Posted on March 9, 2017 9:33 am

Changes to the American Health Care Act

In recent news…

Major developments and their effect on developmental services

The American Health Care Act On Monday afternoon, House Speaker Paul Ryan announced the formal release of the American Health Care Act (AHCA), the Republican plan to repeal and replace the Affordable Care Act (ACA, or Obamacare). Some of the biggest items and impacts are described here.

What Changes #1 Medicaid Expansion (contraction) Obamacare let states expand Medicaid (simplistically, healthcare for low-income individuals. Here we call it Medi-Cal) to people earning up to 138% of the federal poverty level. For a family of four, that’s an annual income of roughly $34,000. The AHCA would, starting in 2020, prevent new enrollments or re-enrollments. This would shrink Medicaid by attrition, especially since many people have a break in Medicaid coverage each year.

#2 Medicaid Per Capita Grants The AHCA would cap Medicaid funding. This “per capita” approach will provide money based on each state’s per-person Medicaid spending, and for all future years, simply provide that dollar value, per person, to each state. It would also grow by medical inflation plus one percent. It would use five different groups for those calculations, meaning that the costs for people who are “blind or disabled” would be calculated separately. There are indications that the bill would also create Medicaid spending targets, and cut state funds if those targets are not met. This topic will thus be covered in greater detail in a future D.C. Currents email.

#3 Age Ratios Older people use more health care. The ACA lets insurance companies charge them up to three times more than younger enrollees. The AHCA raises that “age ratio” to five times the cost, making insurance more expensive for older people.

#4 Tax Credits The ACA provides tax credits (subsidies) for people to buy their own health insurance. The more money a person earns, the less they get. The AHCA replaces these subsidies with tax credits that go up with age, to help counter the age ratio (see above). They phase out when an individual’s income is over $75,000. There are two major criticisms of the tax credits. Compared to the ACA, the AHCA gives less help to low-income people. And the age ratio could mean that, even with these credits, older enrollees will see their insurance bills go up.

#5 The Employer Mandate The AHCA ends the requirement that large employers give health insurance to their employees.

What’s Kinda Different The Individual Mandate Broadly speaking, for insurance to work, people have to pay into it even when they don’t need it. Obamacare solved this by the “individual mandate,” making people either buy insurance or pay a penalty each year. The AHCA doesn’t make you buy insurance or pay a penalty. Instead, if you spend more than 63 days in a row (in a year) without it (“continuous coverage”), when you buy a plan, you can be charged 30% more for the year. But if you make enough money, and can stay healthy for long enough, it’s cheaper to not have insurance and only buy it when you need it.

What Doesn’t Change

#1 Essential Health Benefits The AHCA will continue to require certain minimum services in all health insurance plans, including behavioral health and habilitative care.

#2 Pre-Existing Conditions Insurance companies will still have to cover people with pre-existing conditions, and still can’t charging them more than other people.

What’s Next

The bill is moving through committees now, and will probably get to the floor of the House before the end of the month. But passage there – or in the Senate – is not guaranteed.

Different Republicans and conservative groups are arguing this bill is Obamacare Lite, and doesn’t go far enough. Others worry the changes will hurt their states, particularly the proposed Medicaid contraction. Democrats are united in opposition. And three major advocacy groups including the AARP, the American Medical Association, and the American Hospital Association already oppose it.

The non-partisan Congressional Budget Office hasn’t been able to calculate how much this would cost yet, or how many people will gain or lose insurance if it passes. But unofficial estimates predict between 2 to 10 million people will lose insurance under the AHCA.