While the Republicans have for a long time pledged to repeal the Affordable Care Act, analysts always believed that it would be more difficult said than done, because simply repealing the law would have left millions without health insurance – which would have been political catastrophic for the Republicans.
That largely meant that Republicans would have to replace the ACA with something, and Republicans are attempting to preserve the two most popular features of the current health-care law – which allows young adults to remain on their parents’ health plans until age 26 and prevents insurers from denying coverage or even charge more to people with preexisting conditions.
At the same time, it does away with the individual mandate which is a highly unpopular provision that requires everyone who chooses not to purchase insurance to pay an annual $695 penalty, it keeps the Medicaid expansion until 2020, and it contains tax credits.
The current law determines subsidies for insurance by income, while the new plan instead would weigh the tax credits by age and then phase them out by income.
Part of the problem with the ACA is that people making over $48,000 do not get subsidies regardless of age, while the new proposal would offer some tax credit for those making up to $75,000 and up to $150,000 for those filing jointly who are married.
One tool released by Kaiser Family Foundation (based on the February 10 draft of the GOP plan) finds that a 40-year-old making $50,000 would be better off with the tax credits than they were under the ACA. However, that quickly changes as the new plan allows insurers to charge people five times the amount that younger people would be charged.
What that means is that a 40-year-old making $50,000 might benefit, but the 60-year-old making the same amount would pay out a lot more. Thus, older people in the $50 to $75K bracket might not benefit under the GOP’s plan.
The politics in the Senate should be most interesting. Republicans hold a 52-48 advantage in the Senate and they will use rules to prevent a filibuster on the bill, meaning that a simple majority would pass the legislation. But the trick is that if they lose more than two GOP members, the bill fails.
Senator Rand Paul is one of three conservatives who oppose the portion of the plan to provide income-based tax credits. On Monday he tweeted, “Still have not seen an official version of the House Obamacare replacement bill, but from media reports this sure looks like Obamacare Lite!”
A bigger threat may come from four senators in states that opted to expand Medicaid – Rob Portman from Ohio, Shelley Moore Capito from West Virginia, Cory Gardner from Colorado and Lisa Murkowski from Alaska. They wrote Senator McConnell: “We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.”
On the Democratic side, there is no indication of an intention to work with Republicans. Senate Minority Leader Chuck Schumer said on Monday, “Trumpcare doesn’t replace the Affordable Care Act, it forces millions of Americans to pay more for less care.”
Experts believe that the biggest problem with the bill is that it will leave millions uninsured, according to preliminary drafts by the Congressional Budget Office.
“With Medicaid reductions and smaller tax credits, this bill would clearly result in fewer people insured than under the ACA,” said Larry Levitt, senior vice president at the Kaiser Family Foundation. “The House GOP proposal seeks to reduce what the federal government spends on health care, and that inevitably means more people uninsured.”
Lower-income people will be left uninsured, as the Affordable Care Act expanded Medicaid to cover people who earn as much as $16,400 a year – which added 11 million to insurance in 31 states. And those who make under $30,000 receive subsidies to make their premiums affordable.
The new plan would end the enhanced federal Medicaid funding for new enrollees starting in 2020. Those already in the program could stay as long as they remain continuously insured. But since up to half have a break in coverage each year, it’s likely participation would fall off quickly, according to an analysis.
But there is more as the bill would also send states a fixed amount per enrollee, capping the coverage per capita. That would limit the amount that the federal government spends, shifting the burden to the states. States lacking the money to pay the difference would either reduce eligibility, curtail benefits or cut provider payments.
Most believe that will reduce coverage of poor adults, low-income children, women, senior citizens and the disabled.
The legislation would also, according to analysts, end subsidies that reduce deductibles and co-pays for those moderate-income people.
A Kaiser study concluded that those making $20,000 will take the biggest hit – at any age. A 27-year-old would get only $2,000 instead of $3,225 under the ACA, while a 40-year-old would get $3000 rather than the current $4150. And the 60-year-old would take a literal beating, receiving only $4000 rather than the current rate of $9900.
As mentioned previously, older Americans would likely have to pay more as insurers would go from being able to charge three times more under the ACA to five times more under the new proposal. That means, for those aged 60 to 64, their premiums would increase by nearly one-quarter, and those in their 50s would see a 13 percent increase.
Finally, while the sick could get coverage, it would be more limited. The current plan does provide more protections than previous versions, however, the current plan removes the requirement that insurers cover a certain share of the cost. This change would allow insurance companies to offer a wider selection of policies, including more with higher deductibles and co-pays.
Those who figure to be advantaged by this plan include: younger people who would get less expensive plans. The healthy could also get less expensive policies. Higher-income earners would pay fewer taxes, and get more tax benefits. And insurance companies would get a big tax break as the bill repeals the limitation on tax breaks for executives’ pay.
—David M. Greenwald reporting