Evaluating the CARE Act

Since the Affordable Care Act (ACA) was enacted in 2010, the U.S. Department of Health and Human Services estimates that 20 million people have become newly insured, and approximately 24 million people have gained access to subsidized or free care through marketplace tax credits and Medicaid expansion. Despite these successes, there have been repeated calls to repeal the law and replace it with an alternative set of policy reforms. Those wishing to replace the law often argue that it goes too far in imposing requirements on individuals, businesses, and health insurers. The individual mandate, requiring most Americans to obtain coverage or face penalties, and the employer mandate, requiring large businesses to offer coverage or face penalties, are particular targets of criticism. Those opposing the law also argue that regulations restricting insurers' ability to charge higher premiums to older and sicker adults may lead to unnecessarily high premiums for younger and healthier individuals. An additional concern is that the law could substantially increase federal spending in the long run, given the cost of Medicaid expansion and the ACA's approach to subsidizing health insurance coverage in the marketplaces. Both the Medicaid expansion and the marketplace tax credits offer a minimum level of benefits to individuals and restrict cost-sharing amounts in a manner that protects enrollees from rising health care spending. Many proponents of repeal-and-replace alternatives favor a premium-support approach, in which federal subsidies are based on a fixed amount that grows over time at a predictable rate (e.g., based on the Consumer Price Index, or CPI).