Yesterday, House Republicans announced a pair of bills intended to fulfill their promise of repealing and replacing the Affordable Care Act, a.k.a. Obamacare. Known as the American Health Care Act, the bills would replace the coverage mandate and income-based tax credits of Obamacare with penalties for lapses in coverage and age-based tax credits (with income caps).
The announcement was met with approval from President Trump, and consternation from some lawmakers on both sides of the aisle. Even prior to the bills’ release, Sen. Rand Paul objected to the plan’s use of income-based tax credits, calling it “Obamacare Lite.” Rep. Nancy Pelosi argued that the plan would “force tens of millions of families to pay more for worse coverage — and push millions of Americans off of health coverage entirely.”
Regarding that last point:
“Republicans did not offer any estimate of how much their plan would cost, or how many people would gain or lose insurance,” write Robert Pear and Thomas Kaplan at The New York Times. “The two House committees plan to vote on the legislation without having estimates of its cost from the Congressional Budget Office, the official scorekeeper on Capitol Hill.”
On Twitter, President Trump seemed to acknowledge the potential difficulties of passing the bills, saying that they were now “out for review and negotiation”:
Our wonderful new Healthcare Bill is now out for review and negotiation. ObamaCare is a complete and total disaster – is imploding fast!
— Donald J. Trump (@realDonaldTrump) March 7, 2017
So, the American Health Care Act might not pass — and if it does, it might not look very much like it does today. But assuming that it does, what would be its effects for you, the working person who may or may not get your insurance through work?
First, the Good News:
The AHCA proposal keeps many of the more popular provisions of the Affordable Care Act, including:
- Allowing people to stay on their parents’ insurance until the age of 26.
- Requiring insurance companies to cover customers with preexisting conditions.
- Banning lifetime caps on coverage.
In addition, the AHCA does away with the individual mandate, which while essential for funding Obamacare, was understandably less than popular with some consumers. (On the business side, the AHCA also ends the mandate that employers provide coverage, but more on that in the “Bad News” section.)
The plan also expands the contribution limits on Health Savings Accounts to as much as $6,550 for individuals and $13,100 for families, and allows catch-up contributions from both spouses to one HSA. Contributions can be used to pay for over-the-counter drugs, as well as prescriptions.
Finally, the AHCA delays the “Cadillac Tax,” a 40 percent excise tax on high-cost plans provided by employers, until 2025.
And Now, the Bad News:
Without data from the CBO, it’s hard to say how much the Republican plan will cost … or how many people will be able to access coverage under it. But there are a few areas of concern for the average working person, whether they purchase health insurance themselves or get it through an employer:
1. Less accessible insurance for people who aren’t rich.
The GOP’s plan replaces income-based tax credits with age-based ones, with a phase out for individuals who earn $75,000 or more annually and families who earn $150,000 or more annually. For example, those under age 30 would receive a $2,000 tax credit, while those between 30 and 40 would receive $2,500, and so on. In theory, this sounds simpler, but in practice, it’s likely to leave lower- and middle-income people with less access to affordable insurance.
At Vox, Sarah Kliff explains:
[The AHCA] will roll back much of the health law’s insurance expansion, which currently covers about 20 million people. It does this by making the two big sources of coverage under the law — Medicaid and private individual insurance — less accessible to low- and middle-income Americans.
In private insurance, AHCA provides much lower subsidies for those who buy coverage on the individual market — especially people who are low-income. The Kaiser Family Foundation estimates that, on average, the subsidies in this plan are 36 percent lower than those in current law. This means that it would become harder for people who earn about $20,000 or $30,000 a year to afford coverage if they don’t get it at work.
On Twitter, President Trump claims that the next phases of the plan will allow selling insurance across state lines, reducing costs:
Don't worry, getting rid of state lines, which will promote competition, will be in phase 2 & 3 of healthcare rollout. @foxandfriends
— Donald J. Trump (@realDonaldTrump) March 7, 2017
However, if the Kaiser Family Foundation’s numbers are right, costs would have to drop significantly — and quickly — to make up the deficit.
Without data from the CBO, it’s hard to say how how many people will have coverage through the AHCA.
2. No more employer mandate means your company might not offer insurance.
“The individual and employer mandates are eliminated,” writes Michael Hiltzik at The Chicago Tribune. “They’re not repealed exactly, but the penalties are repealed, which amounts to the same thing.”
Without the mandate, there’s nothing to stop your employer from declining to provide health insurance. Of course, many still will — employers prior to the Affordable Care Act did so, to attract top workers and to maintain a reputation as a good place to work. But should the market shift — during another recession, for example — employers would be empowered not to offer insurance. Worse, because the health insurance exchanges depend on the individual mandate, there could be limited options for consumers who aren’t covered through work.
3. Less coverage … especially for women.
Currently, the ACA requires health insurance plans to cover maternity care, mental health services, and hospitalization. The Republicans’ plan, however leaves coverage requirements up to the states. That means that if your state decides not to mandate these services, you could be stuck paying for them out-of-pocket.
“Prior to the ACA, only 12 percent of individual market plans covered maternity care (and, as the National Women’s Law Center notes, health insurance was more expensive for women because things like maternity care, breast or cervical cancer, and treatment for sexual or domestic violence fell under the category of ‘pre-existing conditions’),” writes Maggie Mallon at Glamour.
Furthermore, since the bills would strip federal funding any healthcare provider that performs abortions, with a few exceptions such as saving the life of the mother, women might lose the option to use Planned Parenthood even for non-abortion care. (Note: it’s already illegal for Planned Parenthood or other providers to use federal funds for abortions. These bills would defund any organization that performs abortions paid for by other sources.)
4. Big penalties for lapses in coverage.
One of the big conundrums facing Republicans in drafting these bills: how to convince young, healthy people to stay in the health insurance marketplace, thus providing financial stability for the system. The AHCA solves this by removing the penalties for not having insurance, and replacing them with a “continuous coverage” provision. That means that if you let your insurance lapse, insurance companies could levy a 30 percent surcharge on your normal premium.
Obviously, this is a problem if you ever find yourself laid off or otherwise unable to afford continuous coverage. In a perfect world, that wouldn’t happen. But anyone who was in the workforce during the Great Recession knows that it’s not a perfect world.
Tell Us What You Think
What’s your opinion of the American Health Care Act so far? We want to hear from you. Tell us your thoughts in the comments or join the conversation on Twitter.