The American Health Care Act’s failure was a victory for the American people. The Congressional Budget Office (CBO) found that the American Health Care Act (AHCA), the GOP’s answer to the Affordable Care Act (ACA) also known as Obamacare, would have lead to 24 million Americans losing coverage. Other analyses revealed more flaws in its policy as well as GOP hypocrisy in early 2010s criticism of Obamacare.
The good parts of this bill were those that were carried over directly from the ACA. Some of the GOP’s new additions, on the other hand, threatened the coverage of millions of Americans and would increase the price of insurance for millions more. The new bill also failed to realize the GOP’s 8-year rallying cry of repealing the individual mandate.
The New York Times reported that the bill carried over four key Obamacare provisions: children would be able to remain on their parents’ insurance plans until age 26, insurers would be barred from increasing the price of insurance based on pre-existing conditions and other health history, insurers would have to provide ten essential health benefits (such as maternity services and preventive care), and insurers could not set annual or lifetime limits on how much coverage they will provide a customer.
However, the AHCA would have repealed two provisions that help people afford health insurance: the employer mandate and cost-sharing provisions. The employer mandate requires that all small businesses with more than 50 full-time employees must provide health insurance to at least 95 percent of their employees or face a fee. Critics claim that the provision causes businesses to limit full time employment and favor part-time employment, which hurts vulnerable workers. However, those claims are part of a false narrative. For instance, FiveThirtyEight reported that the majority of job growth between 2010-2014 was in full-time employment. Further, limits to part time workers’ hours over this time period were unsubstantial and too small to be linked to the ACA.
The second provision that was scrapped was the cost-sharing provision that provided a sliding government subsidy to help 10 million mid and low income Americans afford health care. Here, the GOP cited reasonable concerns. Because the subsidy decreases as one earns more, it disincentivizes working more hours. The CBO estimated that this provision will decrease the total number of hours worked nationally by 1.5-2 percent, which will be equivalent to 2.5 million full time jobs by 2024.
However, our priority should be making sure that the poor can afford health care rather than the decrease in efficiency due to fewer work-hours—especially considering there is a decrease in efficiency in inadequately insured populations.
Not only that, but 155 million American workers receive health care plans from their employers, and this income in-kind is not taxed (and thus essentially subsidized). Fully one-third of this benefit flows to the top quintile of income-earners, representing a clear misstep in the trade-off between efficiency and equality. To be politically even handed, it should be noted that Obama grilled McCain in the 2008 campaign for reasonably proposing to eliminate this tax break, which inefficiently incentivizes employers to provide health care in lieu of pay.
Instead, the GOP plan offered different solutions to issues of affordability. The plan proposed to give subsidies by age instead of income, but the Economist estimated that this would leave many with only up to 42 percent of the assistance they received under the ACA.
The Republican line has been that insurance industry deregulation would bring down prices to compensate, but it’s unlikely that the potential decrease in price would compensate for the slashing of subsidies.
This bill was also hypocritical. Since the passage of Obamacare, the GOP has demonized the individual mandate, a provision of Obamacare that forced people who could afford health insurance but did not buy it to pay a tax. Such policies are necessary because otherwise too many young, healthy people, for whom health risk is low and thus insurance is cheap, would choose not to buy insurance, pushing up the price of insurance out of the reach of the old and sick.The GOP, nevertheless, branded the individual mandate as an autocratic attempt to force people to buy health insurance and promised to repeal such provisions.
However, the AHCA would have simply redirected this penalty. Instead of being penalized by a tax, people found to have had a lapse in their insurance of 63 days or more out of the year would have been forced to pay a 30 percent surcharge on all premiums paid to their insurance company over the next year.The merits and pitfalls of redirecting the penalty fee to insurers notwithstanding, this shows that the right rallied against the individual mandate as a breach of freedom, despite knowing that such a policy was necessary.
These flaws in the bill led to criticism from all sides. Thankfully, the effort collapsed—bringing down with it the GOP’s credibility.