How’s your health care plan? The US government recently reported that Americans spent $3.65 trillion in 2018 on healthcare. In fact, the US easily spends the most money on healthcare in the world. Both major parties have tried to fix and improve the current system by offering various plans. That included the Democrats’ Affordable Care Act (ACA) or Obamacare passed almost a decade ago in 2010. There’s also the republican health care plan, which is known as the American Health Care Act (AHCA) or Trumpcare in 2017. The AHCA repealed part of “Obamacare” This affected some people who were covered by the ACA.
The main goal of the AHCA was to repeat part of the ACA. A big question is if they’ll create an alternative plan and if so, who it would cover. The current healthcare costs in the US are about $10,000 per person. It’s unclear what the new Republican plan would include. However, it might include a version of the 2017 bill from Senators Lindsay Graham (South Carolina) and Bill Cassidy (Louisiana), which would replace the ACA. It’s unclear if the two chambers of Congress would be able to work together to create a plan that would completely replace the ACA.
AHCA Key Points
There are some significant differences between the AHCA (2017) and ACA (2010):
1. Health Savings Accounts
The GOP bill includes incentives for the use of HSAs. That includes different issues like out-of-pocket costs for certain health plans. The bill also includes various details related to issues like family coverage.
2. Late Enrollment Penalty
This was 30% of the insurance plan’s premium if they didn’t have continuous healthcare coverage for about 2+ months during a 12-month period in the past before enrolling for a new plan. The penalty lasted during various enrollment periods in plans.
3. Medicare/Medicaid changes
There are also some changes involving Medicaid financing for states. These issues are very technical and include various Medicare/Medicaid programs including CHIP. These were some of the most debated issues regarding the AHCA.
4. Patient and State Stability Fund
This is a new feature that wasn’t included in the ACA. This allows states to use the funds in order to give financial help to individuals who are high-risk. The goal is to provide various benefits including lower insurance premiums and cost-sharing subsidies.
5. Individual/Employer Mandates
These were repealed starting in 2016. So, individuals wouldn’t have to pay a penalty if they failed to be covered by health insurance. This was usually referred to in the ACA as “minimum essential coverage.”
6. Tax Credits
There were some changes in tax credits and especially for young adults with a certain income. Meanwhile, the figure was dropped for adults 50+ years old above that particular income level.
The AHCA also lists things that the tax credits can be used on. They included various health plans that cover certain health benefits.
The tax credits will also be changed to flat tax credits starting in 2020. They’ll be adjusted for the person’s age. The bill lists amounts of tax credits for individuals of different ages.
One issue regarding the AHCA vs. ACA was about the coverage it provided. There are various changes to note. The main one is nobody would be required to purchase health insurance under the AHCA and you also wouldn’t have to pay a tax penalty if you are uninsured.
A related issue is employers wouldn’t be penalized for not giving health insurance to their workers. This was a change from the ACA and provides fewer consequences if companies don’t cover their employees with health insurance.
Both of these factors would increase the number of Americans who are uninsured. That’s because they wouldn’t be required to be insured and either them or their employers wouldn’t have to pay fees for not doing that.
Another change is related to tax credits. Obamacare allowed the government to determine fair prices for silver health insurance plans.
The health insurance market includes plans with 4 “metal levels.” Silver plans are in the middle. They have mid-level monthly premiums and mid-level costs whenever you need care. It’s important to study these four types of healthcare plans to understand the current healthcare debate better.
If a silver plan was higher than the government’s estimate then the government cover the costs of the rest of the premium.
The AHCA handles subsidies differently. Tax credits are based on age rather than income. So older people get subsidies that are higher than people who are younger.
In terms of pre-existing conditions, people can’t be charged more or turned down because they have medical conditions that are pre-existing. This doesn’t change with the AHCA.
These are all technical issues in the side-by-side comparison of the two health care plans. One issue to note is the AHCA is a partial repeal of the ACA. It changes some key parts but doesn’t replace it completely.
Future Republican Health Care Plan
During the past few years, Republicans have sometimes received criticism for only appealing part of the ACA without creating a new plan.
Some conservatives and Republicans have suggested that Congress take up the plans introduced by Senators Graham and Cassidy in 2017. This was before Congress was unable to replace the ACA.
One major change was changing Medicaid’s expansion via the federal government and ACA’s subsidies for certain healthcare expenses into a “block grant” program. Here’s how it would work. US states would get a lump sum of funds and could determine how they would spend the money.
The GOP healthcare plan would also allow states to make changes to ACA protections for people who have pre-existing medical conditions. Insurance companies would still have to cover everyone but they could tweak other rules like requiring insurance companies to offer their customers comprehensive plans.
Another change of the Graham-Cassidy plan states would have the ability to exchange pricing rules. This would allow people who are younger and healthier to have decreasing premiums. However, older people might have higher policies.
Yet another difference is states could revisit many ACA financial protections. That includes placing limits on the amount of out of pocket costs people must pay every year and the amount insurance companies would pay.
President Trump supports the2017 Republican plan and included it into his new budget. However, it’s uncertain whether or not Congress would pass the replacement plan. Even Graham has said he doubts it will get passed.
The process also would be more difficult because Democrats control the House now. They also want to strengthen the ACA and protect people with pre-existing conditions. These goals would likely be different compared to any plans Republicans roll out. However, it’s still possible they could try to bring back the 2017 republican health care plan.