Monday night, House Republicans released a bill dubbed the American Health Care Act to begin the process of an ACA repeal. The 123 page bill would replace the Affordable Care Acts tax credits based on income with tax credits that are fixed and based on age. However, the new tax credits will not be as big as the credits allotted to consumers under the ACA. Low income adults will have less federal funding of Medicaid under the new bill. Federal funding for states to expand Medicaid will be capped. Fortunately, federal funding of Medicare expansion will continue until 2020, as well as the premium subsidies to the ACA will continue until 2020. On Wednesday March 8th, Republican leaders will have the opportunity to begin marking up the bill in two committees. The draft legislation could see considerable changes during this time and will still need the support from the Senate to pass.
Here is a brief summary of what the American Health Care Act will do under the ACA repeal:
- Repeal the mandatory ACA requirement for all individuals to have insurance by the end of 2015. In short, no more individual tax for not having insurance.
- by the end of 2019, end federal funding for states to expand Medicaid to low-income adults
- The beginning of 2019 will see the conversion of medicaid to a program of capped per capita federal grants to the states.
- Age based refundable premium tax credits to help people buy insurance. Individuals under $75,000 a year and families under $150,000 a year will receive a potential tax credit of $2,000 to $4,000.
- Repeal the majority of the ACA taxes that fund premium subsidies, medicaid expansion, and medicare benefit enhancements by 2018.
- Delay the Cadillac Tax until 2025
- By the end of 2019, eliminate the ACA’s minimum essential benefits.
- Over 9 years, the federal government will offer states $100 billion to establish new high risk pools, or other mechanisms, for stabilizing the individual insurance marketing.
- If an individual lets their coverage laps, insurers will be allowed to increase premiums of that individual by 30% for a year This premium increase is to encourage people to maintain continuous coverage.
- Insurers will be able to charge older customers 5x higher premiums than they charge for younger people. An increase from the ACA’s permitted 3 to 1 age differential. Under the new ACA Repeal plan, that ration will increase to 5 to 1 for older customers.
- By the end of 2019, the ACA repeal will cut the low income enrollee’s cost-sharing subsidy for private health plans.
- There will be no more federal funding of Planned Parenthood, or any other organization, that performs abortions. No tax credits will be used to purchase any health insurance plan that would cover abortions.
For a more detailed description of the plan, feel free to go to the following link where you can review more details of the bill.
Concerns over Employer sponsored health insurance plans under ACA Repeal:
To clarify, the Cadillac Tax has been delayed until 2025 and is still an active tax on employers. Any taxes imposed on employers health insurance runs the risk of having employers drop health insurance plans all together. If a tax is implemented, and premium costs were to increase for the employer group, many individuals could drop their employer health plan and choose to navigate the individual insurance market. Those who remain on the group plan may see even higher premiums do to possibility of high risk employees choosing to remain on the plan. Thus diluting the group of healthy premium paying individuals and families.
What we still don’t know about ACA Repeal:
- Congressional Budget Office has not yet seen the bill to fully assess the cost of the ACA Repeal to tax payers. Nor have they been able to access the impact the ACA repeal will have on coverage levels across the United States.
- We are still unsure on how the new tax credits will be funded. The possibility could be that the money saved by the ACA Repeal from reducing the funding to medicaid could be diverted to pay for the tax credits.
A shift from Federal to State for health insurance responsibility:
The ACA repeal will focus on giving more power to the states so they can decide how to fund Medicaid, as well as high risk pools of individuals, by themselves. The House Republicans are trying separate the federally run ACA away from the states and allow the states to be held responsible for managing their own health insurance markets. Although they will be offering funding to states of $100 billion over the next 9 years, the republican lead federal government is making health insurance a state issue, not a federal one.
We will keep you posted on any new developments with the ACA repeal.