The Fallout of an Obamacare Implosion

In our most recent article, which detailed a bipartisan plan for progressing the future of health care, we briefly touched on the possibility of the Trump administration eliminating cost-sharing payments, a move that would likely destabilize the healthcare market, as well as skyrocket premiums for low-income people. What we didn’t talk about, however, was how removing these payments (which are actually subsidies) would trigger the implosion of the Affordable Care Act itself, the fruition of which would devastate insurers and consumers alike.

So let’s talk about it.

The implosion of Obamacare may seem like a victory for Republicans, but in reality, it exists beyond a political vacuum insomuch that its consequences could be the difference between life or death for many individuals who rely on the Affordable Care Act in this current day and age.

Let’s talk about what would happen if Obamacare were allowed to fall apart at its seams.

Under the ACA, plans on the individual market must meet a certain set of requirements in order to be considered legitimate. For instance, the plans must cover a minimum amount of procedures, and they cannot charge consumers extravagantly. This very price cap ensures that out-of-pocket payments aren’t impossible for low-income people to pay, as well as keeps deductibles at an affordable rate. These requirements, however, come at a loss to insurers, a defect that has thus far been offset by a seven billion dollar stipulation in the ACA which has the sole purpose of motivating insurers to continue offering their plans to lower-income people.

If these payments suddenly disappeared, insurers would lose their big financial incentive to offer affordable plans to low-income citizens, causing some to likely withdraw from the market as a result. In the space left by evacuated insurers, premiums are estimated to rise anywhere from fifteen to twenty percent, which would become financially taxing to consumers or leave them with no other option than to abstain from having health insurance. The whole healthcare market would be destabilized in the scramble.

The Trump administration has not yet confirmed whether it will proceed with its proposal to eliminate these subsidies, but even so, the ambiguity of the decision itself has given insurers pause. Insurance companies only have until the end of September to finalize their rates for next year; they might just opt to abandon the market altogether.

Yes, Obamacare does have its flaws, and yes, it would be a true feat to see it replaced by superior legislation, but allowing it to crumble in this manner is hardly the solution when it negatively impacts so many Americans.