Repeal and replace week in review: March 10, 2017

On Monday, Republicans officially released the “American Health Care Act” which continues the process to repeal and replace the Affordable Care Act (ACA). Trump had stated his plan would allow “insurance for everybody” which superficially sounds like the new act has the same intent as the Affordable Care Act — to expand health insurance coverage to as many Americans as possible. The content of the act, however, doesn’t necessarily align with campaign promises. While the legislation still needs to be reviewed by the Energy and Commerce and Ways and Means Committees, edited and voted on, here’s what you need to know about the current changes included in the American Health Care Act:

• Tax Credit Changes
  As we’ve seen in previous proposals, this plan bases tax credits (mostly) on age, instead of income, household size and geographical location. Under the ACA, tax credits were meant to be larger for those earning less and those with higher insurance costs — to help make plan premiums more affordable. This new credit starts at $2,000 a year for those under 30 years of age, and peaks at $4,000 a year for people who are older than 60. What is new in this legislation, is that the credits begin to phase out for individuals earning $75,000 a year, and for families earning $150,000 a year. Previous iterations did not set an income threshold and provided tax credits to people who, in theory, did not financially need them.

• Plan rate adjustments
  In order to balance the risk pool under the ACA, the anticipation was that young, healthy people would enroll in plans, in addition to the older and/or sicker population. However, the “young invincibles” as they were often called, didn’t enroll at the forecasted rates. Reasons ranged from cost to lack of need. Under the new bill, insurers can now charge older individuals a rate five times higher than their younger counterparts; under the ACA the rate disparity was capped at three to one. So while offering insurers the opportunity to lower premiums for the young and healthy, it could be at the expense of the older population.

• Medicaid Changes
  For the 31 states that expanded Medicaid, funding will continue through 2020. But beyond that, funding as they know it today will switch over to block grants. This means that the federal government will pre-determine how much funding each state will get and it’s up to each state to allocate the funds to cover their individual Medicaid needs. The opposition to block grants fears this will not be enough to cover the state’s needs and will not keep up with rising healthcare costs.

• Individual Mandate
  The tax penalty imposed on those who didn’t enroll in a health insurance plan will be removed. The penalty was meant to encourage individuals to enroll, creating a larger, healthier risk pool. For those that felt they couldn’t afford coverage, the penalty was, in many cases, less than premiums, so folks opted for the penalty. Now, everyone can decide whether or not they wish to enroll in a plan. The effects on the market are to be seen.

• Preexisting Conditions
  The new bill will continue to protect those with preexisting conditions by guaranteeing them coverage — so long as they maintain continuous coverage.