Trump Care is the nickname given to the American Health Care Act of 2017. This legislation was a bill that came through the 115th Congress. It was initially passed by the House of Representatives, but it failed in the Senate with a 51-49 vote. The downward thumb of Senator John McCain would become the nail in the coffin to create a different system of healthcare access in the United States. It would become the final part of McCain’s maverick reputation as well.
With the Senate failing to pass Trump Care, the Tax Cuts and Jobs Act of 2017 would repeal the individual mandate from the existing healthcare legislation that is popularly called Obamacare.
Although many Republicans disagreed with the independent analysis of the legislation, the general consensus of Trump Care was that it fell fall short of what the candidate promised while on the campaign trail. It was almost certain to reduce coverage, increase deductibles, and phase out the expansion of Medicaid. The tax credits funded at the federal level were also insufficient to cover the added costs, leading many families to drop out of the healthcare market for good.
Even though this bill is defunct, it is still 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.
Natalie Regoli is a child of God, devoted wife, and mother of two boys. She has a Masters Degree in Law from The University of Texas. Natalie has been published in several national journals and has been practicing law for 18 years. If you would like to reach out to contact Natalie, then go here to send her a message.