If Repealed, Obamacare Requires a Replacement
Senator Rand Paul (R-KY) is quickly becoming one of the most important politicians in Washington. As I have touched on in a previous article, the libertarian-leaning Rand Paul has the powerful ability to tip the balance of the Republican majority in Congress. In the coming vote on whether or not to keep the controversial Affordable Care Act, Rand Paul has made it clear that he will not vote for a bill that fails to simultaneously institute a replacement; this decision is in the best interest of American taxpayers and healthcare recipients alike.
The purpose of this article is not to indicate any support for or against Obamacare, but rather, to suggest that in the likely event it is repealed, it is important that it is immediately replaced with a more effective law. A total repeal of the law will be extremely difficult to manage, and the costs will be severe. Over the course of the next decade, a repeal of Obamacare is projected to cost American taxpayers $350 billion. The quicker a replacement is put into place, the lower the burden on the Federal government’s coffers.
Aside from the costs to the Federal government, there are a few improvements that will likely be seen in a replacement bill that will potentially solve the problems put forth by Obamacare. Paul seeks a replacement that will allow cheaper insurance to be sold in the health care markets, making health care more appealing to younger adults.
The aim is to boost the revenues of insurance companies, many of which have been subjected to losses due to the influx of new, sick insurance recipients. By doing so, this will allow more insurers to remain competitive, resulting in a more diverse market. The issue of market diversity has been a problem for Obamacare, as many buyers have only one or two choices in their local markets, and they are often not ideal.
Another important component that will likely be seen in the replacement bill is the provision of tax credits to Americans who purchase insurance through the individual market. Under the current system, Americans who are insured by their employers purchase their insurance before tax, allowing them to choose more extensive plans. Americans in the individual markets must purchase their insurance after tax, limiting their choices of coverage. By receiving tax credits, these Americans will be able to obtain the same grade of insurance as those who are covered by their employers.
Fortunately, President-elect Donald Trump is said to be in support of Paul’s plan. With Trump’s support, the GOP will be under increased pressure to not simply repeal and forget Obamacare. The economic costs of a repeal of Obamacare will be painful, and the right move is to ensure that a replacement law is readily available. Doing so will help protect millions of insured Americans from losing their healthcare, which would undoubtedly have disastrous effects, and guard against a possible crisis in the healthcare markets that would result just from the repeal itself.
