Earlier this week, House Republicans unveiled the American Health Care Act (AHCA), their proposal to repeal and replace the Affordable Care Act (ACA). The AHCA, which we absolutely won’t call Trumpcare, keeps a few of the ACA’s most popular provisions — coverage for preexisting conditions, extending dependent coverage until 26 — while drastically altering, replacing, or removing other features.
This isn’t the first Republican health care plan. They already created one a decade ago,
when the House submitted health care plans to oppose Democratic proposals. Rather than fight, President Obama took those GOP-approved ideas and baked them into Obamacare. If the right wanted to criticize the ACA , it would have to attack its own ideas. And there’s no way Republicans would contradict themselves, right?
So Republicans have contradicted themselves and proposed a law that would eviscerate their own ideas. For a snapshot of what could be coming, here are three of the biggest changes between the Affordable Care Act and the American Health Care Act.
1. INDIVIDUAL MANDATE
ACA: The ACA created the individual mandate, requiring most Americans to obtain and maintain health insurance. This is the provision that forces people to pay for health insurance or pay a fine. The purpose of the individual mandate is to encourage everyone to get coverage. This would put more money into the system, which will help high-need individuals. Adding healthy people to plans means more money to help the chronically ill and elderly, groups with disproportionately high costs. Think of it like herd immunity to predatory insurance companies.
AHCA: The AHCA repeals the individual mandate and replaces it with something called continuous care. Under the AHCA, if you do not have coverage, there is no penalty — until you decide to get coverage. Starting a new health care plan after not having coverage will cause your premiums to increase by 30 percent for one year. In theory, this encourages people to maintain their insurance to keep their costs the same. But with no penalty for dropping coverage, the number of uninsured is guaranteed to increase. Insurance providers will respond to seeing fewer members and less revenue by raise rates on current members. The end result is an increase in the costs of continuous care — the opposite of the intended effect.
2. EMPLOYER PENALTIES
ACA: The employer mandate in the ACA requires companies to offer “affordable insurance” that provides a “minimum value” to its employees. For most large businesses, that means offering insurance that covers certain services, pays at least 60 percent of those services, and costs the employee less than 10 percent of her household income. Smaller companies can get away with offering less value to fewer employees, and those with fewer than 50 employees don’t need to offer any insurance. Organizations that do not comply are forced to pay a penalty based on company size.
AHCA: Under the AHCA, employers do not need to provide insurance to employees. There is no penalty for not offering insurance. As a result, you can expect businesses to phase out employee insurance benefits. These employees would then be forced to purchase insurance on the marketplace or forgo insurance and risk the 30 percent increase should they re-enroll later. Costs for the individual will only increase — not only will she need to pay the extra 60 percent her employer was previously funding, she will be paying higher marketplace rates due.
ACA: The ACA included a Medicaid expansion option, which allowed states to increase the number of people eligible for Medicaid. States that opted to expand — 26 so far, with 6 more in the process of expanding — allow people to qualify based on income. Anyone with come below 133 percent of the poverty level, or $11,880 for an individual as of 2016, can apply for Medicaid in the expanded states. Without the expansion, people need to be at the same income level, as well as meeting additional qualifiers such as household size, family hardship, and disability.
AHCA: The AHCA places a per capita cap on government Medicaid financing starting in 2020. With lower federal subsidies, states would need to decide between offering reduced coverage to more people, or offering more coverage to a smaller population. This is only the illusion of choice: the AHCA also limits funding for Medicaid expansion states and ends the expansion program in 2019. The end result is fewer people eligible for Medicaid, meaning more people forced into market plans or living without insurance.
There is a common theme in all these proposed changes: They funnel more people into higher-priced marketplace plans. Insurance companies are thrilled about that since profit margins are higher on individual programs. Employer-sponsored plans get lower rates by buying in bulk, so the move to individual insurance causes Americans to lose their only negotiating chip. Meanwhile, the lowering of government subsidies will cause insurers to pass that cost on to the consumer. The ultimate takeaway is that health care costs can only increase under the American Health Care Act.
It’s almost like the name “the Affordable Care Act” makes sense.