Briefing: Amid price hikes, where Obamacare stands

The Obama administration announced Monday that consumers will face an average 25 percent increase in certain premiums. It’s increasingly clear the next president will have to address such financial instability.

Given the polarizing nature of the Affordable Care Act, aka “Obamacare,” it’s not surprising that the two main presidential candidates have opposite takes on it. Here’s a review of the law and what could happen with it.

Q. Why is Obamacare in trouble?

The Obama administration announced Monday that consumers who buy private insurance under the law’s federal marketplace exchange will face an average 25 percent increase in premiums for a benchmark “silver” plan, though most people will qualify for tax credit subsidies to help pay for the price hike. It’s increasingly clear that the next president will have to address the instability of the federal exchanges.

The premium increases follow the exit of big private insurers and co-ops from many of the exchanges set up under Obamacare. Analysts cite several reasons for the insurer exits, including inexperience with the marketplaces, the end of certain federal support for the insurance companies, and an imbalance among those covered: too many sick participants, not enough young, healthy ones. That has been costly for private insurance companies, who have cited hundreds of millions of dollars in losses.

Q. What are the basics of the law?

The main point of the ACA is to increase access to affordable health care for the uninsured and underinsured. The law provides for this by: creating marketplaces where people can purchase private insurance, often with the help of subsidies; by expanding Medicaid (insurance for the poor) to include more people; and by allowing young adults to stay on their parents’ plans until age 26. It penalizes large employers that do not offer coverage (employer mandate). And it requires individuals to have coverage or pay a penalty (individual mandate).

It also set standards so that people with pre-existing conditions can’t be denied coverage and insurance companies can’t place lifetime limits on the dollar value of coverage. The law includes hundreds of other provisions to address healthcare costs, access, and quality.

Q: How has it done so far?

The law has brought the percentage of people without insurance to a record low: Only 8.6 percent were uninsured in the first quarter of 2016, according to the US Department of Health and Human Services. The administration says 20 million more people have insurance under the ACA. Most people, though, still get their coverage from their employers.

Meanwhile, projections for the total cost of health care in the United States have fallen – by $2.6 trillion for a five-year period, according to an Urban Institute study.

The system got off to a very rocky start in 2013 because of the balky enrollment site, HealthCare.gov. Nineteen states have opted not to expand Medicaid under the law, leaving more than 2.5 million adults on the sidelines.

The marketplace exchanges, which cover more than 11 million people, are not faring well. Many nonprofit insurance co-ops have failed. Citing financial losses, profitable private insurers such as Aetna, Humana, and UnitedHealthcare are exiting marketplaces, leaving 1 in 5 consumers with only one insurer to choose plans from for next year.

Premiums for the benchmark “second-lowest cost silver plan” for a hypothetical 27-year-old will rise an average of 25 percent on the federal exchanges. Most consumers will qualify for a federal subsidy to help with the increase, but higher earners will not – leaving them in the lurch.

Q: What explains the polarization around Obamacare?

It’s a fundamental difference over the role of the federal government in health care.

Republicans believe markets should be allowed to work and that individuals should have the freedom to make their own health coverage choices. They object to the individual and employee mandates, for instance, and don’t like the government prescribing what should be covered. Republicans in Congress have tried dozens of times to repeal or restrict the law and have pursued legal action against the law.

Democrats believe markets have failed too many consumers and that the government needs to step in and help those who can’t afford insurance. They included the Republican idea of a private insurance marketplace in the ACA, but no Republicans voted for the law.

In a major ruling in 2012, the US Supreme Court upheld the ACA, backing the individual mandate on the grounds that Congress has the power to levy taxes. It ruled, however, that states can’t be forced to expand Medicaid – so that part of the law became voluntary. Last year in a ruling about the marketplace exchanges, the high court again backed the law.

Q: What do the leading presidential candidates propose?

Donald Trump echoes the Republican “repeal and replace” mantra, but he has been vague on replacement details. Some of his plans include: expanding health savings accounts, making insurance premiums 100 percent tax deductible, and allowing insurance policies to be sold across state lines. He would turn Medicaid into a block grant for states. Critics of these ideas say they would increase the number of uninsured and that states would cut Medicaid rolls when recessions hit.

Hillary Clinton wants to keep the law and improve it. She proposes increasing tax credits to help middle-income Americans handle rising health costs. Her two big fixes are to provide a “public option” (government health insurance) in every state and allow people 55 or older to buy into Medicare (health care for seniors). Critics say her plans are too costly and that a public option would further drive out private insurers.

Q: How realistic are these proposals?

If Mr. Trump wins and Republicans retain control of both chambers of Congress, they could use a process called budget reconciliation to repeal and replace the law – though only aspects of the law that pertain to budgetary issues. But could Republicans agree on what to do? And would moderate GOP senators go along with repealing a law that has insured many people? Those questions make repeal-and-replace a long shot, though not an impossibility.

Mrs. Clinton’s fixes would require congressional approval. Right now it looks likely that Republicans will retain control of at least the House, which makes them a blocking force. If that’s the case, her fixes, too, are a long shot. Which means she would have to settle for repairs that Republicans might support, such as lowering premiums so they attract more young and healthy consumers, or tweaking regulations through executive action.