The American Health Care Act – the Republican Plan to Replace the ACA

The American Health Care Act – the Republican Plan to Replace the ACA

On March 6 Republicans released the first official plan for repealing and replacing some provisions of the Affordable Care Act (ACA), called the American Health Care Act.  The bill contains many proposals that have long been discussed within the Republican party, but information about exactly how it would be implemented, and thus how it would affect consumers, is still to be determined.  Below is a summary of the bill’s key features.

 

The proposal would repeal these ACA provisions:

  • The individual mandate
  • The employer mandate
  • The current income-based subsidies to purchase health insurance on the individual market. Under the new plan, tax credits would be based on household income and age, and would be capped.
  • Assistance to help consumers cover cost-sharing responsibilities like deductibles and co-pays
  • All ACA taxes, including the medical device tax and taxes on insurers that would be phased out starting this year

 

It would implement these changes:

  • Cut federal payments to states that are implementing the Medicaid expansion, essentially ending the Medicaid expansion
  • Cap the amount of money states receive from the federal government to provide care to each Medicaid enrollee in the state, creating a per capita cap funding mechanism
  • Create high-risk pools by allowing states to apply for funding through a State Innovation and Stability Program
  • Establish a continuous coverage system where individuals would not be charged more for pre-existing conditions or if they become sick, but only if they maintain continuous coverage
  • Loosen the requirement that seniors cannot be charged much more for coverage by allowing older people to be charged up to five times more as younger people, instead of three times as much more

 

It would keep these ACA provisions:

  • Children up to the age of 26 can remain on their parents’ health insurance plans
  • Insurers cannot institute limits on how much they will pay to provide coverage for an individual over a year or their lifetime

 

Overall, the bill would make it more difficult for low income consumers to obtain and afford health insurance coverage, and it would benefit those who have higher incomes and are healthier.  The effective date of each provision varies, but most would be phased in by 2020.

 

The change in the premium subsidy calculation for purchasing insurance is especially troubling in Florida, which leads the county in the amount of assistance provided to consumers.  The Kaiser Family Foundation (KFF) reports that a 27 year old earning $20,000 per year would see a 26% decrease in their subsidy in Hillsborough County and an 29% decrease in their subsidy in Pinellas County under the plan.  Similarly, a 40 year old person earning $20,000 per year would experience a 14% reduction in their subsidy in Hillsborough County and an 18% reduction in their subsidy in Pinellas County.

 

The Congressional Budget Office estimates that 24 million people will lose coverage if this bill becomes law,  including 14 million immediately.  Premiums would increase for many, including seniors, people with low incomes and the very sick.  In addition, the bill would cut Medicaid spending by $880 billion over the next ten years.  While it would reduce the federal deficit, these savings would likely mean increased costs for consumers and providers.  In addition, given that the bill reduces or eliminates many of the ACA’s tax provisions, it is not clear how it would be paid for.

 

The bill’s political future is not guaranteed. Democrats oppose it, and some Senate Republicans have already expressed concern about its sweeping cuts to Medicaid and the Medicaid expansion funding mechanisms, while others do not think the bill goes far enough.

 

The House is expected to vote on the bill next week.  The Senate has indicated it is ready to take up the bill, but it will be difficult for Republicans to muster the 60 votes needed to overcome a filibuster.  This forces Republicans to push the bill through using a complicated budget process called reconciliation, as outlined in a previous blog post.  Party leaders have indicated they intend to have the bill to President Trump on April.

A full list of resources on what information is currently available can be accessed here or on the TBHC Advocacy Committee page.