ACA or AHCA
Republican health care coverage plan is a work in progress
By Ilene Schneider
No matter which party or which program one favors, most Americans agree that the health care situation in the United States could be improved. The question is how to make it fair while making it affordable.
On May 4, 2017, the U.S. House of Representatives voted in favor of repealing the Patient Protection and Affordable Care Act (ACA) and passing the American Health Care Act of 2017 (H.R. 1628) (AHCA) by a vote of 217 to 213. Hospitals, doctors and insurers raised concerns about the AHCA, which still needs to be addressed by the U.S. Senate.
The AHCA, a budget reconciliation bill, is part of the 2017 federal budget process that can pass the Senate with a simple majority of votes. It would repeal parts of the Affordable Care Act (ACA), including provisions contained in the Internal Revenue Code, such as the individual and employer mandates and various taxes, as well as modifications to the federal Medicaid program.
The ACA, a major reform of health care in the United States, was passed during the term of the 111th United States Congress. It remained in effect despite Republican efforts to repeal it.
Health care experts are concerned that the AHCA would provide tax credits that are insufficient to pay for individual insurance and could lead to Americans dropping out of the health care market. These experts also say that the bill’s elimination of the ACA’s community rating provision (keeping insurance companies from charging older people more than three times what they charge younger people) would increase cost differences between age groups and would increase premiums for Americans more likely to get sick. Additionally, if healthy people drop out of the health insurance market, insurers would also leave, thus decreasing choice. Finally, the phase-out of the Medicaid expansion could cause poorer Americans to lose health care coverage.
The ACA has an individual insurance mandate with an employer mandate on larger companies. The AHCA has no individual or employer mandate, and insurers can impose a one-year, 30-percent surcharge on consumers with a lapse in coverage.
The ACA provides income-base subsidies for premiums that limit after-subsidy cost a percentage of income, with tax credits for out-of-pocket expenses. The AHCA offers age-based refundable tax credits for premiums, which are phased out for higher incomes. There are no tax credits for out-of-pocket expenses.
As to Medicaid, the ACA matches federal funds to states for anyone who qualifies with expanded eligibility up to 138 percent of poverty level income. In the AHCA federal funds would be granted to states based on a capped, per-capita basis starting in 2020. States can choose to expand Medicaid eligibility but would receive less federal support for those additional persons.
Under the ACA insurers can charge older customers as much as three times as much as younger customers. Under the AHCA insurers can charge older customers up to five times as much.
The ACA enables individuals to put $3,400 and families $6,750 into a tax-free health savings account. The AHCA allows individuals to put $6,550 and families $13,100 into a tax-free health savings account.
The ACA would impose a “Cadillac tax” on high-cost employer plans implemented in 2020. The AHCA would impose a “Cadillac tax” on high-cost employer plans implemented in 2025.
Under the ACA there would be a 3.8 percent tax on investment income and an 0.9 percent tax on individuals with an income higher than $200,000 or families with an income higher than $250,000. The AHCA would repeal both taxes.
The ACA requires insurers to offer ten essential health benefits. The AHCA requires private plans to offer the ten essential health benefits, but some Medicaid plans are not required to offer mental health and substance abuse benefits.
The two plans allegedly do have three similarities. Insurers may not deny coverage for pre-existing conditions, dependents can stay on health insurance plans until age 26 and insurers may not set annual and lifetime limits on individual coverage. The pre-existing condition portion of the two plans takes different forms.
Most Americans get their health insurance through their employers, and as long as they remain employed by the same company, their coverage probably will not be affected. However, if they change jobs, work as independent contractors or live in states that seek waivers from the AHCA, they could see some major changes. Age could be a huge factor as well.
However, last week’s vote has to be seen for what it is – the first step in a long process that will evolve into some kind of a compromise. What will happen now is anybody’s guess.