Ever since the Patient Protection and Affordable Care Act (the ACA) was passed, Republicans have been bound and determined to repeal it. Despite having nearly seven years to come up with an alternative plan, it took them until this past Wednesday to finally introduce something. Dubbed the American Health Care Act, the bill doesn’t fully repeal the ACA (they’d need 60 votes in the Senate to do that, and they only have 52), it remakes the program so heavily that it more or less accomplishes this goal. Since health care policy is hard, I figured I’d dissect the key elements of the new plan (spoiler alert: I’m not likely to praise very much of it).
First, a short primer on how the ACA worked. Under this law, low-income Americans could obtain health insurance coverage in a few ways. First, the law expanded the Medicaid program, which provided insurance through the government for the poorest individuals and families (a Supreme Court decision later determined that states could choose whether or not to expand their Medicaid programs). Second, it provided federal subsidies to buy private insurance on federally-run health insurance marketplaces, or exchanges. It also required insurance companies to provide ten basic benefits in all but the most bare-bones plans. (outpatient care, emergency services, hospitalization, maternity and newborn care, mental health services, addiction treatment, prescription drugs, rehabilitative services, laboratory tests, preventive services, and pediatric services).
The ACA also contained a provision that required people to carry health insurance at all times, or face a tax penalty. While this may seem burdensome, the point of the individual mandate was to get more young and healthy Americans, many of whom didn’t have insurance previously, paying into the system so that insurance companies could afford to cover sicker and older Americans. More of these individuals would be buying insurance because the ACA made it illegal to deny or cancel coverage for preexisting conditions. To partially compensate for requiring younger Americans to buy health insurance, they allowed children to stay on their parents’ health plans until age 26, providing something of a safety net if younger Americans had trouble finding a job out of school to help pay for coverage.
Here’s what the American Health Care Act (AHCA) does to these provisions:
-It gets rid of the individual mandate… or does it? A closer examination of the bill reveals that it allows insurers to tack on hefty surcharges if people don’t maintain continuous health coverage. So the individual mandate is in effect still there, the money just lines insurance companies’ pockets rather than going to the government, where it might be able to fund more people getting coverage.
-It dramatically remakes Medicaid. Under the current system, the federal government provides matching funds for what states spend on Medicaid, and mandates what their Medicaid insurance plans must cover at minimum. The AHCA instead gives states a fixed amount of funding per enrollee starting in 2020. The problem is that the funding provided under this formula will likely be less than what the government provides now, meaning that Medicaid plans in many states may not provide the ten essential benefits listed above due to cost crunches, since the AHCA removes that requirement as well.
-It shrinks federal subsidies for those who don’t qualify for Medicaid. The Affordable Care Act used a complex formula in each state that determined how much of a federal subsidy one would get to buy health insurance using a complex mathematical formula. The AHCA does away with this formula, and instead offers a flat tax credit of $2,000-$4,000. This is a narrower range than under the ACA, and would likely make health insurance more expensive, especially for those that need it most.
-It allows insurance companies to charge elderly customers more. The Affordable Care Act only allowed insurers to charge elderly Americans up to three times more than they charged younger Americans. The Republican bill increases that ratio to 5-to-1. Thus, younger people would likely see their premiums drop as older peoples’ rise. This upsets the balance the Affordable Care Act struck by putting healthier Americans on the rolls to lower the costs for everyone else.
-It repeals two taxes that hit highest-income Americans hardest. The top 1% of earners could get a tax break of around $33,000 or more thanks to the repeal of these taxes. The AHCA also delays the implementation of the “Cadillac tax,” which charges employers and insurers extra for super-generous health care plans from 2020 to 2025. This leaves less funding for programs such as Medicaid and federal subsidies described above.
-It expands the amounts that individuals and families can contribute to Health Savings Accounts. Health Savings Accounts are accounts in which people can store money tax-free to pay for health care costs as they arise. This is great if you’re middle class or richer and have discretionary income to sock away in such an account, but for poorer Americans, this wouldn’t really help.
-It defunds Planned Parenthood. Planned Parenthood found itself in hot water in 2015 when the Center for Medical Progress released several videos that appeared to show the organization selling parts of aborted fetuses for profit to biotechnology companies. Since then, Republicans have been on a crusade to defund the organization. In fact, what Planned Parenthood was doing was accepting reimbursement for collecting and shipping tissue to research labs. They weren’t actually making any money from it. All of this was also perfectly legal. Nevertheless, the AHCA still defunds Planned Parenthood for a year. Never mind that the organization provides valuable health screenings, sex education, contraception, and other services that many community health clinics do not provide. Never mind that it doesn’t use federal funding for abortion services, as it is banned from doing under the Hyde Amendment. This smacks of nothing more than a move to score political points with the Republican base, and would leave many low-income individuals with less access to care.
In conclusion, while the Affordable Care Act had its issues, such as a faulty website and insurers withdrawing from the exchanges, it is worlds better than the system under the American Health Care Act, which shifts the burden of acquiring health insurance from the rich and healthy to the poor and sick. It should be rejected in favor of such provisions as reinstating risk corridor programs that would help insurance companies by sharing the risk with the federal government and thus making it easier for them to keep selling insurance on the exchanges. In short, let’s shore up the ACA’s weaknesses, not gut it for the sake of politics. Luckily, many Republicans have come out against the bill for a variety of reasons: it isn’t conservative enough for the extremists, it dramatically alters Medicaid in states that have expanded the program, many of which have Republican governors. Senator Lisa Murkowski (R-AK) has even come out against the Planned Parenthood defunding. So this bill’s days could be numbered, or it could at least undergo big changes before it passes, as the ACA did.