Tags: Healthcare Reform | obamacare | affordable Care Act | trump | solutions

Why Obamacare Is So Controversial and Solutions Elusive

Why Obamacare Is So Controversial and Solutions Elusive


By    |   Friday, 27 January 2017 03:53 PM

The Affordable Care Act, otherwise referred to as Obamacare because of the former president’s sponsorship and close association, was passed and became law on March 23, 2010.

In the House of Representatives, only one Republican voted in favor of the Act and no Republican Senators voted in favor. From the beginning, the Affordable Care Act was a Democratic bill almost universally opposed by Republicans. In 2010, the Democrats controlled both Houses of Congress and the Presidency and were able to pass legislation without Republican support.

The Republicans continued to criticize the Act and introduced numerous bills to repeal it without success. President Trump campaigned on repeal of the Act. Now, the Republicans control both Houses of Congress and the Presidency, so repeal or change is likely.

In part, the Act is a partisan political issue. It’s the kind of issue, unfortunately, Republicans and Democrats would likely fight about regardless of content. This contributes to the lack of consensus-seeking that was more typical of past political disputes but less typical of more recent political partisanship.

The biggest divide between supporters and opponents of the ACA is the lack of agreement on what the elected officials are trying to accomplish. The two sides have different objectives, different priorities, and different criteria they use to evaluate public programs.

Democrats support ACA because it provides affordable health insurance to those who otherwise are uninsured. This includes poor and working poor people and those with existing health issues, call pre-conditions, which make them uninsurable. About 20 million people have received health insurance under the ACA, and the percentage of uninsured Americans has dropped from about 16% to less than 12% since the ACA was implemented.

Democrats largely believe it is Government’s responsibility to provide access to health care for its citizens and take pride in this achievement. They will fight vigorously against any attempts to repeal the Act or diminish access to health care for those now insured.

Republicans are concerned about a different issue and view the ACA through a completely different lens. Republicans object to ACA for two primary reasons, which have nothing to do with health care. The Federal Budget deficit is running about $600 billion per year. This scale of deficit is unsustainable. Eventually, the increasing interest on the debt will overwhelm the Government’s ability to pay bills and require potentially draconian program cutbacks or result in default. Greece is experiencing the consequence of unsustainable deficits.

Providing health care is expensive, especially when a disproportionate number of newly covered people have pre-existing conditions – i.e. they are sick. Many signed up for ACA because they needed medical attention. Others, especially healthy young people, have not signed up to the extent predicted, leading to a further imbalance. Those who are healthy probably figure they will wait and sign up when they become sick and need medical attention. Most of the newly enrolled individuals are covered under Medicaid, because they are poor and cannot afford to pay for regular insurance. The gap between what they can afford and what they pay is an expense of Government under ACA.

With large existing budget deficits and even greater deficits forecast for the future due mostly to other entitlement programs that are underfunded like Social Security and Medicare, Republicans see a fiscal disaster looming. In other countries with such situations, the normal response would be to raise taxes. Australia, for example, offers universal medical coverage for citizens and permanent residents, but they have a special 1.5% tax on everyone’s income to pay for this service. Republicans believe in lowering taxes and not increasing taxes because they believe lower taxes will stimulate greater economic growth and job creation.

The ACA is funded through higher taxes on investment income, taxes on companies that do not provide prescribed health insurance to employees, taxes on medical devices, and a variety of other levies and tax subsidies. Insurance companies provide the subsidized medical insurance, but these companies are losing money because their costs are higher than forecast due to so many sick people signing up. Many of these insurance companies are withdrawing from participating in the ACA program or imposing much higher premiums, further increasing required government subsidies for the poor and making insurance unaffordable for moderate income recipients.

Republicans also decry the extra burden ACA places on small businesses that are marginally profitable and often do not provide their employees insurance coverage. Democrats feel the burden of health care is simply being transferred from these businesses to the Government or medical providers so these businesses can maximize profits. Both are correct; but the Democrats’ priority is to provide basic health care access to these “working poor,” while the Republicans’ priority is to encourage small business to expand and hire more employees.

Democrats celebrate the success of providing health coverage to formerly uninsured sick and poor Americans while Republicans fret the unsustainable high costs, big deficits, and prospects of insurance companies withdrawing from the program unless subsidies are increased significantly. Unless the Republicans agree to higher taxes to fund the program, which is highly unlikely, there is no good solution. Providing health care is costly; Democrats want to provide it but Republicans don’t want to raise taxes to pay for it.

Scott MacDonald, a successful CEO with a history of turning around struggling companies, is the author Saving Investa: How An Ex-Factory Worker Helped Save One of Australia’s Iconic Companies. MacDonald’s decades of corporate experience include serving as a senior consultant for Morgan Stanley, president of New Plan Excel Realty Trust and CEO of Center America Property Trust. 

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The biggest divide between supporters and opponents of the ACA is the lack of agreement on what the elected officials are trying to accomplish. The two sides have different objectives, different priorities, and different criteria they use to evaluate public programs.
obamacare, affordable Care Act, trump, solutions
Friday, 27 January 2017 03:53 PM
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