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American Health Care Act 101: What to Know About the Repeal and Replace Bill

The new Affordable Care Act (ACA) repeal and replace bill will affect almost all of us. Learn the key highlights that will affect you and your family.

By
Sanaz Majd, MD,
March 16, 2017
Episode #235

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As you’ve likely heard, the Trump administration has developed a new plan to replace the Affordable Care Act (ACA), otherwise known as Obamacare. The American Health Care Act (AHCA), and its 123 pages, was released March 6, 2017.

With the new AHCA, the elderly and the poor, because they are typically our sickest population, will be most impacted. According to the anticipated Congressional Budget Office (CBO) calculation that was released this week, about 24 million people are estimated to be left uninsured under this bill.

How will the new plan affect us? You may not have the time (or patience frankly) to decipher all 123 pages of these complex legal and insurance terms. Plus, a lot of the details are still uncertain. (If you'd like to, you can download the full text herethe points below all appear in the full text, and are also noted widely in summaries from the media).

What Would Change?

Decreased Tax Credits

As expected, there will be fewer tax credits, but most especially for the elderly and low-income populations. The current ACA bases its financial assistance on income levels, zip code, and age; however, the new bill bases it primarily on age. It will provide some tax credits to those with an income below $75,000 and for families below $150,000, but it will be less than what they are receiving with their current plan subsidies. It is structured to provide a $2,000 tax credit to those less than age 30, working its way up to $4,000 to those over 60. Of note, it will not be provided if the plan being purchased covers abortion services, however.

Repealing Subsidies for Out-of-Pocket Expenses

The ACA currently provides assistance in the form of a tax credit to those who have trouble paying for out-of-pocket expenses (those earning between 100 and 250% of the federal poverty level), such as deductibles and co-pays. The new bill repeals this ACA cost-sharing reduction provision starting in 2020.

Cost Limits for the Elderly

Obama’s ACA placed a 3 times limit cap on how much insurers could charge the elderly more than young people for their health plans—because the cost of health care is typically more for the elderly. Under the new bill, they can be charged up to 5 times as much as their younger counterparts. However, it gives states the power to decide for themselves ultimately.

Repealing the Individual Mandate

You will no longer have to pay a penalty for being uninsured, which was a key feature of the Obamacare plan. Therefore, young, healthy people who were purchasing plans only to avoid this tax penalty may no longer contribute to that cost-sharing balance for insurers. As a result, costs may rise for everyone else in order to balance the cost-sharing. The more you are paying for your premiums, the more this bill may affect you. And since older people typically have higher premiums. it will affect them the most.

The bill instead creates a “continuous coverage” requirement. Those that allow their coverage to lapse for more than 63 continuous days during the preceding 12 months will be charged a 30% premium surcharge upon returning. Therefore, there is no mandate to be insured like before, but if you become uninsured and then you change your mind, you will have this premium surcharge.

Medicaid Phase-Out

Medicaid is the government paid health plan for those with low incomes—for those that are even below the income level set to obtain health insurance through the exchange. This plan was expanded to cover more people under Obamacare. However, the new bill will phase-out this expansion by decreasing allocated federal dollars for Medicaid. There will be a federal funding cap per person starting in 2020. There will also be diminished federal funding for all those who submit an application for Medicaid after 2020, whether there was a lapse in coverage or the individuals left Medicaid and are returning.

Defunding Planned Parenthood for One Year

Planned Parenthood is often in the news for its abortion services; however, not everyone is aware that Planned Parenthood provides many non abortion-related services (although the percentage of which service types are more frequently offered by Planned Parenthood is often debated). Planned Parenthood is also where uninsured, low-income patients can obtain birth control and prevent unwanted pregnancies that result in abortion or increased health care spending that sends our tax money towards pregnancies, deliveries, and health care for these children. It is also where patients obtain testing and treatment for sexually transmitted infections. Planned Parenthood also provides cervical cancer screening (aka pap smears) and breast cancer screening. Now, the federal funding for all of these services will cease for at least one year.

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