The Future of Health Insurance May Look A Lot Like Our Past


Craig Klugman

Publish date

January 17, 2017

by Craig Klugman, Ph.D.

This week marks the transition of power from President Obama to President-elect Trump. One issue that has been high on Trump’s list of policy changes is a repeal and replace of the Affordable Care Act (a.k.a. Obamacare). The Republicans and Trump seem split in how to go about this. Some Republicans want to repeal immediately with a replacement to come in the future; others want to vote for repeal but have it take effect only after a replacement; Trump want both repeal and replace to happen quickly and simultaneously.

Last week, both Houses of Congress passed rules in a budget resolution that would permit the ACA to be repealed with only a majority vote rather than two-thirds. Thus, without any Democrat vote, they can repeal. While a lot has been said of the repeal part, not much has been said about replace. After 7 years of complaining and voting to repeal, the Republicans have not offered a plan. In fact, the ACA is based on an original Republican plan.

Just yesterday, Trump stated that his new plan would “provide insurance for everyone.” He also added that he wanted the government to negotiate with pharmaceutical companies for prices on prescription drugs. During his campaign he put forth the idea of permitting people to buy insurance across state lines. But he has not put forth any specific plans. A new GOP advertising campaign says a new plan offers “more choices,” “Better care,” and “lower prices.” Again, the GOP Congress has not discussed any plan with the public or the press.

Today, the non-partisan Congressional Budget Office posted its report on the effects of repeal. In the first year of repeal, 18 million people would lose their insurance plan that they currently receive through the ACA Marketplace. If the Medicaid expansion is rolled back, that number would increases to 27 million people and within 10 years, 32 million. Those who lose insurance include the working poor (those whose employers do not provide insurance but do not qualify for government programs), children age 26 and under, those with pre-existing conditions, the self-employed, and others.

While many people get insurance through their employer, those who are self employed or who work for small employers who purchase their own insurance will lost their group (i.e. the marketplace) and thus their costs would increase 20 to 50 percent.

The CBO did not report the cost of a repeal because the new Congress passed rules forbidding the CBO from doing so. However, a 2015 CBO report estimated the cost at over $350 billion over 10 years.

Under the ACA, some of the cost of the ACA is borne by the “Cadillac Tax,” is a tax on insurance plans that cost more than $10,200 for a an individual or $27,500 for a family. Health benefits above those thresholds are taxed at 40%. Also under the ACA, all residents are mandated to have health insurance. Eliminating the insurance mandate would destabilize the marketplace. Basically, in insurance, there must be more people paying into the system who do not need to use funds than there are people who use funds. If there is no requirement to buy-in, then the healthy and young will most likely pull out, meaning that the pool will be people who are likely to be sicker and cost more. Financially, such a market is not tenable.

Some reports have suggested that popular parts of the ACA may be maintained such as children staying on their parent’s insurance until age 26, the pre-existing exclusions ban, and the loss of lifetime limits. However, these are the parts of the ACA that cost money but do not take in money. Many have forgotten but the ACA also required that insurance companies cover well care including contraception, women’s health, annual check ups and screenings, and wellness programs. All would likely be eliminated under a repeal, especially since these cost insurance companies money and lacking the mandate, companies could not be assured of a sufficient pool of premiums to cover these services.

Popularly, in a Kaiser Family Foundation poll, 75% of respondents said they wanted to keep the ACA or repeal it only after a replacement has been released. Twenty percent wanted to see immediate repeal. When people do not have insurance, they do not go to the physician. That means that more people wait until they are sicker to receive care—often in the ER—and it costs more. Nothing less than the health of the nation is at risk here.

The great divide in this debate is over whether “health care” (here defined as health insurance that opens the potential of access to care) is a [positive] right that must be provided by the government or if health care is a privilege (commodity) that one should have the opportunity to access (if one can afford it). From the rights perspective, repeal is a wrong since the consequences of that action are to deny millions of people their right to entry to health care. From the privilege perspective, repeal is righting a wrong where government overstepped its bounds. As any reader of this space knows, I fall strongly in the rights camp.

From an ethics perspective, justice informs us that any new plan must preserve insurance for everyone who has it now, if not expanding access to insurance to everyone such as the undocumented who account for a large portion of the remaining uninsured. A new plan must provide benefits with at least as much coverage as it does in the current system. The ACA was not a perfect law as it only provided access to insurance, not access to care, and it left a lot of people out of the system. Ideally, I would like to see a single payer system that has provides a level of efficiency and fairness that a market plan is unlikely to meet.

The next few weeks will be challenging and anxious ones as the people of the U.S. await the choices and actions of a few. The most unethical thing that Congress and the President-elect could do is to eliminate the benefits and coverage that people have come to expect and rely upon.



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