Last Monday, with the endorsement of the American Health Care Act, the Trump administration and the majority of the Republican Congress introduced their plan to repeal and replace the Affordable Care Act, more commonly known as “Obamacare.” Essentially, the bill strikes down Obamacare’s controversial individual mandate for Americans to have health insurance. The new bill will offer U.S. citizens tax credits that will allow them to acquire medical coverage from health insurance companies competing on the market.
This free-market strategy is expected to include monthly premiums on the Affordable Care Act for all Americans. Up until now, 20 million Americans have signed up for the Obamacare premium subsidies found on Healthcare.gov. Starting in 2020, funding for Medicaid will end, resulting in vast inequalities between individual states. The variables determining state funding will be calculated according to how much each state spends per enrollee on Medicaid, population demographics and whether or not the state participated in Medicaid expansion under the ACA.
Part of the goal of Obamacare was to reduce the number of uninsured American citizens, as well as to give states the opportunity to expand Medicaid, with the federal government footing the bill. Thirty-one states expanded the Medicaid program. Of the 20 million citizens who received health insurance under Obamacare, half of them did so through Medicaid.
This will lead to disparities between states in terms of Medicaid funding. Under the original 1965 fiscal structure of Medicaid, funding increased as an individual state’s need changed. Currently, Medicaid’s resources become available as each state amends its rules of eligibility and payment formulas for doctors and hospitals. Under the Republican Party plan released on March 6, federal funding for Medicaid beneficiaries will be frozen, and altered only if the consumer price index changes. This concerns state governors, who anticipate that the only means to maintain the solvency of the Medicaid program will be to commit state funds as their demographics or their ability to pay hospitals and doctors change.
In addition, states who did expand Medicaid under Obamacare will continue to receive federal assistance to pay for the expansion. As this will cease in 2020 with no further provision, many are now predicting that states may be forced to drop coverage for their most expensive populations or for the Medicare-Medicaid demographic which is mainly made up of people age 85 or older. With a fixed commitment of federal funds for Medicaid, states may not be able to provide coverage for the growing population of sicker and older Americans.
Date: March 15, 2017