- The official name is the American Health Care Act and so the companion initialism is AHCA. Twitter was joking last night about how much trouble the addition of that measly H is causing. Other AHCAs like— this one(link is external) and this one(link is external)—are going to see more action on their Twitter feeds and clicks on their websites. Nicknames include GOPCare and Trumpcare, although Trumpcare is a stretch because the legislation is coming from the House Republicans led by Paul Ryan.
- The bill doesn’t change two of the most popular provisions of the ACA: children will still be allowed to stay on their parents’ policies till age 26 and insurers can’t refuse coverage or charge higher premiums because of pre-existing conditions. The New York Times put together a helpful side-by-side comparison of the ACA and AHCA(link is external) for those who want a quick, one-stop look at which parts of the ACA the Republicans are keeping and which parts they want to change.
- Although there’s a pressure on the Republicans to pass a bill and get it signed by President Trump, the AHCA would unspool some important parts of the ACA fairly slowly. For example, Medicaid expansion would continue with an enhanced federal funding till 2020. Similarly, the ACA premium tax credits won’t be repealed and replaced till 2020.
- The Congressional Budget Office (CBO) hasn’t “scored” the AHCA, so it’s effect on the federal budget and on the number of uninsured is unknown. As Joe Biden might say, CBO scoring is a big %@! deal—CBO scoring had a major influence on how the ACA was cobbled together—but key House Republicans are talking about pushing the bill through without CBO numbers. Avik Roy, a health care policy expert with impeccable Republican credentials who has devised his own ACA alternative, said in a Forbes commentary(link is external) earlier today that he has problems with the way CBO models health care, but the “AHCA itself contains enough flaws that there can be little doubt that the plan will price millions out of the health insurance market.” Former CMS Administrator Andrew Slavitt tweeted last night that “the biggest marketing gimmick is to release it or mark it up, or potentially even vote on it without a CBO score.”
- The AHCA gets rid of the ACA’s individual mandate and replaces it with a 30% “continuous coverage” surcharge. Continuous coverage was in Paul Ryan’s A Better Way proposal last summer, so wasn’t surprising to see it in the bill that came out last night.Vox’s Sarah Kliff(link is external) does a nice job of explaining (exposition is Vox’s stated mission) how the surcharge—and other parts of the AHCA—will work. The gist: If you have a break in insurance coverage of more than two months, insurers could tack a 30% surcharge on your premiums once you buy health insurance again. The surcharge ends after a year. The thinking is that the prospect of the surcharge will give people an incentive to maintain their coverage and keep more people in the insurance pool. The wider the pool, the more stable the market. Conceptually, the surcharge is akin to the Medicare Part B late enrollment fee.
In his tweetstorm last night about the AHCA, Larry Levitt at the Kaiser Family Foundation said the continuous coverage provision will have the opposite of the intended effect: “For people healthy and uninsured, a 30% premium surcharge would actually discourage them from signing up until they get sick.” Roy wrote about the flip side: the surcharge encouraging a disproportionate number of high-risk people to get coverage, so insurers will be covering them at a loss. It is, he wrote, is a recipe for adverse selection death spirals.
- The AHCA ditches ACA’s scheme of tax credits to subsidize premiums for insurance bought on the ACA exchanges with a scheme of its own. The ACA credits are tied to income and premiums. The AHCA tax credits are based primarily on age and don’t vary with premiums, a drawback for Americans living in regions of the country with expensive health care and high premiums. Here are the age-banded tax credits as outlined in an explainer issued by the House Ways and Means Committee last night:
- Under age 30: $2,000
- Between 30 and 39: $2,500
- Between 40 and 49: $3,000
- Between 50 and 59: $3,500
- Over age 60: $4,000
The tax credits are additive within a family member but there is a $14,000 cap.
Previous Republican proposals would have made the tax credits available to anyone buying insurance in the individual market—even affluent Americans. That was done partly in the name of the simplicity.
But last night’s AHCA phases the credits out starting at incomes of $75,000 ($150,000 for joint filers) at rate of $100 per year for every $1,000 in income. The tax credits are refundable, which means that if your federal income tax bill is less than the credit you are owed, you’ll get the difference as a tax refund. They are also advanceable, which means people can get them when the premiums are due.
Kaiser tweeted out a chart last night that supports criticism that the AHCA scheme tax disadvantages low-income Americans. According to Kaiser’s calculations, in 2020, on average, a 40-year-old with an income of $20,000 would receive $1,143 more in tax credits under the ACA than under the AHCA ($4,143 vs. $3,000). It’s the reverse for a 40-year-olds earning $40,000. They would receive $1,979 more under the AHCA than under the ACA ($3,000 vs. $1,021). In addition, Roy pointed out that the Republican plan phases out tax credits at a much higher income level than the ACA. This year, the ACA tax credit tapers off at an income of $48,240 whereas under the AHCA it would end at an income of $105,000, by Roy’s figuring.
The AHCA would increase amount that Americans can put into health savings accounts to $6,550 per year from the current limit of $3,400. That change is another move that will advantage higher earners, say the ACA’s defenders, because those with higher incomes can afford to sock more money away into tax-advantaged HSAs. Republicans have long argued that HSAs put “skin in the game,” so people become more cost-conscious consumers of health care services.
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