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What the repeal of Obamacare will mean for the U.S.


What the repeal of Obamacare will mean for the U.S.

When it comes to political footballs, U.S. healthcare is hard to beat. Just seven years ago, in March 2010, the Affordable Care Act – nicknamed ‘Obamacare’ – became law. This significant overhaul of the U.S. healthcare system was, of course, strongly criticised by the Republican Party and its backers. Now, the Republicans are about to dismantle it.

The recently proposed House Republican health plan has been sharply criticised by both sides of the political aisle. Democrats point to the likely increase in uninsured Americans that would result from the bill. Republicans, on the other hand, lament that the proposal does not go far enough in dismantling Obamacare, labelling the new bill “Obamacare Lite”.

The bill being passed in its current form is no sure thing, although the final form of legislation signed into law is likely to have far-reaching consequences for low-income Americans, the U.S. budget deficit, and future support for the Republican party.

Last week, the House GOP released its health plan that would repeal and replace Obamacare. Republicans have loathed Obamacare due to the individual mandate – that is, the requirement that all Americans take out healthcare coverage, or face a penalty. They viewed the law as intrusive, and the redistributive mechanism of the healthcare exchanges – the poor who purchase insurance on government exchanges are in effect subsidised by the higher premiums paid by Americans who can afford private health insurance – did not gel well with the Republican ideology. It was no surprise that, with the Republicans controlling both the House of Representatives and the Senate, they would swiftly seek to relegate Obamacare to the history books. And swiftly they did.

In an unusual and perhaps intentional move, the Republican healthcare proposal was released prior to the Congressional Budget Office (‘CBO’), a non-partisan body that performs independent analysis on budgetary and economic issues, conducting a full analysis of the bill. This is remarkable but not surprising when the CBO later issued an analysis that predicted that under the House Republican proposal, the number of uninsured Americans would grow by 24 million (it is worth noting that Donald Trump had previously stated that everybody would be covered under his new plan).


This is an astonishing number and undoes much of the progress Obamacare made in improving the affordability and accessibility of healthcare to previously uninsured Americans. However, the CBO also found that the legislation would reduce the federal deficit by $337 billion over the next decade, a number that will surely be touted by Republicans in attempting to secure support for the bill. Ironically, many of the voters who carried Trump to the Presidency stand to lose out from this new health plan, with many low-income Americans potentially losing their healthcare coverage due to the insufficiency of the tax credits under the new plan. This has serious implications for the future support for the Republican Party from this portion of the voter base.


George joined MGIM in September 2015 as a Research Analyst. Prior to joining MGIM, George was an investment analyst at Private Portfolio Managers where he covered global equities across various industries, using a value investing framework. George’s prior experiences include equities research and investment banking roles at both Citi and Greenhill & Co.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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  1. Protection and Affordable Care Act, commonly known as “ObamaCare.”  That 2,700 page monstrosity also generated between 20,000 and 30,000 additional pages of regulations, depending on how one counts them, and that regulatory labyrinth continues to grow.

    What if ObamaCare were fire insurance? It would be very special. You could buy a policy after a smoke detector in your home started blaring.

    When you hear “pre-existing condition,” think “blaring smoke detector.”

    For decades, the U.S. healthcare system was the envy of the entire world. Not coincidentally, there was far less government involvement in medicine during this time.

    Austrian economist, libertarian theorist, and political philosopher Hans-Hermann Hoppe proposes a radical, but perhaps ultimately necessary four-step solution to America’s healthcare crisis. He writes:
    To cure the problem requires not different or more government regulations and bureaucracies, as self-serving politicians want us to believe, but the elimination of all existing government controls…. Tax credits, vouchers, and privatization will go a long way toward decentralizing the system [italics mine]…. But four additional steps must also be taken:
    Eliminate all licensing requirements for medical schools, hospitals, pharmacies, and medical doctors and other health care personnel. Their supply would almost instantly increase, prices would fall, and a greater variety of health care services would appear on the market. Competing voluntary accreditation agencies would take the place of compulsory government licensing….
    Eliminate all government restrictions on the production and sale of pharmaceutical products and medical devices. This means no more Food and Drug Administration, which presently hinders innovation and increases costs.… [Our country’s robust legal profession will keep drug companies in line.]
    Deregulate the health insurance industry. Private enterprise can offer insurance against events over whose outcome the insured possesses no control…. [Like insuring one’s home against fires and floods, buy insurance that covers expenses for major injuries and illnesses, not like current misnamed health “insurance” that covers routine doctor visits.]
    Eliminate all subsidies to the sick or unhealthy. Subsidies create more of whatever is being subsidized. Subsidies for the ill and diseased breed illness and disease, and promote carelessness, indigence, and dependency. If we eliminate them, we would strengthen the will to live healthy lives and to work for a living. In the first instance, that means abolishing Medicare and Medicaid. [Private charity will once again play an important role in medical care.]
    Only these four steps, although drastic, will restore a fully free market in medical provision. Until they are adopted, the industry will have serious problems, and so will we, its consumers.

  2. “This has serious implications for the future support for the Republican Party from this portion of the voter base.”

    You’re giving too much credit to the common sense in American voters, George. Notwithstanding religious/social issues, the Republican party wouldn’t exist if Americans possessed even the slightest bit of self-interest at the voting booth.

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