The Affordable Care Act known as Obamacare is a very complex law that has numerous taxes, regulations and government subsidies, all of which Republicans hate. In fact the vast majority of them want to simply repeal the law. But political pressure from 20+ million Americans who would lose coverage without Obamacare caused them to come up with a replacement.
So last Monday House Republicans rolled out their American Health Care Act (AHCA). The House and Senate conservatives who oppose it call it “Obamacare-lite.”
The GOP leadership is rushing the AHCA through Congress before the Congressional Budget Office has determined its cost and its effect on the number of individuals insured. Of course the more people who are insured, the cheaper insurance is for everybody. That was the whole idea behind Obamacare. So I was eager to analyze how the GOP plan differs from Obamacare and here is what I discovered:
Individual and Employer Mandates – The AHCA repeals Obamacare’s mandates and its penalties for not having health insurance. This will cause some younger, healthier individuals to exit the market.
Subsidies for out-of-pocket expenses – In 2020 the AHCA repeals Obamacare’s cost-sharing assistance that helps low income families pay deductibles and co-payments. This increase in out-of-pocket costs could make their policies unaffordable.
Premium subsidies – Obamacare provides tax credits to middle-income Americans on a sliding scale to help pay premiums. These credits are based on income, age and local health insurance costs. The AHCA uses age instead of income to grant a flat tax credit amount for individuals earning less than $75,000 and households earning less than $150,000. A person under 30 would receive a maximum subsidy of $2,000, a person age 40 would receive $3,000 and those over 60 would receive $4,000.
These less generous subsidies based solely on age will no doubt reduce the number of participants in the health insurance market. And they will penalize older, poorer individuals in high premium markets. According to the Kaiser Family Foundation’s interactive map, in 2020 a person in Henderson County, NC aged 60, earning $30,000 per year, would lose $10,160 in tax credits under the AHCA. While the same 60 year old in states like Washington and Massachusetts might lose less than $1,000 in many cases.
Medicaid expansion – Obamacare expanded Medicaid to include some 11 million people in 31 states. The AHCA would keep Medicaid expansion and continue federal funding as promised under Obamacare for two more years. Then in 2020 it would cap federal funding per Medicaid enrollee based on state Medicaid spending in fiscal year 2016, with inflation adjustments thereafter.
According to the Center on Budget and Policy Priorities the AHCA formula will shift $370 billion of Medicaid’s costs to the states over the next 10 years. Some states may have to ration care, perhaps having to decide on who lives and who dies. Nursing homes and hospitals with emergency rooms would no doubt suffer significant revenue loss.
Tax-Free Health savings accounts – The AHCA would almost double contribution limits in 2018 to $6,550 for an individual and $13,100 for a family. But those who need this law probably can’t afford these contributions and may not even pay much in taxes.
Older Americans pay higher premiums – Obamacare allows insurers to charge older insureds three times more than younger insureds. The AHCA allows five times more. This provision will no doubt price many seniors out of the market.
Other provisions in both Obamacare and AHCA – Obamacare and AHCA both require insurers to accept those with preexisting conditions, allow young adults to stay on their parents’ plan until age 26, require insurers to offer 10 essential health benefits and prohibit caps on annual and lifetime coverage limits.
Obamacare taxes – The AHCA repeals most of the tax provisions in Obamacare that were designed to help offset the cost of providing subsidies to lower income individuals. The Joint Committee on Taxation in Congress has estimated that this repeal will reduce federal revenues by almost $600 billion over 10 years. So seniors get higher premiums; the wealthy get lower taxes.
Planned Parenthood and Abortions – For one year the AHCA prohibits funding to organizations that primarily provide reproductive health care, which will effectively defund Planned Parenthood. It also prohibits beneficiaries from using subsidies to purchase insurance that covers abortions except in the case of rape, incest, or life-threatening complications.
The American Medical Association has called the AHCA “critically flawed” and it is opposed by the AARP. Major physician’s groups have said they have serious issues with or outright oppose the plan. But I don’t think most Republicans are worried about opposition from health care organizations. The Koch brothers and various right-wing groups also oppose their replacement bill and that’s who they fear the most.
Republican controlled states are among the poorest in the nation and have the most to lose with an Obamacare replacement. And President Donald Trump’s promise that “his” Obamacare replacement will be better, cheaper and cover everybody certainly won’t be fulfilled by the AHCA. Yet I wonder if low and middle-income Trump supporters and Republican voters even realize how badly this law will hurt them.
President Harry Truman probably said it best: “How many times do you have to get hit over the head until you figure out who’s hitting you.” Of course he was referring to Republicans.
Note: Click on the link interactive map above to determine tax credit differences in other state counties.