In a rare admission of his limitations, U.S. President Donald Trump said recently about health care: “Now, I have to tell you, it’s an unbelievably complex subject… Nobody knew health care could be so complicated.”
When Mr. Trump promised during the election campaign that he would repeal Obamacare on his first day in office, he arguably did not know about the health care architecture designed by his predecessor. The stalling of his health care move last week, following stiff opposition within the Republican Party, signifies that the President is now struggling to breathe life into his signature promise.
It is indeed a tough task to disentangle the labyrinth of arguments in the debate that has within its range concepts as different as a ‘single payer system’ and a ‘free market system’. The Affordable Care Act, or the Obamacare, in force since 2010, is a hybrid between the two. It allows a federally regulated insurance marketplace that is subsidised in multiple formats. It incentivises people to enrol for health care, and mandates companies to insure their employees. Those who choose to stay out of insurance face a tax penalty.
Some taxes built into its architecture make the life of the affluent slightly costlier. For instance, the federal government collected $78 million in taxes from people who visit sun-tanning salons in 2015. Not a big sum, but all Republicans agree that it is unfair to tax patrons of sun-tanning salons. However, not all Republicans agree on what their leadership — in this case Mr. Trump and House Speaker Paul Ryan — have proposed as a plan to repeal and replace Obamacare.
The ‘Trumpcare’ plan
What is the proposed plan? For one, the scuttled American Health Care Act does away with the tax on sun-tanning salons. Gone also will be other taxes on the wealthy. Subsidies offered in the form of tax credits under Obamacare for people of low income and older age will shrink or disappear. Employers or individuals will not be mandated to enrol. State subsidies that helped the lower income customers pay out of pocket expenses will be gone. Obamacare allowed companies to charge older people not more than three times what they charge the younger ones; in this case, the ratio is one to five.
Overall, it might make insurance cheaper for the healthy and the young, but it will certainly make it costly for the old and the sick. According to the Congressional Budget Office, 24 million more people will fall out of the insurance net by 2026 if the new law comes into effect, while saving $150 billion for the federal government. The plan faced opposition from within the party from two opposite, irreconcilable viewpoints. Conservatives such as Senator Ted Cruz believed that it does not go far enough in undoing Obamacare and that only a more market-driven approach will bring costs down. The second group opposed it on the ground that it will be unbearable for the older and the vulnerable.
Obamacare pushed to broaden the insurance market so that the costs are spread across a larger number of healthier people. But it did not push far enough and hence premiums went up as healthier people dropped out, according to progressive critics.
Belief in the market among conservatives notwithstanding, it is illegal and socially unacceptable to turn a patient away from a hospital emergency care. Federal law mandates that all hospitals provide a patient coming into emergency section the needed care until she is ‘stabilised’. American hospitals had $41 billion in unrealised bills in 2011. So, there is a socialisation of health care costs. Only that it is ineffective and costly.
President Trump’s health plan, pulled out due to opposition from his own Republican Party, could have made 24 million Americans fall out of the insurance net by 2026