Health Insurance Policy brochure

Part of Donald Trump’s appeal to many voters was his promise to repeal and replace Obama’s Affordable Care Act (ACA). However, that leaves the new administration the obligation of coming up with a better alternative. Despite critical responses, the President and the Republican party are still trying to push their own plan through Congress. How will the proposed legislation affect your health insurance?

Subsidies

Funding for the ACA insurance plans came from significant tax subsidies. The new plan, dubbed the American Health Care Act (AHCA), would replace those tangible tax funds with a tax deduction that could help set aside money to reduce insurance costs. However, for most families, those tax savings would not have much impact in offsetting their insurance premiums. Low-income families especially, who most benefitted from the ACA, would have the least savings and thus the highest premiums relative to income.

State Regulation

The new legislation would also allow medical insurers to provide coverage across state lines, thus allowing them to pursue customers in those states with the least restrictions on pricing or mandatory coverage. This could lead to higher premiums for weaker policies. Working out the details in each state will require specific training such as from new degrees in health policy such as a health law degree specifically designed to support careers in improving the troubled healthcare system.

Medicaid

The proposed legislation would convert Medicaid funds to a fixed annual sum that would be allocated to each state to be dispersed according to their own laws and guidelines. This leaves states the burden, financially and administratively, of processing person-by-person distribution of these funds. Medicaid restrictions would have the greatest impact on low-income families, so that in states with proportionately more low-income households, the funds allocated might not be sufficient.

Pre-Existing Conditions

One of the promises in promoting the AHCA of the new administration is preserving the stipulation that those with pre-existing conditions cannot be denied healthcare coverage. This aspect of the healthcare program is both one of the most appealing factors for the insured and one of the most costly for insurers. Inadequate funding to make this sustainable would lead to either compromises on this promise or escalating premiums, if not both.

The Affordable Care Act is admittedly far from perfect. But the proposed AHCA at this point seems to need even more fixing. It might be seen as a rush to satisfy “repeal and replace” mandates rather than a thoughtful, viable solution.

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