Trumpcare Cost: The GOP plans to "drive down" health care costs. Will it work?


Well, they've done it. At long last, the Republicans have put forth their plan to replace Obamacare: a Donald Trump-approved health care law that would roll back Medicaid, kill the individual mandate and possibly trigger a death spiral in the individual marketplace.

The draft, which has come under fire from both parties, would "drive down costs, encourage competition and give every American access to quality, affordable health insurance," House Speaker Paul Ryan said Monday in a statement.

But how does the Republican plan propose to do that — and will it work?

How does "Trumpcare" "drive down costs"?

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The Affordable Care Act expanded Medicaid, which provides health care to low-income Americans, and required all Americans to either obtain health insurance or pay a tax penalty to help offset the health care costs of older and sicker people. It also required large employers to provide affordable health insurance for their employees.

The plan pitched by the Republicans on Monday, called the American Health Care Act and nicknamed "Trumpcare," would phase out the Medicaid expansion starting in 2020 and change the way it is funded. The "individual mandate" would be repealed and replaced with a potential 30% penalty for lapses in coverage imposed by insurance companies. The employer mandate would be eliminated. Additionally, the plan would repeal taxes on prescription drugs, over-the-counter medications, health-insurance premiums and medical devices.

Under the Republicans' proposed plan, the Obama administration's federal subsidies will be replaced by tax credits based on a person's age.

House Republicans have framed their plan as a return to "free market" principles that will allow Americans to have "control and choice" over their health care — in contrast to the ACA, which they said led to "higher costs, fewer choices and less access to the care people need."

Will the Republicans' plan work?

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The Congressional Budget Office has yet to score the GOP's ACA replacement plan, so it's difficult to say how much the proposal would cost and how many Americans would be impacted.

But an analysis published by Vox has determined the new plan would cost the average enrollee $1,542 more per year than the ACA, were it the law today — and $2,409 more per year by 2020. Those cost hikes would be even higher for older and lower-income Americans. A large reason for the cost increases would be the plan's elimination of requirements that insurers cover a minimum share of costs, tax credits linked to plan costs and the ACA's lower cost-sharing levels.

That would seem to align with a previous warning from the CBO, which reportedly cautioned Republicans that their proposals could lead to millions of Americans losing their healthcare coverage and spikes in costs for others.

The plan is expected to be voted on in House committees starting this week. Trump has praised the proposal as "wonderful."

But critics, including some Republicans, have argued that phasing out Medicaid will rob millions of Americans of health insurance. Experts have argued that replacing the individual mandate with a penalty for lapsed coverage discourages Americans from purchasing coverage, potentially triggering a "death spiral" in the individual marketplace. The tax credit system put forth by the American Health Care Act will also disproportionately impact sick and older Americans.