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Wednesday, March 8, 2017

The Three Piece Of Obamacare and Its Replacement

There are a great many parts to Obamacare, most of which are never discussed.  There's no way to discuss all of the relevant pieces in one post or even in twenty.  There are three, however, which are key.

The first issue is the coverage of Medicaid.  When that program was first enacted, it was meant to provide health care for those across the country who were experiencing difficulties that made obtaining healthcare impossible.  Basically, this meant people who could not otherwise get work.  People with disabilities, indigent children, and those who were suffering temporary difficulties that precluded work were all meant to get this coverage.  The program expanded a bit, but then when Obamacare passed, the scope of the program was increased dramatically.  For the first time, Medicaid was made into a program for all poor people, whether or not these people could pay for health insurance themselves.  It went from covering people in difficult situations to just covering poor people.  The Obamacare expansion of Medicaid also made it relatively easy for those who are in the country illegally to get coverage.  As a result, there was a vast increase in the number of people who were on the Medicaid rolls.  Indeed, over three -quarters of all the increase in the number of people with health insurance came from the Medicaid expansion.

The proposed replacement for Obamacare keeps those currently on Medicaid on that program.  In fact, it allows the states to make their own rules as to who gets. coverage.  All those currently on the program will be grandfathered in.  By 2020, however, the rules for federal payments for Medicaid will be changed to each state getting a grant for the program in proportion to population.  The restrictions on coverage will also be moved back towards the original program.  What this will do is to not throw anyone off the program, but as time passes, those on Medicaid will go off of the coverage if their circumstances improve.  Once off, they will need to meet the new requirements to get back on should circumstances warrant it.

The second issue is the employer provided insurance market; these are people who get their health insurance from their job.  Obamacare requires that employers with more than 50 employees must provide health insurance to the workers.  This mandate has not yet kicked in fully, but it has kept many employers from hiring new employees or forced others to replace full time workers with part timers.  The GOP plan gets rid of these mandates, so as to stop the interference with job creation.  For the most part, people with employer supplied health insurance will see no changes in the health care.

The third area is the individual insurance market.  These are people who buy their own coverage.  This is a small group of people across the country.  There are roughly 20 million people in this market area.  Obamacare forced these people to buy coverage on the exchanges.  These are the people who have seen their choices disappear as Obamacare has failed.  In about a third of the counties across America, there is only one choice available for health insurance.  In a few counties, there are no choices; insurance is just not available.  At the start of Obamacare, something like seven million policy holders in this group lost their coverage because of the law.  For them, it was "if you like your plan, tough, you lose it."  By the end of last year, there were about 11 million policies issued to this group.  That means that about 4 million people picked up insurance over the time when Obamacare was enacted.  For 2017, however, under Obamacare, the number of policies has declined by roughly 1 million, so that means only 3 million more insured than when Obamacare was passed.

The replacement plan will make some major changes for this group.  First, it will equalize for the first time the tax treatment of health insurance.  Right now under Obamacare, someone who gets his or her insurance from an employer pays no tax on the value of this benefit; it is a form of tax free income.  Someone who buys his or her own insurance, however, does not get that benefit in most cases.  Not only does the person have to pay for the insurance, but he or she also usually gets no tax benefit for doing so.  The GOP Obamacare replacement plan provides tax credits to this group which evens things out between this group and those who get employer-provided coverage.  Second, the replacement plan no longer requires people to buy health insurance.  That will undoubtedly mean that the number of people insured will fall a bit, but that will be by choice.  The freedom to choose for oneself is a good thing, not a bad thing.

Today, the news is blaring that the replacement plan from the GOP will reduce those with coverage by ten million.  That is just wrong.  Employer provided insurance will be unaffected.  Medicaid will be unaffected for all those presently on the system.  Only the individual market will see any change, and it consists of just over ten million insured.  There is no way that those ten million insured will all drop off their health insurance.  In truth, if there is any contraction in the number covered, it should be small, and nearly all of those who drop coverage will do so because they no longer see a need for it.  Remember freedom is a good thing.


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