Late yesterday evening, Republicans in the Senate took the first step toward repealing the Affordable Care Act, also known as ObamaCare. The vote which passed 51-48, sets in motion a budget reconciliation process that will allow Congress to repeal certain aspects of the law specifically those having to do with taxation and funding.
Repealing the entire law would require more doing but this first step lays the groundwork to effectively render the law unsustainable without adequate funding.
While there appears to be pretty much unanimous support among Republicans for repealing the law as quickly as possible, there is less solidarity on replacing the law with something better. And as quickly as the repeal process appears to be moving, it seems unlikely that a satisfactory replacement will be ready to immediately take the place of ACA.
The question of whether ACA is good or bad is a highly polarized issue. I personally see the value in some aspects of the bill such as the exclusion of pre-existing conditions clauses. But with that said, much of the bill consisted of shifting expenses from one payer to another. And while this was effective initially, we are starting to see costs of ACA health plans rise.
In addition to the consumer aspects of ACA, the law also included provisions restricting profitability of insurance companies. The impact of these provisions has led to massive changes in these companies and to a reduction in competition.
President-Elect Trump campaigned on the idea of opening state borders and allowing insurance companies to compete freely. I’m not sure how quickly this change could be made as it would undoubtably face stiff challenge from individual states.
I would like to see changes made to the existing ACA law but I am concerned about the desire to simply repeal the law without provisions in place to protect those currently served by it.
Many of those ACA health plan participants are also the same people living and writing about personal finance and early retirement.
I would love to hear back from readers about their thoughts on repealing ObamaCare. How much of an impact do you think this will have on you and your retirement plans?
Hi FS, I’m hopeful that any repeal and replace put through will have support from both sides of the aisle. The GOP was always critical of the Dems for how the ACA was passed without there support and it would be hypocritical to do that themselves now.
I’m a healthcare banker so have seen a lot of the ins and outs of ObamaCare. There’s definitely a lot more to it than the normal consumer sees, like the impact to insurance companies you mentioned. I’m skeptical of opening states up for cross-border competition, there’s a lot of hurdles to that working (although it sounds like a great idea).
I still have a few years before retirement and having to buy insurance in the open market so hopefully by then the dust will settle on all this and we’ll have a feasible option available!
Thanks for the feedback, Green Swan.
I too would like to see more cooperation. Nothing irritates me more than one party getting elected with slightly more than half of the vote and then declaring that they have a mandate. And then they proceed to push through their agenda without regard to working with people with differing views.
I’m optimistic that things will be different this time.
Thanks again.
Since ACA was modeled on Mitt Romney’s Massachusetts plan, the implacable opposition really baffles. As a prospective retiree that just signed up after exhausting COBRA, obviously very concerned about the tremendous urge to repeal, but not so much to replace. Also why the complaints get so much attention, but not the very many that have benefited. Or that our healthcare system pre-ACA had even higher accelerating costs while covering fewer each year. Or that after one became sick, faced with huge premium increases or exclusion from coverage.
Hey Steve. Thanks for commenting.
I will say that using Massachusetts as the model for a national healthcare program is somewhat problematic.
The greatest challenge being the disparity in average income levels between Massachusetts and most other states.
For instance, when you compare the income level of Massachusetts with New Mexico, what folks can afford here is very different.
The end result for states like New Mexico has been a dramatic increase in the number of people covered by Medicaid. This has been subsidized by the federal government but over time that subsidy will diminish. And as it does, the state will struggle to fund the plan.
Additionally, the reimbursement paid to providers under Medicaid is so low, New Mexico will see a reduction in physicians willing to practice medicine in the state.
So while there are a number of provisions that are a good thing – pre-existing conditions, allowing children to remain on their parents’ policies for longer – there are many provisions that need to be changed.
I am a believer that longer term, increasing interstate competition, reducing dependence on employer-sponsored plans, and engaging patient in the payment process will be the most beneficial things we can do to improve the system.