Under President Trump’s administration, we have seen several significant challenges to the Affordable Care Act. In 2017, we saw Trumpcare or the American Health Care Act (AHCA) pass the House yet failed to pass the Senate. However, Trump successfully passed a federal tax bill which removed the tax penalty for not having health insurance which will likely affect the enrollment numbers of healthy individuals in 2019, the year the mandate is removed.
Protesters speak out against the Affordable Care Act in front of the Supreme Court during a previous legal challenge. Photo: Brooks Kraft LLC/Corbis via Getty Image
Now in June 2018, the guaranteed issue provision of the Affordable Care Act is in jeopardy. The guaranteed issue provision of the Affordable Care Act requires the insurers to accept applicants regardless of their age, gender, or most importantly, of their pre-existing conditions. These factors would otherwise allow insurers to charge some people more than others due to their medical history. With the tax penalty removed, a new lawsuit filed in June by 20 state attorneys asserts that the guaranteed issue provision and other key provisions of the healthcare bill should also be removed due to their inherent link to the tax penalty.
If their case wins, we shall see the guaranteed issue provisions, protections for those with pre-existing conditions, and the current price ratings based on age and region removed. Technically, the ACA individual mandate is still in force although the tax penalty has now been set to zero. Since Trump’s tax bill did not effectively remove the mandate, the lawsuit led by Ken Paxton would be seen by many experts as lacking support. On the other hand, we will likely see a reduction in healthy individuals enrolling into the individual market due to the removal of the tax penalty, thus increasing premiums for everybody else as the sick and disabled take a bigger share of the enrollees. However, we are seeing some pushback at the state level with some states such as New Jersey and Massachusets implementing their own tax penalty for not having health insurance. We are surprised to see California and other states have not yet followed this path to stabilize the ACA.
In all, Obamacare is still upheld at every opportunity by the Supreme Court and we have also seen 70 repeal attempts by the House fail. On the other hand, the Affordable Care Act has failed to address the steadily rising medical costs and thus health insurance premiums. In one of our previous articles, we went over the big hospital systems being major contributors to medical inflation, especially with the acquisition of smaller hospitals and then immediately jacking up the prices of their services. We have seen drug costs rising to over 18% of the total medical costs yet there is little power and authority given to the insurers to control drug prices. The Trump administration’s new Secretary of Health and Human Services, Alex Azar, wants to give private insurers more power to negotiate drug prices, especially for Medicare prescription drug plans. Healthcare costs are estimated to be roughly 1/6th of the U.S.’s GDP (CMS national health expenditure data) which is, to the say the least, substantial. If the U.S. insurers can be granted more authority over the prices they pay (and thus the consumers), we may be able to see at least a slowdown in health insurance premium hikes.
At Solid Health Insurance Services, we will always strive to keep our clients informed about the healthcare trends and changes to the state and federal legislation around the Affordable Care Act. Our mission at Solid Health Insurance Services is to find for you affordable health insurance, life insurance, long-term care insurance and travel insurance which fits your medical needs and budget for your individual, family and business needs. Please contact us at 310-909-6135 or at info@solidhealthinsurance.com.