NEW YORK — House Republicans have finally fulfilled their years-long pledge to repeal and replace Obamacare.
The legislation, titled the American Health Care Act, now moves to the Senate, where it will likely change a lot when or if it lands on President Trump’s desk. But it’s already possible to identify who will get helped and who will get hurt by the bill.
Titled the American Health Care Act, the legislation calls for providing refundable tax credits based on a person’s age and income. It allows states to waive some protections for those with pre-existing conditions, while letting insurers charge higher rates to older consumers and levy a 30% surcharge on the premiums of those who let their coverage lapse.
The bill also eliminates the enhanced federal match for Medicaid expansion starting in 2020 and curtails federal support for the entire Medicaid program, which covers about one in five Americans. And it lifts the taxes that Obamacare had imposed on the wealthy, insurers and companies.
Republican lawmakers and supporters say the bill will lower premiums and deductibles and give consumers more control over their health care. But an array of opponents, including many consumer and patient advocacy groups, say this bill could leave millions facing higher health care bills and less coverage.
Here’s whom the American Health Care Act would likely help:
Younger Americans could get cheaper plans
Obamacare was designed so that younger policyholders would help subsidize older ones. That would change under the Republican bill because it would allow insurers to charge older folks more.
This means that younger Americans would likely see their annual premiums go down. Enrollees ages 20 to 29 would save about $700 to $4,000 a year, on average, according to a study by the Milliman actuarial firm on behalf of the AARP Public Policy Institute.
Those under age 30 would also get a refundable tax credit of up to $2,000 to offset the cost of their premiums, as long as their income doesn’t exceed $215,000 for an individual.
The GOP tax credits would also likely be more generous than Obamacare’s subsidies for these folks. For example, a 27-year-old making $40,000 a year would receive $2,000 under the GOP plan, but only gets a $103 subsidy from Obamacare, on average, a Kaiser analysis found.
Also, the bill keeps the Obamacare provision that lets young adults up to age 26 stay on their parents’ insurance plan.
The healthy could buy less expensive policies in some states
Obamacare requires insurers to provide an array of health care benefits, including maternity, mental health, prescription drugs and substance abuse. This comprehensive coverage, however, jacks up premiums and provides services that some consumers find unnecessary — think, a couple in their late 50s who aren’t having any more kids likely don’t need maternity coverage.
The bill would allow states to waive this federal mandate, which would allow insurers to offer skinnier plans that offer fewer benefits with lower premiums.
Middle class and higher-income Americans could get tax breaks and perks
The Republicans would enable people higher on the income scale to claim the tax credit to help pay their premiums. Under Obamacare, an enrollee who makes more than $47,500 is no longer eligible for a premium subsidy. The GOP plan would let a policyholder making up to $75,000 claim the full tax credit. The benefit would phase out slowly until the enrollee hits $215,000 in income.
The legislation also would eliminate two taxes that Obamacare levied on the wealthy to help pay for the law. Under the Affordable Care Act, single taxpayers with incomes above $200,000 and couples making more than $250,000 annually have to pay an additional 0.9% Medicare payroll tax on the amount they earn above these thresholds. These taxpayers may also be hit with a tax surcharge of 3.8% on investment income above those thresholds.
And the bill would allow folks to contribute more to Health Savings Accounts, which are primarily used by better-off Americans who can afford to sock money away for health care expenses.
Here’s whom the American Health Care Act would likely hurt:
Lower-income folks could be left uninsured
Obamacare contains many provisions to help poor and lower-income Americans.
Primarily, it expanded Medicaid to cover adults who earn up to $16,400 a year. The American Health Care Act would end the enhanced federal Medicaid funding for new enrollees starting in 2020. And it would curtail federal support for the entire program by sending a fixed amount of money per enrollee or by providing a block grant. States would likely have to either reduce eligibility, curtail benefits or cut provider payments.
All this could hurt not only poor adults, but also low-income children, women, senior citizens and the disabled.
Also, Obamacare provides those with incomes just under $30,000 with generous subsidies to lower their deductibles and out-of-pocket costs in individual market policies. The legislation would eliminate the subsidies.
Finally, the premium tax credits the legislation would provide would not go as far Obamacare’s subsidies for lower-income consumers
Folks making $20,000 a year would take the biggest hit at any age under the GOP plan, a Kaiser study found. A 27-year-old earning this amount would only get $2,000, instead of $3,225 under Obamacare, on average. Meanwhile, a 40-year-old would get $3,000 versus nearly $4,150. However, the biggest loser would be a 60-year-old, who would receive only $4,000, instead of nearly $9,900 under Obamacare.
In its review of an early version of the bill, the non-partisan Congressional Budget Office estimated that 24 million fewer people would have coverage by 2026 as compared to current law. The majority of those would have qualified for Medicaid under Obamacare.
Major health insurance lobbying groups are concerned about the bill’s impact on all these folks, many of whom are their customers.
“The American Health Care Act needs important improvements to better protect low- and moderate-income families who rely on Medicaid or buy their own coverage,” Marilyn Tavenner, CEO of America’s Health Insurance Plans, said after the bill passed the House Thursday.
Older Americans could have to pay more
Enrollees in their 50s and early 60s benefited from Obamacare because insurers could only charge them three times more than younger policyholders. The bill would widen that band to five-to-one.
That would mean that adults ages 60 to 64 would see their annual premiums soar 22% to nearly $18,000, according to the Milliman study for the AARP. Those in their 50s would be hit with a 13% increase and pay an annual premium of $12,800.
Also, the GOP bill doesn’t provide them with as generous tax credits as Obamacare. A 60-year-old making $40,000 would get only $4,000 from the Republican plan, instead of an average subsidy of $6,750 from the Affordable Care Act, according the Kaiser study.
States could also receive waivers to allow insurers to charge older Americans even more than five times the premiums of the young.
Those with pre-existing conditions could be charged more and get less coverage
States could allow insurers to charge higher premiums to those with pre-existing conditions who let their coverage lapse. These states would have to set up high-risk pools or other programs to help lower the costs of insuring these folks, but many experts say the $138 billion set aside through 2026 for that funding would not be enough.
Consumers with health issues may also find that their policies don’t cover all of their needs. That’s because states could allow insurers to offer skimpier plans. It’s likely many carriers would take them up on that offer since few would want to sell policies that attract the sickest and costliest patients.