An Analysis of the New Proposed ACA Replacement Bill

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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.”

Here’s how:

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

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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7 thoughts on “An Analysis of the New Proposed ACA Replacement Bill”

  1. Tia Will

    Although you alluded to the harm the GOP replacement of the ACA would do to women, on the International Day of the Woman, I would like to provide more specific detail on this point.

    http://www.cnn.com/2017/03/06/opinions/repealing-aca-contraception-health-starrs-opinion/

    For women in their reproductive years, access to effective contraception is often their most pressing health care need. While the ACA provided for access to contraception as preventive health care without increased premiums or deductibles ( essentially an increased cost simply for being female), the GOP plan will not contain this provision as currently envisioned.

    Largely due to the availability of effective contraception, the rate of unintended pregnancy and thus of abortions has dropped to its lowest level since Row vs Wade. This planned removal of accessibility, combined with the plan to defund Planned Parenthood, currently the largest provider of preventive care to the least affluent women in our society, is likely to lead to an increase in abortion, as well as complications of pregnancy including preterm birth with preventable increases in health care costs.

    1. Richard C

      While the ACA provided for access to contraception as preventive health care without increased premiums or deductibles …., the GOP plan will not contain this provision as currently envisioned.

      It seems like many politicians in the GOP, including the President, have said that they are opposed to abortion.  Given that stance, it seems like it would be logical to make reproductive health education and access to contraception easy and affordable. I wonder why we aren’t hearing GOP politicians talking about making it easier for people to avoid unwanted pregnancies?

      1. Tia Will

        Hi Richard

        I wonder why we aren’t hearing GOP politicians talking about making it easier for people to avoid unwanted pregnancies?”

        This is speculation on my part. But it is speculation based on thirty years of medical practice most of which was spent as a gynecologist. I think that what are seeing from Republican lawmakers goes far beyond just prevention of abortion. It is a matter of control. I believe that many men, including doctors who have told me as much directly, still believe that contraception and all things related to pregnancy are the solely the responsibility of women but at the same time believe that men should be able to have equal say in the outcome of a pregnancy. In other words, the health risks associated with pregnancy, labor and delivery and postpartum care of the infant all belong to the woman, but the man remains the “head of the household”. So all the privileges, but none of the risk or obligation.

      2. Howard P

        Tia has some good points… another point is many in the ‘Republican base’ see unmarried sex as immoral and don’t want to facilitate/encourage that.  If the law was that only married couples could obtain contraception services, much of that, I believe, would disappear (or become very muted)…

        From a health perspective, and that young folk often do stupids, I agree with Tia and others that health education and contraceptives should be available in either event.

  2. Don Shor

    This is a huge and radical change to Medicaid. Under the guise of reforming the ACA, Paul Ryan and his fellow Republicans are seeking to implement a devolution of this entitlement in a manner that will clearly affect millions of Americans adversely.

    From the News Hour last night:

    SABRINA CORLETTE:Well, this is one thing that I think is really important for people to know, is that this bill goes way beyond repealing the ACA’s Medicaid expansion.

    This really is a radical restructuring of a program that’s been around for 50 years. It’s a financial lifeline for not just low-income families, but families who have people with — kids with disabilities, older people who need long-term care. Close to 50 percent of births in this country are funded by the Medicaid program.

    So we are looking at potentially cutting this program that will affect far beyond the people just that got coverage through the ACA.

    So imagine block-granting and capping Medicaid, and then sending that responsibility to the states. Now imagine Kansas, which is reeling under the fiscal disaster of Governor Brownback’s policies, trying to pay for health care for its poorest citizens. Health care costs go up (they will) but the cap doesn’t. What will Kansas do? Obviously they will cut coverage. Medicaid pays for health care for the most vulnerable among us. It is not hyperbole to say this proposal would kill people.

  3. David Greenwald

    Someone asked the question yesterday and from the analysis it looks like there is going to be a huge number of people who lose their coverage or have it greatly reduced.

  4. Tia Will

    It is not hyperbole to say this proposal would kill people.”

    Don has this right. As one small example from my own practice, when Obamacare was enacted there was a marked increase in patients into my clinic who had not previously been able to obtain health care. As a gynecologist I saw a number of women who had not had routinely recommended gyn cancer screenings ( no, these are not ever done in an emergency room) and who were found to have precancerous and cancerous conditions of the breast, cervix, and uterus. Caught at early stages, these are conditions that have very good cure rates. Found at later stages, not so much so. Removing availability of screening services will cost women their lives.

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