After the first attempt to repeal and replace Obamacare died on the floor of the House, Republicans came back with a new version of the American Healthcare Act(AHCA) that passed through the house on May 4th. Even in a Republican majority House, the AHCA had a rough time pulling through and ended up getting passed with 217 votes in favor and 213 votes against.
Despite the magnitude of the bill, which aims to rework how 18% of the U.S. GDP is spent, there seems to be little known about the bill — both from inside and outside the House. A lot of representatives are openly stating that they have not read the bill and the public seem to be none the wiser.
Without the Congressional Budget Office (CBO) having released its report on the new version of the AHCA, it’s difficult to tell precisely what the economic fallout will be. Nonetheless, here’s everything you need to know about the American Healthcare Act that just passed through congress.
Protection to stay on parent’s plan until 26 survives. The ability to stay on one’s parent’s plan was one of the celebrated features of the ACA. It made sure young adults with preexisting conditions would be able to be insured through other means than an employer. This was celebrated by both Democrats and Republicans alike, as it allowed for entrepreneurship and innovation through non-conventional careers.
Removal of individual mandates. Individual health care mandates require everyone to be insured. Uninsured people come at a cost to the rest of the American population. The fee was intended to serve as a nudge to get more people insured, but groups like the Heritage Foundation found it to be unconstitutional.
States could choose to opt-out of ACA essentials. These are the core services that the ACA requires all insurance to cover. However, the AHCA would allow states to opt-out of requiring insurers to provide these essentials. The essentials include the following:
- Emergency services
- Mental health services
- Rehabilitation services
- Pediatric services
- Laboratory services
- Outpatient care without hospital admission
- Prescription drugs
- Preventive care and chronic disease management
Medicaid expansion would be phased out. The ACA expanded Medicaid to allow adults earning an income below the 133% of the federal poverty line ($15,800 for one person, $32,319 for a family of four) to be covered through Medicaid. The expansion would stay in place until 2019 under the AHCA, but post-2019, no newly eligible people could be added to the Medicaid rolls.
States can choose to receive Medicaid funding through block grants. If states choose to opt for a block grant, they’d be receiving their funding in a lump sum, rather than a per-person payment per Medicaid recipient. Block grants would alleviate restrictions put on states’ ability to charge premiums, kick people off Medicaid, and cut benefits for children. Additionally, regardless of whether or not states uses block grants, states can now add work requirements for non-disabled adults.
Allows insurers to charge more for people with preexisting conditions, which was illegal under the ACA. While insurers can not deny someone due to preexisting conditions, they can ‘price them out of the market’. According to a report by the AARP, some of the premiums could reach as high as $25,700 per year for people in high-risk pools. Some of the preexisting conditions are rather straight-forward, such as cerebral palsy, Alzheimer’s, and diabetes. However, what has caused quite the stir is some of the other very common ‘preexisting conditions’ like acne and migraines being possible reasons for hikes in people’s premiums.
The bill benefits the rich and healthy; hurts the poor and sick. The AHCA would seek to cut the taxes that were introduced with the ACA. That includes a 3.9% tax on investment income, 0.9% tax on individuals with an income higher than $200,000 or family with higher than $250,000, fees on health insurance providers based on plans, and a 2.3% tax on medical devices. All the cuts total a net of $883 billion. The vast majority of that amount would go towards the already rich and healthy, with $247 billion of that amount going towards the richest 2%.
Tax credits would be based on age, rather than income. Under the ACA, one’s tax credit would be based on income as well as location, as premiums vary regionally. However, the AHCA would change it to be based on age, increasing them as recipients become older. However, it would phase out tax credits for individuals earning more than $75,000 and families earning more than $150,000.
Premiums would be higher for older enrollees. The AHCA would get rid of regulations from the ACA that says that insurers can only charge their oldest enrollee three times as much as their youngest enrollee. This would now be increased to five times as much for the oldest enrollee, compared to the youngest one. Christine Eibner, an economist at the RAND Corporation, estimates that this provision would lower premiums for a 24-year-old from $2,800 to $2,100, but increase the premiums for a 64-year-old from $8,500 to $10,600.
The AHCA would fund high-risk pools for people losing their coverage. The hopes of the high-risk pools are to pulling people with diseases that are expensive to treat, like cancer and diabetes, from the insurance pool. They could then be subsidized to cover the cost, which would drive down the price of premiums for other healthy people. However, experts worry that the $115 billion allocated towards high-risk pools is far from what is required to run a program like this.
The AHCA would cause millions to lose their health coverage. While there has been no CBO report for the AHCA bill that passed through congress on May 4th, a CBO report was issued for the first variation of the AHCA. Of course, a lot has changed within the bill since, but there are a few conclusions we can draw from what we know from the previous CBO report, and what has changed since. The largest insurance loss in the original CBO report was in regards to Medicaid provisions. The report estimated that approximately 14 million people would lose their insurance by 2026 as a consequence of the Medicaid provisions. However, since the Medicaid provisions have remained largely unchanged, it is safe to assume that the 14 million number will hold true for the new version as well. Other than that, it is difficult to tell what the outcome will be since there are new provisions that would reduce coverage (such as waivers from ACA’s community rating provisions) and provisions that would increase coverage (such as additional funding for programs covering sick people).
As the bill makes its way to the Senate, we are likely to see major revisions to the current bill. It’s also highly unlikely that a Senate vote would take place before a CBO report has come out in regards to the new bill. However, with a small majority in the Senate (52-48), the AHCA faces an uphill battle. All it takes for the bill to fail is for three Republicans to vote no, assuming all Democrats vote for saving Obama’s signature domestic achievement. With all the mounting pressure, that may very well happen.