Obamacare VS. Trumpcare: the American dream of health insurance

Alongside immigration and government and tax reform policies, one of the cornerstones of Trump’s campaign was to prioritise restructuring healthcare. President Obama had hoped that his legacy would be his contribution to health – ‘Obamacare’ – but Trump is striving to see it undone. Still, despite Obamacare’s unpopularity, Trump’s battle to replace it has already been an uphill one, and that shows no sign of changing.

Broadly speaking, to receive health care in America you need to have insurance; you could buy it yourself, or it could come from your employment package and include your family. A lack of insurance could mean more expensive healthcare when you need it, and cause issues with follow-up treatments. There are also programs like Medicare and Medicaid, paid for by the government to help both the elderly and poor families respectively. Despite private companies bearing of the most insurance costs, the US government still pays 64.3% of healthcare expenditure, which equates to an incredible $1.9 trillion.

Not-so-great Obamacare

In 2010, Obama came ratified the Affordable Care Act, a collection of measures designed to improve the quality and cost of healthcare in America. Among them were provisions to keep children on their parents’ insurance until 26 (thereby avoiding issues when they go to college), mandating businesses with more than 50 employees to subsidise healthcare, and making it compulsory to buy insurance – or pay a fine.

So far so sound good it would seem – who could possibly object to better healthcare?

Well, insurers certainly did. One of Obamacare’s clauses meant that insurers had to provide insurance for people with ‘pre-existing conditions’ – that is, those who were already ill before applying. For insurers, this was terrible news. Buying insurance is essentially a bet – you’re betting you’re going to fall ill. If you do, you win the bet and your treatment is paid for. If you don’t, you’re healthy, so it’s all good. On the other hand, insurers are betting you don’t fall ill so they can keep the premium you paid to buy insurance. The issue here is that insurers are guaranteed to lose if sick people can play the game. American Policy-makers are not oblivious to the mechanism, so they hoped that by making insurance compulsory enough young and healthy people would buy it to offset the costs of covering the sick, but this did not happen.

Further opposition came when some families also saw the cost of their insurance more than double under Obamacare as premiums were necessarily rising to cover more of the sick. Obama also promised that “if you like your healthcare plan, you can keep it,” but these words soon rang hollow as the policy scrapped a number of insurance plans that it deemed poor quality.

This week, Aetna (one of America’s largest health insurers) heavily dialled on its Obamacare marketplaces, condemning a loss of $900 million since 2014 which it links to the policy. Moreover, only a third of US counties have an Obamacare provider, and public support for the policy has understandably remained low.

Trump’s chance to be Trump

Obamacare’s unpopularity meant Trump had support in crafting something new to fill the gap. The Trumpcare bill passed a vote in the House of Representatives in early May this year, having failed to do so in March. The Trump bill intends to make a number of changes: fading out Medicaid, allowing states to determine mandatory health benefits independently from the Federal government and relaxing requirements for insurers to accept applicants with pre-existing conditions – instead allowing them to discriminate prices in such cases.

It is predicted these changes would lead to 24 million more Americans being uninsured, but CBO estimates the price of premiums would drop to about 10% of what they are currently by 2026. It is believed expected drop will be due to the new healthcare plan significantly decreasing insurers’ responsibilities and extent of required coverage. For example, they would not be forced to cover emergency room visits or pre-natal care under the Trumpcare bill. Throughout the next 2 years however, the Congressional Budget Office reports premiums will increase by up to 20%, overall increasing the burden most heavily for those less fit to carry it like the elderly. Indeed, the bill has not been a popular one, with critics slating it as “Obamacare-lite” and it is speculated to only have passed due to political deal-making – especially given its first failure.

The bill is up in the air at the moment – it will be heading to the Senate next, where it is probable that it’ll be tweaked and face opposition. At the moment, those in the US healthcare field are watching with baited breath – having faced a massive systemic change less than 10 years ago, they’ll be wondering whether they are imminently facing another one.