How Republicans Want to Transform Health Insurance
Early Monday evening, legislation to replace the Affordable Care Act was unveiled by House Republicans.
While some features of the replacement have been trickling out for weeks, the legislation fleshes out details of the plan, officially known as the American Health Care Act.
The legislation will be taken up by the House Energy and Commerce committee and the Ways and Means committee later this week. And it still needs to be passed by the full House and Senate.
While the plan will be cheered by critics who have said that the ACA is burdensome to employers and has made health insurance too expensive for many people, healthcare advocates reviewing the plan Monday night worried about its impact, especially on low-income Americans.
“This bill would strip coverage from millions of people, and drive up consumer costs,” said Ron Pollack, executive director of Families USA, a nonprofit organization that pushes for affordable healthcare options.
Consumers say they are already worried about their ability to afford insurance: 55 percent of respondents in our recent nationally representative CR Consumer Voices Survey had that concern.
The Key Changes
Here's how four important changes in the House plan would affect consumers:
Less help for low-income people. As with the ACA, the GOP plan will use tax credits to help people pay for insurance.
Under the ACA, tax credits are based on your income: The less you make, the bigger your credit. The GOP proposal, meanwhile, provides a flat credit tied to your age, ranging from $2,000 for people 30 and under to $4,000 for those over 60.
That benefit for older people would be offset by another provision in the GOP bill, which allows insurers to charge them five times more than younger ones. Under the ACA, insurers can charge older people only three times more.
Some provisions in the bill would help high-income people, and others hurt them.
For example, the tax credits in the GOP plan would gradually phase out for individuals who make more than $75,000 and families that make more than $150,000, and be eliminated entirely for those who earn more the $215,000 (individuals) and $290,000 (families). On the other hand, it would also repeal an 0.9 percent surcharge on earnings above $250,000 that's part of the ACA, a step that would benefit wealthier Americans.
No "individual mandate" for not having insurance—but you'll have to pay more if you let your insurance lapse. The GOP plan would do away with the provision in the ACA that makes you pay a penalty if you don't have health insurance. But the GOP plan does penalize people who let their insurance lapse, by allowing insurers to charge 30 percent more for one year when they try to sign up again later.
Essential health benefits may be cut. The ACA requires that all insurance plans offer 10 "essential health benefits," such as maternity care, mental health care, and prescription drug coverage. The House plan scraps essential health benefits plan for new Medicaid enrollees after Jan. 1, 2020.
Fewer people may get help from Medicaid. Under the ACA, states were allowed to relax the rules for enrolling in Medicaid, the government's health insurance program for low-income Americans. That allowed more than 10 million Americans in 31 states to get health insurance. The House Republican plan would gradually eliminate that provision, freezing new enrollments on January 1, 2020.
Three popular provisions of the ACA will remain: People with pre-existing medical conditions can't be charged higher premiums, insurers can't put a cap on the dollar amount of annual and lifetime benefits covered, and children can stay on their parents' health insurance until they are 26.
It’s not clear how the American Health Care Act will be funded. The legislation calls for repealing virtually all the taxes that funded it, though the repeal won’t kick in till 2018.
Clarification: An earlier version of this article suggested that the proposed changes to essential health benefits would apply to all people, but they would apply only to those on Medicaid.
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