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To Replace Obamacare, Republicans Prepare Tax Credits, Subsidies for ‘Uninsurable’

November 30, 2016

Contrary to mainstream media reports, Republican plans to replace Obamacare would cover individuals with preexisting conditions.

President Barack Obama’s exit from the Oval Office could spell the end of the Affordable Care Act (ACA), his signature legislation, if President-elect Donald Trump and the Republican-controlled Congress implement some of their numerous proposed changes to the federal tax code, insurance regulations, and pharmaceutical industry rules.

Implementation of ACA began with the launch of a buggy website in 2013 intended to provide millions of people with subsidies with which to buy health insurance to avoid paying a tax penalty. Mega-insurers Aetna, Humana, and UnitedHealth Group subsequently exited many health insurance markets, and millions of individuals whose old insurance plans were canceled once ACA took effect will spend an average of 25 percent more on premiums in 2017 than in 2016.

Proposed Republican plans would repeal the individual mandate and tax penalty, help people buy insurance using tax credits or deductions, subsidize high-risk pools for so-called uninsurable individuals with preexisting conditions, and block-grant Medicaid to the states, among other reforms.

Opportunity Knocks

David Barnes, policy director for Generation Opportunity, a free-market advocacy group, says ACA’s mandates on individuals, employers, and insurers have blocked patients from accessing high-quality, affordable health care.

“Obamacare’s inflexible regulations have stifled medical innovation while failing to increase the supply of doctors, providers, and available treatments, all of which has resulted in more expensive and lower-quality care and less competition in the marketplace,” Barnes said.

Sally Pipes, executive director and CEO of the Pacific Research Institute and author of The Way Out of Obamacare, says Ryan’s plan would result in more expansive, cost-effective coverage than ACA’s mandates have produced.

“House Republicans have already put forward a replacement plan, ‘A Better Way,’ and it’s far more detailed than anything Obama proposed when he was running for president,” Pipes said. “The GOP plan would greatly reduce costs and expand coverage for Americans by getting rid of Obamacare’s overbearing mandates and regulations.”

Coverage for Poor, ‘Uninsurable’

Republicans have countered Obamacare’s coverage of uninsurable individuals by proposing federally subsidized pools for high-risk individuals, Pipes said.

“Trump has also said he would keep the provision on preventing insurers from denying coverage based on preexisting conditions,” Pipes said. “The GOP plan would provide $25 billion in funding over the next 10 years to high-risk pools so that those with expensive chronic ailments can still be covered and insurers can offer lower, more stable premiums in the standard insurance pool.”

Trump should ensure lower- and middle-income individuals receive tax advantages under a Republican plan by awarding greater tax credits for health insurance based on age, Pipes says.

“Trump has called for individuals to be able to deduct health insurance premiums from their income taxes, but the move won’t make health insurance affordable to Americans who have no income-tax liability,” Pipes said. “Trump should instead embrace age-based, refundable health insurance tax credits, which every American would be able to use to purchase coverage, regardless of income or tax liability.”

Cautions Regarding Pharma

Pipes says Trump should take care to avoid opening the U.S. pharmaceutical market to products from government-controlled markets in other countries.

“Drugs in other nations are only cheaper because their governments cap their prices,” Pipes said. “Importing foreign price controls would gut medical research and innovation.”

Nathan Nascimento, a senior policy advisor at Freedom Partners Chamber of Commerce, says Trump and Congress should reduce regulation of insurance plans, medical treatments, and health savings accounts (HSAs).

“Congress and the next administration should take a targeted, piecemeal approach to ensure that market-based solutions such as health-status insurance plans; FDA reform to speed the adoption of new drugs, devices, and treatments; and the elimination of caps on HSA contributions are passed into law to reduce costs and improve the health care system overall,” Nascimento said.

Arianna Wilkerson (awilkerson@heartland.org) is a marketing coordinator at The Heartland Institute.

Image via Thinkstock

Author
Arianna Wilkerson works in government relations at The Heartland Institute.
awilkerson@heartland.org

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