The Healthcare Quagmire

28 March 2017

In March, President Trump suffered his first serious political setback after Republican party leaders decided to abstain from legislation repealing the current US healthcare system, popularly known as the ‘Affordable Care Act’ (ACA) or ‘Obamacare’. Trump’s proposed bill, called the ‘American Health Care Act’ (AHCA), failed to convince either House moderates or Freedom Caucus members who found that no substantial changes were made to the existing Obamacare structure. House Speaker Paul Ryan was forced to withdraw the bill, due to a lack of supporting votes.

Given below are a list of pros and cons of Obamacare and Trumpcare:



  • More Americans gained health insurance coverage: Obama’s healthcare act increased the exposure of health insurance in the US. Over 16 million Americans obtained health insurance coverage within the first five years of the ACA.
  • No denial of coverage for people with pre-existing health conditions: People with pre-existing conditions often found it difficult to get health insurance before the ACA. The ACA prohibits denial of health coverage and the charging of higher insurance rates because of a pre-existing health problem.
  • No time limits on care: Prior to the ACA, there were chances of people with chronic health problems running out of insurance coverage as insurance companies set limits on the money they would spend on an individual consumer. Under Obamacare, insurance companies can no longer maintain a pre-set limit on the coverage they provide their customers.
  • Children can stay on their parents’ health insurance plans up to age 26: As of 2012, this provision helped add over 3.0 million previously uninsured young people.
  • Expansion of employer sponsored health coverage: Obamacare requires all companies with over 50 full-time employees to offer health insurance to full-time staff or they may be subject to penalties. This increased the number of Americans receiving employer-subsidised health insurance plans, thus reducing the need for these individuals to receive Medicaid through the marketplace.


  • Individual Mandate: The goal of Obamacare is for people to be insured all year round. Under Obamacare, every eligible American citizen must obtain health insurance or face a penalty fine each year. This mandate was introduced to make sure that there’s enough funding in place to make insurance plans affordable in the marketplace. However, it infringes on the right of people to choose whether or not they want coverage.
  • Higher Premiums: Under Obamacare, US insurance firms started providing a wider range of benefits, which also drove up insurance premiums.
  • Higher Taxes: Several new taxes were created to help pay for the ACA, including taxes on medical device and pharmaceutical sales.
  • Complicated enrolling process: Many customers have complained that signing up for the right family and business coverage on the ACA website is complicated. The website was fraught with technical issues when first launched and resulted in delays and lower-than-expected signups.



Reduction in Federal Deficit: The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) had · indicated that Trump’s proposed changes in the healthcare bill would reduce Federal deficits by $150 billion over the 2017-2026 period.

  • No individual mandate: Trump seeks to eliminate individual mandate and advocates the point that “No person should be required to buy insurance unless he or she wants to”.
  • More tax saving: The bill would provide a tax cut of $600 billion to large company owners.
  • Interstate Insurance Sales: For the last 70 years, insurers have not been able to sell their products across state borders. Under Trumpcare, consumers would have the choice to purchase out-of-state health plans. According to Trump’s campaign website, he believes that if insurance companies can sell to a broader audience, “insurance costs will go down and consumer satisfaction will go up”.
  • Price Transparency: Under Trumpcare, individuals would be given greater access to cost breakdowns so that they can look around for the most cost-effective provider or treatment as they see fit.
  • Block-grant of Medicaid Funding: The Federal government pays for the cost of Medicaid, but the contribution is on a Dollar for Dollar basis. Trump is proposing an alternative to the current financing system with a “block-grant program”. As per this, states would be allotted a set amount of money each year to run their individual Medicaid programs. Trump suggests that block-granting funds to the states would encourage state Governments to weed out fraud and eliminate wasteful spending.


  • Higher levels of uninsured people: The CBO had suggested in its report that under the new legislation, the share of uninsured US residents would rise significantly.
  • Bad news for those dependent on employer coverage: The employer mandate does not feature in the Trumpcare bill. While this might be a good thing for employees who already have health insurance plans, it is bad for those who rely on employer coverage. Also, fewer employers providing coverage means a higher burden on the state to provide assistance.
  • Higher premiums for single policyholders: According to the CBO and JCT, average premiums for single policyholders in the nongroup market would be 15 to 20% higher in 2018 and 2019 under Trumpcare than under current law.

The Way Ahead

Donald Trump’s health care plan does not have enough specifics for detailed interpretation, but his objective is clear: He intends to repeal and replace Obamacare for good. The bill was widely viewed as a litmus test for Trump’s ability to get legislation passed through a Republican-controlled House and Senate. After the bill’s failure, there is a great deal of anxiety that his bills for tax reform and infrastructure plans would also witness the same fate. Republicans now have two options to move forward on the health care reform. The first option is to attempt and unify the House Republicans behind the American Health Care Act. The second and relatively easier option is to negotiate with the Democrats and reform Obamacare. In latest development, top White House officials started discussions with moderate and conservative Republicans in the US House of Representatives with an aim to revive a plan to repeal and replace Obamacare.