American Health Care Act 101: What to Know About the Repeal and Replace Bill
The new Affordable Care Act (ACA) repeal and replace bill will affect almost all of us. Learn the key highlights that will affect you and your family.
Sanaz Majd, MD
As you’ve likely heard, the Trump administration has developed a new plan to replace the Affordable Care Act (ACA), otherwise known as Obamacare. The American Health Care Act (AHCA), and its 123 pages, was released March 6, 2017.
With the new AHCA, the elderly and the poor, because they are typically our sickest population, will be most impacted. According to the anticipated Congressional Budget Office (CBO) calculationopens PDF file that was released this week, about 24 million people are estimated to be left uninsured under this bill.
How will the new plan affect us? You may not have the time (or patience frankly) to decipher all 123 pages of these complex legal and insurance terms. Plus, a lot of the details are still uncertain. (If you’d like to, you can download the full text here—the points below all appear in the full text, and are also noted widely in summaries from the media).
What Would Change?
Decreased Tax Credits
As expected, there will be fewer tax credits, but most especially for the elderly and low-income populations. The current ACA bases its financial assistance on income levels, zip code, and age; however, the new bill bases it primarily on age. It will provide some tax credits to those with an income below $75,000 and for families below $150,000, but it will be less than what they are receiving with their current plan subsidies. It is structured to provide a $2,000 tax credit to those less than age 30, working its way up to $4,000 to those over 60. Of note, it will not be provided if the plan being purchased covers abortion services, however.
Repealing Subsidies for Out-of-Pocket Expenses
The ACA currently provides assistance in the form of a tax credit to those who have trouble paying for out-of-pocket expenses (those earning between 100 and 250% of the federal poverty level), such as deductibles and co-pays. The new bill repeals this ACA cost-sharing reduction provision starting in 2020.
Cost Limits for the Elderly
Obama’s ACA placed a 3 times limit cap on how much insurers could charge the elderly more than young people for their health plans—because the cost of health care is typically more for the elderly. Under the new bill, they can be charged up to 5 times as much as their younger counterparts. However, it gives states the power to decide for themselves ultimately.
Repealing the Individual Mandate
You will no longer have to pay a penalty for being uninsured, which was a key feature of the Obamacare plan. Therefore, young, healthy people who were purchasing plans only to avoid this tax penalty may no longer contribute to that cost-sharing balance for insurers. As a result, costs may rise for everyone else in order to balance the cost-sharing. The more you are paying for your premiums, the more this bill may affect you. And since older people typically have higher premiums. it will affect them the most.
The bill instead creates a “continuous coverage” requirement. Those that allow their coverage to lapse for more than 63 continuous days during the preceding 12 months will be charged a 30% premium surcharge upon returning. Therefore, there is no mandate to be insured like before, but if you become uninsured and then you change your mind, you will have this premium surcharge.
Medicaid Phase-Out
Medicaid is the government paid health plan for those with low incomes—for those that are even below the income level set to obtain health insurance through the exchange. This plan was expanded to cover more people under Obamacare. However, the new bill will phase-out this expansion by decreasing allocated federal dollars for Medicaid. There will be a federal funding cap per person starting in 2020. There will also be diminished federal funding for all those who submit an application for Medicaid after 2020, whether there was a lapse in coverage or the individuals left Medicaid and are returning.
Defunding Planned Parenthood for One Year
Planned Parenthood is often in the news for its abortion services; however, not everyone is aware that Planned Parenthood provides many non abortion-related services (although the percentage of which service types are more frequently offered by Planned Parenthood is often debated). Planned Parenthood is also where uninsured, low-income patients can obtain birth control and prevent unwanted pregnancies that result in abortion or increased health care spending that sends our tax money towards pregnancies, deliveries, and health care for these children. It is also where patients obtain testing and treatment for sexually transmitted infections. Planned Parenthood also provides cervical cancer screening (aka pap smears) and breast cancer screening. Now, the federal funding for all of these services will cease for at least one year.
Expanding the Health Savings Account
The bill will allow you to place aside more pre-tax money for health care expenses starting in 2018 than. Under ACA, $3,400 is the annual cap per for an individual HSA and $6,750 for families, whereas the new bill doubles these caps to allow a max of $6,550 for individuals and $13,100 for families.
Repealing the Employer Mandate
Larger companies are no longer required to pay a penalty if they fail to provide insurance for their employees.
Repealing the Following Taxes
Taxes on health insurers, pharmaceutical and medical device manufacturers, and high-cost employer-sponsored group health plans will all be repealed.
What Would Stay the Same?
Surely, this is a controversial bill—with criticism from both sides of the political spectrum, not just Democrats.
The health plan exchange will still exist, but the terms of how much financial support you receive to help pay for these premiums will change. Almost 85% of people purchasing a plan through the exchange under the ACA are receiving financial support in the form of a subsidy. This percentage, although still unclear on the specifics, will be lower with the new bill. That means that that you will be paying more for your plan than you are currently if you use the health plan exchange.
Insurance plans must still cover preexisting conditions, which is a positive part of the new bill from my perspective as a primary-care physician. I will never forget a young 20-something patient of mine was diagnosed with leukemia, a type that can be treated well with a “simple” oral pill every day. Guess how much that once-a-day pill costs? $13,000 a month. If an insurance company knew about this patient’s preexisting condition (leukemia), they could deny him care, which would mean he’s left to pay for that $13,000 pill out of pocket.
The new bill still covers kids up to age 26 under their parents’ insurance. Insurance plans are still required to keep the 10 essential health benefits, including preventative care and mental health coverage. The AHCA prohibits insurers to set lifetime and annual limit on how much they will cover.
I highly recommend this helpful chart by the New York Times, which also breaks down the policies that will change or stay the same under the ACA versus AHCA.
The American Medical Association (AMA), one of the largest organizations that represents physicians in the U.S., released a statement that they are unable to support the AHCA bill, and that the bill would have an “adverse impact on patients and the health of the nation.”
Surely, this is a controversial bill—with criticism from both sides of the political spectrum, not just Democrats. Plus, there is still much speculation about the details of the bill, its costs, and its impact. What do you think?
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Please note that all content here is strictly for informational purposes only. This content does not substitute any medical advice, and does not replace any medical judgment or reasoning by your own personal health provider. Please always seek a licensed physician in your area regarding all health related questions and issues.
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