Trump takes a third swipe at the Affordable Care Act

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US President Donald Trump has once again taken a swipe at the Affordable Care Act (ACA), this time dealing what could be a major blow. This is the third time that the president has tried to dismantle Obamacare. After failing twice at repealing and replacing Obamacare, the president has not backed down from his campaign rhetoric, as last week he announced that the US government will end subsidies (known as cost-sharing reductions) for low-income-earning Americans. These cost-sharing reductions were created under the ACA in order to reimburse insurers for reducing out-of-pocket expenses for customers making up to 250% of the federal poverty level, which equates to around $61,000 for a family of four. What this means is that the president is pulling money that accounts for some insurance costs not fully covered by low-income earners, leading Democrats to accuse the president of “sabotage” through this move, and it is being seen as a way to cut off Obamacare and force it to fail.

Currently, nearly six million low-income-earning Americans receive insurance subsidies and, with an estimated 25-30 million Americans to be without health insurance if Obamacare was to be repealed and replaced, things certainly do not look good for American people wanting affordable and reliable healthcare.

With premiums looking to spike by 20% next year and then by 25% in 2020 according to a report by the Congressional Budget Office, it will be much harder for people, (especially low-income earners) to access healthcare. With the president’s aim to just let Obamacare fail, it is unlikely that there will be any substitute that will benefit those who are set to miss out on subsidies. Subsidies are critical for low-income earners and getting rid of them will see a shrink in consumers’ choice, meaning that people looking for health insurance will have little choice; insurance companies will not be able to provide for them. Getting rid of these subsidies also sees a rise in healthcare costs – premiums will go up and there will be destabilisation of ACA marketplaces.

The Congressional Budget Office has projected that getting rid of the subsidies will see a big increase in taxpayer costs next year, by around $6bn and then by $21bn in 2020, because federal tax credits (a credit that allows low to moderate income earners to keep more of the money they earn) rise under the ACA when premiums increase to cover the costs for low-income earners. The Budget Office also stated that 5% of people in a county would have no insurers if subsidies ended next year.

The major fear for insurers is that, once people see premiums rising and subsidies potentially out of the picture, they will be scared away from buying healthcare insurance as it may well be unaffordable. A lot of people don’t realise that, when you sign up for insurance and premiums rise, the amount you have to pay may not be too high because of tax credits. Such credits are available to those who qualify for deductions, such as having children or being low- to moderate-income earners.

Diane Holder, the president of the University of Pittsburgh Medical Centre Health Plan said, “I think it’s unfortunate because I think it can frighten consumers who may feel there isn’t an opportunity for them to have affordable health care.” The American Medical Association also voiced their concerns over the president’s decision, saying that they were “deeply discouraged by the administration’s decision.”

Attorney generals from 18 states have filed for legal action. There has been a request for a preliminary injunction to ensure that federal officials will maintain the payments, and not leave customers without subsidies immediately. States are evidently and understandably very concerned about the president’s decision as there could be a potential rise in numbers of uninsured residents. This could have an impact on overall healthcare costs for everyone, not just those who receive the cost-sharing reduction payments.

Wall Street analysts have predicted that insurers would leave marketplaces, due to insurers pricing their premiums whilst betting that subsidies will continue as usual. Seeing them have major losses, as predicted by Wall Street analysts and the CBO, could see companies leaving the market next year. All essentially boiling down to the loss of federal funding (aka subsidies). This then has an effect on well-off consumers, as they could be disincentivised from signing up to insurance companies as they’ll have to pay more, leading to the demise of companies.

This decision is potentially catastrophic as insurers have just finalised their upcoming premiums for 2018. This limits their ability to respond to this proposition by the president and adds a whole lot of confusion for customers who have just begun enrolling in new plans. There is plenty of uncertainty over this decision made by the president, and it is certainly a decision that does not show anything good to come out of it.

It seems that Trump is more concerned about federal funding and where it goes rather than making sure all Americans have access to affordable healthcare. As mentioned, 25-30 million Americans could be without health insurance if Obamacare were to be repealed and replaced. It looks as if the president’s bid to choke Obamacare has already started, but it’s a bid that will have a profound impact on many. With six million low-income earners set to miss out on subsidies, it looks as if the dismantlement of the ACA has already begun. But when will it end, and how many Americans will be left uninsured and without healthcare in the years to come?