House Republicans have finally released their replacement plan for the Affordable Care Act on Monday. The plan is known as the American Health Care Act. It was developed with the White House and Senate Republicans.
The questions everyone wants to know are still to be answered.
1. How much it will cost?
2. Will the working poor have access to health insurance?
The Congressional Budget Office has not yet scored the legislation, so its price tag is unknown.
But what we know for sure is this: some of Obamacare’s most disliked signature features are gone immediately. The tax on people who don’t purchase health care is gone.
Protections, such as the exclusion on people with pre-existing conditions, are a part of the new plan. Also, the provision that allows young adults to stay on their parents’ plan through age 26 also survived the GOP plan.
The plan maintains the Medicaid expansion — for now. The Affordable Care Act expanded Medicaid to cover millions of low-income Americans. Many say 20 Million of the 25 million people covered on Obamacare are people who qualify for Medicaid to begins with, and the ACA expansion of Medicaid is where most of the enrollment came from.
In a big shift from previous drafts of the legislation, which ended Medicaid expansion immediately, this bill would continue that coverage expansion through January 1, 2020. States will be able to continue to enroll people in the program. States that haven’t expanded yet but are considering the option could join the Medicaid expansion, and enroll people over the same time period as well. On January 1, 2020, enrollment would “freeze,” and legislators expect enrollees would drop out of the program as their incomes change. The expectation is people will be able to buy health insurance across state lines, providing greater competition. Then, insurers will jump off the American Health Care Act and into the private martlet.
In some ways, the replacement plan works the way health insurance has always worked. Some say it benefits people who are healthy, and discriminates against those who are sicker and lower-income.
The replacement plan would make several changes to what health insurers can charge enrollees who purchase insurance on the individual market, as well as changing what benefits their plans must cover. These changes could be advantageous to younger and healthier people looking for cheaper benefits packages.
Coverage for low-income Americans
The bill keeps some key features of Obamacare, like giving more help to lower-income Americans, and the Medicaid expansion, although in a scaled-back form.
One of the main ways that Obamacare increased insurance coverage was by expanding the Medicaid program to cover millions more low-income Americans. Prior to the health law, the entitlement was restricted to severely low-income families.
Obamacare opened the program up to anyone below 138 percent of the poverty line (about $15,000 for an individual) in the 31 states that opted to participate.
The Medicaid expansion change is almost certainly due to intense pressure from the 15 Republican governors who run states that have expanded Medicaid. They have lobbied aggressively in favor of the keeping the program alive. It could encourage some states eyeing Medicaid expansion, like Kansas and Maine, to move forward before the enrollment freeze.
There are some big changes to Medicaid in the American Health Care Act outside of the expansion, too. This bill would convert Medicaid to a “per capita cap” system, where states would get a lump sum from the federal government for each enrollee. This is a windfall for many governors.
This is different from current Medicaid funding. Right now, the federal government has an open-ended commitment to paying all of a Medicaid enrollee’s bills, regardless of how high they go.
Previous analyses of different version of this proposal suggest it could lead to very deep cuts to Medicaid. It’s unclear at this point how much this new version of the policy would reduce Medicaid spending.
The AHCA bans discrimination against those with pre-existing conditions — but charges more to people who have a break in coverage. AHCA keeps many of the popular health insurance reforms from Obamacare. This includes a ban on annual and lifetime limits, allowing kids to stay on their parents’ plans until they’re 26, and requiring insurance plans to offer coverage to all patients regardless of how sick they are. The AHCA, unlike Obamacare, does not mandate that all Americans be covered by health insurance or pay a fee/tax, however. The fee/tax is something many Americans considered to be an overreach of power requiring Americans to buy health insurance.
The continuous coverage policy has shown up a lot in Republican replacement plans. It was part of Speaker Ryan’s “A Better Way” proposal and Rep. Price’s “Empowering Patients First” Act.
This is how the continuous coverage policy works.
If a worker goes straight from insurance at work to another policy, the insurer has to charge the standard rate — it can’t take the cost of the worker’s condition into account.
If the worker had a lapse in coverage longer than 63 days — maybe the person is between jobs — and went to the individual market later, insurers could charge that person a 30 percent premium surcharge. The person would need to pay a higher premium for a full year before returning to the standard rate.
A Congressional aide clarified that this surcharge would be the same for both healthy and sick people. Insurers could not use it to turn away people they expect to have significantly higher medical costs.
This might end up having unintended consequences, however. Because only the people who really need insurance —and who have high medical costs — may want to pay the surcharge. Healthy people might be more comfortable staying out of the individual market longer. They could wait until they get a job that offers coverage, but that should be the person’s choice.
The leaked draft does have a safety net for people who can’t afford to buy this more expensive coverage. It would invest $100 billion over 10 years into a Patient and State Stability Fund. More on that in my next article about the Americans Health Care Act.
All things being equal, I believe we are working towards a goal, but we may not be there yet.