How Does Trumpcare Compare to the ACA?

On the campaign trail in 2016, Republican nominee Donald Trump insisted that the first thing he would do as president would be to repeal Obamacare. President Obama’s Affordable Care Act (ACA) has completely changed how health insurance is managed and distributed in the United States.

As soon as Trump made this promise, thousands of bloggers and journalists took the internet to offer their thoughts on what would happen if the ACA was repealed. The problem is that no one, not even Trump, had any real details on what his new health plan (dubbed Trumpcare) would look like. After Trump became president-elect, details began trickling out as he worked with a transition team to develop his strategies for the next four years. No matter what happens to the ACA under Trump, health insurance in the United States is definitely going to change.

Can Trump Really Repeal Obamacare?

Full repeal is unlikely, but Republicans are still pushing for a complete overhaul on the health care system. Donald Trump needs a two-thirds majority in the Senate to repeal an existing law, and there are only 54 out of 100 Republican Senators who will be in office starting January 2017. Republicans can try to repeal the law, but Democrats will filibuster the process, effectively grinding it to a halt.

However, Republicans can attack different areas of the ACA and how it’s funded, which will bring about serious changes and render much of the law ineffective. After the election, even Trump himself said that he wants certain parts of the ACA to be part of Trumpcare, including the provision that allows young adults up to age 26 to stay on their parents’ health plans as well as provisions protecting people with pre-existing conditions. This means that any die-hard Trump supporters who were looking for a complete repeal of the ACA may be disappointed.

In any case, substantial changes are coming. Details of these changes remain unclear as Republicans are still coming to a consensus even as Trump recently gained the electoral votes needed to secure the presidency. How does Trumpcare stack up against Obamacare? Let’s look at a few key points.

Tax Deductions

Trump’s plan would allow Americans to write off the total amount of their health insurance premiums from their federal income taxes. Under the current system, self-employed people can already write off their premiums, and anyone can take a deduction as long as medical costs exceed 10 percent of your adjusted gross income for the year. Employer-sponsored health insurance is paid in pre-tax dollars. Trump’s proposal doesn’t seem to affect the current system, other than allowing more people to take a tax deduction, and it remains to be seen how this will impact the average American tax bill.

Health Savings Accounts

Right now, health savings accounts (HSAs) are available in conjunction with high-deductible health plans. They’re tax-advantaged savings accounts that help people save money for medical bills. If you use the money for medical costs, then the funds aren’t taxed as income. Trump wants to expand on this idea and bolster HSAs so that more people can use them – and use them more generously. Under his plan, families could effectively share HSAs and transfer them to heirs without additional taxes or penalties.

Changes to Medicaid

The Affordable Care Act expanded Medicaid in states that chose to accept the terms of the health care law. Many states did, which led to millions of additional Americans qualifying for and enrolling in state Medicaid programs. Trump wants to change how Medicaid gets funded. Under his plan, states would be given block grants to use on their individual Medicaid program instead of the current method, which involves the federal government covering the cost on a per-enrollee basis. Block granting has its advantages, but the concern is that states may scale back their programs due to funding, leaving millions of low-income families without access to health insurance.

Prescription Drug Costs

It’s no secret that prescription drug costs are on the rise, an issue that plagued the campaign trail and remains one of the most pressing concerns among American voters. Donald Trump wants to allow foreign drug manufacturers to market and sell their medications in the United States. The pharmaceutical industry has long been overcharging for medications in the U.S. to make up for profit losses in other countries. Under Trumpcare, insurance companies will be able to cover prescriptions from countries, such as Canada, where the cost of prescription drugs is much lower. The ACA has not dealt with prescription drug costs outside of Medicare other than to encourage people to get preventive treatment, which drives down overall health care costs because can reduce the need for long-term, high-cost medications.

Access to Health Insurance

Under Obamacare, consumers have the option to purchase health insurance from a variety of sources. There are federal and state marketplaces, private companies, independent brokers and websites like this one that allow people to shop for the coverage that they need – on a state by state basis. Insurers tend to stick to state boundaries when selling coverage because networks are determined on a regional basis. States also have different regulations and rules in terms of licensing, so even though insurers can sell across state lines under the ACA with an agreement between the states, companies don’t do it for many reasons. Trump wants to encourage the sale of health insurance across state lines. Trump believes that opening up health insurance sales across state lines will spur competition and lower premium costs. Since no companies jumped on the idea with the ACA, it will be interesting to see if there are any takers under Trumpcare.

The Individual Mandate

Even supporters of Obamacare had trouble accepting the individual mandate, a key feature of the Affordable Care Act that required most Americans to have health insurance or pay a fine for noncompliance. Right now, if you don’t buy health insurance during the open enrollment period – which runs until January 31, 2017 – and you aren’t exempt from the mandate, then you will have to pay a penalty fee when you file your taxes for the year. The fee is the greater of 2.5 percent of your household’s taxable income, or $695 per uninsured adult and $347.50 per uninsured child in your household. Speaker of the House Paul Ryan and projected Secretary of the Department of Health and Human Services Dr. Tom Price have both submitted plans to Congress that do not include the mandate. Experts are expecting Trump to eliminate the mandate when he takes office, but it’s possible that Trumpcare will offer some form of tax subsidies to help low-income families afford health insurance.

Other Pressing Insurance Concerns

Despite Trump’s vision of a national health insurance policy, Trumpcare may transfer the ability to determine the structure of health insurance plans from the federal government to the states. This is where Trumpcare gets confusing because Trump has said that he would like to see the creation of a federally mandated list of minimum coverage items to be used as a guideline when insurance companies want to sell across state lines, but both Price and Ryan’s plans allow the states autonomy in determining what kind of coverage is sold.

The ACA allows states to administer their own parts of the federal marketplace by determining which insurance companies can sell insurance in each state and having some say in premium costs. But when it comes to the coverage offered at varying levels of insurance, the federal government dictates plan information.

Trump may not have the authority necessary to repeal the ACA completely, but he does have enough Republican clout to gut the ACA and make it almost unrecognizable. Trumpcare will bring together two sets of health insurance reform ideas that have already been introduced into Congress. Dr. Tom Price echoes Trump’s sentiment that the transition from the ACA to Trumpcare can be seamless and immediate, while Speaker Ryan has said that a 2-year transition period will be necessary. No matter what each party involved may think, the fact remains that the ACA is not going to be the health insurance law of the land much longer. It is only a matter of time before Americans discover what changes are in store for their health insurance choices going forward.