Earlier this month, I shared 12 initial observations about the Republicans’ proposed “American Health Care Act.” Since then, the Congressional Budget Office (CBO) has weighed in, and the bill has been significantly revised in an attempt to accommodate concerns of conservative and moderate GOP member of Congress. As of today, the House vote on that version has been postponed, but it is certainly not dead.
I therefore offer these 10 quick (non-comprehensive) follow up points on the proposed law, as altered. I include more information on certain key points, pertinent references to the CBO report, and italicized items referencing changes made to the original GOP proposal.
1. It would still kill the tax penalty for not getting coverage. But if you let your coverage lapse and don’t sign up again within 62 days, your premiums may be increased by 30% for up to a year. The current penalty is the greater of (1) $695 per adult and $347.50 per child up to a maximum of $2,085; or (2) 2.5% of total household adjusted gross income, subject to a number of exemptions.
2. It would still replace the ACA’s subsidies with tax credits which will cover less of the cost of insurance as follows:
For those under 30 years of age: $2000 annually
30-39 years of age: $2500
40-49 years of age: $3000
50-59 years of age: $3500
Over 60: $4000
Per the National Conference of State Legislatures, the average annual cost of health insurance per family was $18,142 in 2016.
While the ACA subsidies cover up to 100% of premium costs, they taper off for those earning more than 400% of the Federal Poverty Level ($97,200 for a family of four) and are only available for insurance bought on the Health Insurance Exchanges, the tax credits are available to anyone earning less than $75,000 ($150,000 for those filing jointly) so long as they purchase some type of health insurance.
3. The tax credits are scaled by age in order to partially offset higher premiums that health insurers may charge to older Americans. The ACA allowed individual and small employer (100 or fewer employees) health insurers to vary premiums based on age, but only by a 3 to 1 ratio, meaning essentially that the premium charged for older Americans could not be more than 3 times as much as that charged for covering younger Americans. The new law would allow a 5 to 1 ratio. The end result is likely to be significantly higher premiums versus lower subsidy/tax credit for older Americans, per the Congressional Budget Office (CBO).
4. The mandate that businesses with 50 or more full time employees offer health coverage would go away.
5. But small businesses could be badly hurt, according to at least one commentator. Businesses with fewer than 50 employees face no coverage mandates under the ACA, but benefit from certain provisions that the AHCA would take away.
6. Medicaid as we know it in many states would change dramatically, with state block grants, an end to Medicaid expansion as early as 2018, and work requirements. Bottom line, per Forbes, $880 billion in cuts over the next decade, and, per the CBO, fewer people covered.
7. The requirement that health plans provide for “Essential Health Benefits” (doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, pediatric services, and more) would go away, meaning you could buy a “skinny” or low benefit, high deductible health plan and still qualify for a tax credit. The idea is to provide more consumer choice, but such plans may be subject to abuse and even fraud. Also, if more people default to these plans to save money, that may drive up premiums even further for those who want to retain more traditional plans that provide fuller coverage.
8. Most other ACA insurance mandates would still survive. Health plans still would not be allowed to deny coverage or adjust premiums based on pre-existing conditions or disability, or limit lifetime coverage payments. Dependents may still stay on their parents’ policies until age 26.
9. Medicare reforms would still survive. I still see nothing altering the ACA’s numerous Medicare reforms, such as the “Shared Saving” and “Accountable Care Organization” provisions.
10. You’ve read it, I’ve read it, but it bears repeating that the CBO calculates 24 million Americans will lose coverage under the plan, but save $337 billion in federal expenses.
Will the GOP proposal become law? I’m not forecasting, but will provide additional points if and when there's a final version.