Death of Obamacare? Reforms Under the New Presidency
Following the results of the recent election, the American healthcare system will be challenged by uncertainty and transformed by free market philosophies. Amidst these changes, the new Congress and President will need to adapt the new legislation to the existing healthcare foundation and the Affordable Care Act, commonly known as Obamacare, which expanded healthcare coverage to uninsured Americans.1 In mainstream media, there are frequent reports that the new government will end Obamacare, but there are few reports on the specific plans and ideologies that will facilitate the transition to a different healthcare model. Over the next four years, the government will likely work towards adapting existing Republican proposals that support Trump’s campaign to reduce government intervention in favour of competition as a market regulator.2 Specifically, Trump plans to maximize competition between health insurance providers through free market reforms to reduce premiums and minimize rationing of care. These principles are also at the core of the Patient’s Choice Act proposed by Paul Ryan in 2009, which will likely replace Obamacare in the coming years.3 Will these reforms revolutionize the cost and provision of healthcare for the average citizen? How will they balance the needs of rare disease patients?
The legislation at the centre of the American healthcare reform is the Obamacare, which was designed to improve insurance coverage and how Americans were covered. Its functionality relies on the assumption that if it were mandatory to purchase health insurance for all citizens, the cost of insurance premiums per individual should decrease. The act also ended pre-existing condition exclusions for children, arbitrary withdrawals of insurance coverage, and lifetime limits on coverage.1 This is extremely beneficial for rare disease patients like Megan Barron, who suffers from epidermolysis bullosa and requires more than $10,000 per month for bandage supplies to manage her condition. Under Obamacare, she was able to receive coverage despite her pre-existing condition, she was also able to be reimbursed for her medical fees without worries of reaching a lifetime insurance cap, which she describes to make her life “worth only a certain limit – a limit [she] was getting closer to reaching with every bandage change and prescription refill.”4 While Obamacare does have a number of benefits for those with chronic and rare conditions, it is also very limited in that it only covers the 16.4 million Americans who do not receive Medicaid for the poor, Medicare for the 65+ and disabled or employment insurance for working people.3 In addition to only benefiting a select number of individuals, Obamacare has also been criticized for its lack of financial sustainability. To ensure that insurance companies can afford to cover “high-risk” individuals, Obamacare reimbursed participating insurance companies for over $2.2 billion in 2014. It is forecasted that there will be a 22% premium hike by 2017.5,6 Thus, while Obamacare has offered coverage and lifetime cap protection to protected individuals, it doesn’t over comprehensive coverage for the entirety of the population, and its financial standing has been heavily criticized. These factors are commonly cited as reasons for repealing and replacing Obamacare.
Both the platforms of Donald Trump and the Republican Party prioritize repealing Obamacare, arguing that “no person should be required to buy insurance unless he or she wants to”.7 Trump is proposing a free market system that enables the sale of health insurance across state lines to increase competition and decrease premiums. Trump also supports transparency for the cost of physician services so patients can select the most economical option. He additionally plans to import safe, reliable and cheaper internationally, which will a highly controversial proposition also put forth by Hillary Clinton. Due to the ambiguity of policy and lack of specifics on how it will be executed, people are unsure of whether this will translate into moving pharmaceutical manufacturing overseas or permitting international pharmaceutical companies with new treatments can bring these therapies to America, or something in between. Depending on how the drug important is regulated, the impact of this policy can vary. From an optimistic perspective, it is foreseeable that opening up a foreign market can introduce new and more cost-effective therapies. This would benefit patients with any one of the 95% of rare diseases that lack an FDA-approved drug treatment.8 This new policy may enable the FDA to streamline the approval process for successful therapies overseas, saving patients from the financial burden and risks associated with medical tourism. A free market approach will increase competition to prevent companies from overly capitalizing on the period of marketing exclusivity of orphan drugs and attempt to maximize orphan drug prices due to lack of alternative treatments.9 However, some believe that allowing for the importation of safe, reliable and cheap drugs is deleterious for rare disease patients. Some experts believe that the free market for pharmaceuticals could deter American companies from developing orphan drugs, which are already underdeveloped due to limited profitability. This is based on the logical argument that there is already a small number of patients that substantial orphan drug costs need to be recouped from, so if this pool were to shrink because patients are seeking alternative imported treatments, manufacturers have even less incentive to creative orphan drugs due to limited economic viability.9 Much of the forecasted pros and cons of drug importation, for now, is speculation because the logistics of drug importation has not been revealed.
The concept of a free market healthcare system is only the guiding principle for shaping healthcare legislation over the next four years and will not fully represent the more comprehensive and research-supported policies that will be enacted. In fact, the legislation proposal and drafting process is not in the hands of Trump, but rather the legislative branch of government: Congress. Congress consists of 100 member of the Senate and 435 members of the House of Representatives and is responsible for dividing the responsibility of lawmaking to each of their specialized subcommittees.10 Once the Senate and House approve the bill, it is then passed onto the President for approval before it is enacted into law. In other words, the President’s role is more centered on approving policy than developing it. In the American parliamentary system, there is also a Speaker of the House of Representatives, who appoints member and chairpersons of special committees that considers the input of lobbyists, professional groups, and consultants in shaping and passing laws that govern the United States. On all of these committees, there is a chairman selected from the majority party, the Republican Party. The chairman then ensures that every committee is comprised of more Republican representatives than Democrats. One of these committees is the Ways and Means Subcommittee on Health, which is responsible for payments for healthcare, health delivery systems, and health research. The committee has verbalized their concern that the administration has not established the necessary safeguards to protect federal taxpayer dollars during the ACA enrollment and income eligibility verification. Because the committee is heavily Republican, they are committed to working with President-elect Trump on healthcare reform and issues they have “dreamed of doing” and now they have “a speaker and leadership who are saying ‘bring it on’ in a big way.”11 In an interview, Chairman Kevin Brady revealed that the committee plans to deliver on a patient-centered healthcare plan that eliminated all ACA mandates, taxes, and the “159 federal agencies between you and your doctor.”11 In its place, the committee plans to implement portable insurance that can follow a person from job-to-job and state-to-state. From the statements from the Ways and Means Subcommittee on Health, we can see that their stance is very much aligned with Trump in creating free market competition to replace Obamacare. Thus, it is foreseeable that they will create and approve policies to reduce government intervention and promote free market regulation.
The goal of allowing for self-regulation of healthcare by the market is to promote a patient-centered healthcare plan that gives the patient more power and freedom to choose their insurance coverage and the treatment he receives. The concept of a patient-centered healthcare plan is not new. It comes from The Patient’s Choice Act (PCA), a piece of reform legislation first introduced by the Speaker of the House, Paul Ryan, in May 2009 before the enactment of Obamacare. Similar to the stances of President-elect Trump and the Way and Mean Subcommittee on Health, the Act states that Americans should have the freedom and flexibility to choose the care that best suits their needs and that insurers should compete for your business and treat you fairly. The ACA emphasizes the transition from “sick care” to “healthcare” by creating incentives to reduce the prevalence of five preventable chronic conditions that consume 75% of healthcare spending and contribute to 66% of American deaths, including heart disease, cancer, stroke, chronic obstructive pulmonary disease and diabetes.2 Public health organizations will develop tools to education and encourage Americans to promote personal health and avoid illness. The Centers for Disease Control and Prevention will develop web-based prevention tools that help people create personalized intervention plans taking into account personal health, family history, BMI and other individualized health factors. There is a reward system for states with greater than 90% vaccination rates and lower premiums for seniors who adopt healthier behaviours. By providing both the tools and incentive to engage in preventatives healthcare practices, the PCA will be able to improve the wellness of the population and decrease treatment costs in the long run.
In addition to prioritizing prevention, the PCA also offers four specific protections, which will greatly benefit rare disease patients. The first of these approaches is to lower premiums by allowing for the selling of insurance across state lines and uniting small business and individuals to increase their purchasing power to negotiate with insurers for lower prices. Specifically for people who do not quality for Medicare or Medicaid, there is an age-adjusted refundable tax credit that allows individuals to purchase health insurance. This allows people to retain affordable access to insurance that is currently offered under Obamacare by removing financial barriers for those who can’t receive insurance through employment or a government provider. The PCA also ensures status quo for guaranteed insurance coverage regardless of health status. The second goal of the PCA is to ensure that coverage cannot be revoked or denied regardless of age, income or medical insurance. It will ensure that individuals are not charged more than standard rates when dealing with a medical issue to provide consistent coverage. Coverage for pre-existing conditions is extremely important for patients who suffer from a rare disease, who may have previously been denied coverage because of the genetic basis for their disease. In fact, 80% of rare diseases have a genetic basis and can be classified as a pre-existing condition.12 Under the proposed legislation, patients with pre-existing conditions cannot be denied coverage and that companies cannot refuse to renew plans because the patient is sick. Furthermore, individuals cannot be charged more than standard rates when they are dealing with a medical issue to ensure that people can afford consistent coverage. Together these two parts of the PCA compensate for some protections currently offered under Obamacare.
The PCA also emphasizes the development of cures and treatments by building on reforms to the 21st Century Cures Act by strengthening the National Institutes of Health to provide a robust and steady level of discretionary funding. Through these pathways, the PCA will try to break down barriers to sharing and analyzing health data and accelerate drug discovery and development by streamlining clinical trials. Streamlining the pharmaceutical process will broaden the treatment options for patients with common diseases, but more importantly, it will expedite the process of approving standard treatments for rare diseases.
Lastly, the PCA will strive to improve disease outcomes for those on Medicaid. Studies have shown that patients on Medicaid were 50% more likely to die after a coronary bypass and 2-3 times more likely to die from cancer compared to patients with private coverage or Medicare.2 The PCA will bridge the gap in disease outcomes for those on Medicaid by ensuring that patients receive timely interventions and that the quality of treatments for these patients are comparable in quality to treatments covered by private insurance and Medicare. Through this amendment, the PCA will ensure equal access to quality care regardless of how patients receive coverage for their care.
The key difference between Obamacare and the PCA is how the government will subsidize citizens for healthcare and how the population will be grouped to receive coverage. Under Obamacare, the amount of tax that is used to subsidize healthcare costs is related to the portion of a family’s estimated income for the upcoming year and the federal poverty rate The subsidies then go directly to compensate the insurance companies that are covering individuals in that family. However, under the PCA, these subsidies will be going directly to individuals and the onus will be on the individual to contribute that reimbursement to their desired insurance plan. The Republican Party also plans to create a separate insurance pool for standard and high-risk populations. This will allow insurers to accurately predict how much it costs to provide for people’s care and thus can offer lower and more stable premiums. To compensate, the government will provide $25 billion in funding over ten years to these “high risk” pools to subsidize coverage for those with extremely expensive chronic illnesses.13 Some believe that separating treatment plans can be a positive step towards creating specialty pharmacies, patient education, and drug administration for rare disease patients to provide more comprehensive care and reduce administrative burdens. However, it can also be a risk to “high risk” patients to be isolated and identified. This makes them vulnerable to differential treatment under future policies and potentially face higher premiums. Many of these effects are difficult to predict until the relevant legislations are enacted.
The next four years will be a period of uncertainty for the American healthcare system as Obamacare is overturned in favour of a patient-centered system that relies on competition to regulate the insurance market. With changes like dividing citizens into insurance pools based on risk, opening the market to international pharmaceutical companies or giving states greater jurisdiction to provide healthcare, it is difficult to extrapolate the harms and benefits without knowing the exact extent to which the change will be carried out. No system is perfect in its design, and many of the flaws will be revealed during its execution. Thus, it is only safe to say that, for now, changes are coming, but the consequences of these changes cannot yet be predicted.
1. Affordable Care Act. US Department of Health & Human Services Web site. http://www.hhs.gov/healthcare/about-the-law/read-the-law/index.html. Published March 23, 2010. Updated August 13, 2015.
2. Patients’ Choice Act. Paul Ryan Web site. http://paulryan.house.gov/healthcare/pca.htm. Published May 20, 2009.
3. Healthcare Reform to Make American Great Again. Donald J Trump Web site. https://www.donaldjtrump.com/positions/healthcare-reform.
4. Megan Barron. Obamacare Offers Hope for People with Rare Diseases. ABC News. December 8, 2016. http://abcnews.go.com/blogs/health/2013/10/14/obamacare-offers-hope-for-people-with-rare-diseases/
5. The Affordable Care Act is Working. US Department of Health & Human Services Web site. http://www.hhs.gov/healthcare/facts-and-features/fact-sheets/aca-is-working/index.html. Updated June 24, 2015.
6. The Affordable Care Act in 2014: Significant Insurer Losses despite Substantial Subsidies. Mercatus Center Website. https://www.mercatus.org/publication/affordable-care-act-2014-significant-insurer-losses-despite-substantial-subsidies. Published April 22, 2016.
7. Luhby T. Obamacare Premiums to soar 22%. CNN Money. October 25, 2016. http://money.cnn.com/2016/10/24/news/economy/obamacare-premiums/
8. Investment in Research Saves Lives and Money: Facts about Rare Diseases. Research America Web site. http://www.researchamerica.org/sites/default/files/Rare%20Diseases%20Fact%20Sheet_2015.pdf.
9. Simoens S. Pricing and reimbursement of orphan drugs: the need for more transparency. Orphanet journal of rare diseases. 2011 Jun 17;6(1):1.
10. What Does Congress Do?. Scholastic Web site. http://www.scholastic.com/teachers/article/what-does-congress-do.
11. ICYMI – Chairman Brady Talks Tax and Health Care Reform with Larry Kudlow. Ways and Means Subcommittee Web site. https://waysandmeans.house.gov/icymi-chairman-brady-talks-tax-health-care-reform-larry-kudlow/. Published November 14, 2016.
12. Rare Diseases: Facts and Statistics. Global genes Web site. https://globalgenes.org/rare-diseases-facts-statistics/.
13. Under Trump, Americans Can Finally Put Obamacare Behind Us. Forbes Web site. http://www.forbes.com/sites/sallypipes/2016/11/14/under-trump-americans-can-finally-put-obamacare-behind-us/2/#1627d0d21ca0. Published November 14, 2016.
Cite This Article:
Zhang B., Zheng K., Chan G., Ho J. Death of Obamacare? Reforms Under the New Presidency. Illustrated by K. Lee. Rare Disease Review. January 2017. DOI:10.13140/RG.2.2.34005.42729.