the 100% FPL category and
you’d pay more for your care access as well.
At its most extreme, the price difference for someone at the age of 64 at the FPL would spend over $650 per month more on their care and have their costs on top of that. If you were in the 401% FPL category at the same age, your cost-sharing subsidy could save you over $300 per month.
10. Medicare funding problems could exist for some
facilities.
The high income payroll tax and annual fee that branded drug
manufacturers pay into the system would have been repealed, but
there would have been penalties for conditions acquired at a
hospital under Trump Care. Facilities would have been penalized if
they had to readmit someone to a hospital bed as well. This
disadvantage would likely cause facilities to reject patients in
need of care because of the financial risk in doing so. If it was a
small community hospital without an alternative facility nearby,
there could be care access challenges that some patients could
face.
Verdict of the Pros and Cons of Trump Care
Trump Care was an idea that could have had some validity if there weren’t some fatal flaws in its design. It shifted the brunt of the weight of care costs on the lower end of the income scale instead of subsidizing it from the upper end of the income scale.
Although the goal of this legislation was to increase the amount of consumer choice that existed in the marketplace, most experts felt like the opposite would occur. Healthy people could drop out of the market without penalty, creating the potential for insurer death spirals that would decrease choice.
Then the added expenses to seniors could be an untenable position. Even the White House recognized that over 20 million people could lose coverage. That meant the moderate gains on the deficit paled in comparison to the potential harm that could happen over time.
Obama care Pros and Cons
Pros
Cons
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