House Republicans released the American Health Care Act last night. For the first time, we have a strong sense of what repeal and replacement of the Affordable Care Act might look like if passed.
We don't yet know exactly how the bill would impact the number of people covered and the cost to the government. However, early impressions of the bill suggest fewer people will be covered.
The first big change is the amount of financial help consumers would receive to buy insurance. Consumers without workplace coverage would be eligible for tax credits to reduce the cost of buying insurance coverage. However, unlike the Affordable Care Act, these tax credits would not be tied to health insurance costs. A consumer in Philadelphia would get the same tax credit as someone in Minnesota – even if insurance prices are much higher in Philadelphia. The tax credits would grow slowly over time and not keep up with increases in health insurance premiums.
For low-income consumers, the size of the tax credit would be much smaller than under current law. The Kaiser Family Foundation has an online calculator where you can see how things would change. For example, a 40-year old male in southeastern Pennsylvania earning $20,000 per year would see his financial assistance drop by almost $2,000. A 60-year old earning the same amount would see his financial assistance drop by $7,600 per year. However, that same 40-year old earning $75,000 a year would now receive $3,000 a year (rather than $0).
As a result of these changes, many lower-wage workers would be priced out of health insurance entirely. Young and healthy people and those earning more money would be better off. However, older and lower-income individuals will generally be worse off. And every year that passes, consumers will be getting less help relative to the cost of health insurance.
Medicaid, the program for consumers living in or near poverty, would shift to an entirely new funding formula for the states. Instead of the federal government sharing the risk for future increases in Medicaid spending, that risk would shift to the states. In the long run, this could lead to benefit cuts, enrollment barriers, or reduced access to care (related to cuts to provider payment).
There are many other things in the bill. Republicans repeal most of the taxes in the Affordable Care Act that helped pay for new coverage. It is not clear where the money comes from to pay for this new plan. We will have to wait for the Congressional Budget Office to tell us how much this might increase the deficit.
Based on the political environment in Washington, Republican members of Congress from the Philadelphia area (Reps. Meehan, Costello and Fitzpatrick) will play an important role in determining whether this bill becomes law. Their party's leaders are trying to move the process forward without the public knowing the impact.
At this point, our Congressional delegation should be slowing down the process so we can all learn more about its impact on cost and health insurance coverage before votes are cast.
Editor's note: Cross-posted on the HealthPolicy$ence blog of the Leonard Davis Institute of Health Economics of the University of Pennsylvania.
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