We’re in full “will they or won’t they?” mode when it comes to a House vote on a Republican bill to repeal and replace the Affordable Care Act. And two months after the first draft of the American Health Care Act was made public, various amendments and on-again-off-again promises to vote it through have made it increasingly difficult to keep track of what could happen to Americans’ health insurance coverage.
In broad terms, the bill would likely reduce government spending and decrease insurance premiums for people who are healthy and young and don’t get insurance through their employers. It also likely would increase costs for older, sicker people and take away coverage from people living in poverty. It would have far less impact on people who get insurance from their employers. But as a complicated bill that builds off of another complicated bill, the AHCA’s potential impact is, of course, much more … complicated. Here are some of the major changes to the health insurance landscape that could occur if the AHCA passes in its current form.
1. People with pre-existing conditions might no longer be protected financially.
On the surface, an amendment introduced last week — the one that won over the conservative House Freedom Caucus — would loosen regulations for insurance companies on plans they sell to people who buy insurance independently of their employers or the federal government. But it would do that at the expense of one of the most popular parts of Obamacare: rules that protect people with pre-existing health conditions from being discriminated against by health insurers.
The amendment could make insurance coverage unaffordable for people with existing health issues. The inner workings of this are intricate but worth understanding in the wake of confusing claims by President Trump that people with pre-existing conditions will continue to be protected.
Health care is incredibly expensive in the United States, and if you get sick, it’s going to cost a lot. Whether you feel the effects of those costs depends on whether you have health insurance coverage and whether your treatment is covered by that insurance. Before Obamacare, insurance companies routinely refused to cover people with health issues or to pay for costs related to those health issues if they did offer coverage. Obamacare required insurers to offer coverage to everyone who could pay and legislated the type of coverage plans must offer.
But it also regulated how much insurers could charge people with health issues, by requiring what’s known as a community rating. That meant insurers suddenly had to charge everyone the same price for the same coverage — with exceptions for smokers, who can be charged more, and some adjustment based on age (insurers can charge the oldest buyers up to three times what they charge younger buyers). But prices can’t be based on factors such as a person’s sex or how sick they are. Under the GOP plan, states could get a waiver that would allow insurers to set prices based on how healthy a person is.
Republicans have argued that they wouldn’t be totally eliminating protections for people with pre-existing conditions because states don’t have to ask for a waiver, but that claim ignores some difficult realities: Subsidies that help people buy insurance will be reduced under the AHCA. That will likely lead healthier people to leave the insurance market, further increasing premiums for those who remain. States might have to seek the waivers to keep the insurance marketplaces up and running. All this could add up to insurers’ offering coverage that is unaffordable to people with pre-existing conditions.
The AHCA tries to combat those increased costs through a fund for high-risk pools, insurance programs for people with extremely high health care costs. This is a difficult way to get health insurance to people with pre-existing conditions, however. If history is a guide, the proposed pools would be unlikely to cover people with pre-existing conditions that are less serious, and would be very expensive. The money set aside in the bill isn’t nearly enough to cover the costs, according to experts on both sides of the aisle.
2. Medicaid would go back to being a program for just a fraction of the poor.
Although amendments to the AHCA have gotten the most coverage in recent weeks, changes to Medicaid from the original version of the GOP bill would likely affect the largest number of people, and that’s how the bill would cut government spending while rolling back multiple taxes.
Before the ACA, Medicaid was not an insurance program for the poor; it was an insurance program for some people who were poor. It largely covered people whose incomes were equivalent to a fraction of the federal poverty line or who met some other criteria, such as having a disability, being pregnant or being a woman with children.
Obamacare changed that, opening up Medicaid to everyone below 138 percent of the federal poverty line in states that chose to expand the program. Thirty-one states and D.C. opted to expand Medicaid, and more than 11 million people joined the Medicaid rolls who were previously not eligible. That’s the bulk of people who gained insurance coverage under the law. The GOP bill would freeze that part of the program on Jan. 1, 2020.
But the AHCA wouldn’t just cut back Medicaid expansion, it would also trim the program as it existed before Obamacare, by capping how much states would be reimbursed for enrollees. The Congressional Budget Office, the nonpartisan agency that calculates the economic effects of legislation, estimates that the net effect of the changes would be 14 million fewer people on Medicaid.
3. Insurance prices would go down for some, but lower-income people would pay more than they currently do.
Now, on to insurance subsidies and monthly premiums for people who buy insurance on the private market instead of through an employer. The AHCA would make several big changes that would likely lower premiums somewhat, according to the CBO’s analysis. In addition to potentially changing the costs for people with pre-existing conditions, the bill would allow older people to be charged a lot more than they currently are, five times (or more) what younger enrollees pay. That alone would increase costs for people who earn too much to get subsidies or who buy insurance plans outside the marketplaces set up by Obamacare.
Combine that with changes to how subsidies are calculated and some older Americans could pay a lot more for coverage. Currently, subsidies available to people who buy on the Obamacare marketplaces are calculated so that lower-income people won’t pay more than a set percentage of their income. And subsidies go up if you earn less, live in an area where insurance is more expensive or are older. Under the GOP bill, the system would become simpler: You’d get a subsidy based on your age, which would begin phasing out for people with an income of $75,000 a year.
What would that mean for people’s costs? It depends. A 27-year-old earning $30,000 would pay about 50 percent less than she currently pays if she lived in Lansing, Michigan, but would pay about 40 percent more in Lehigh, Pennsylvania, according to analysis from the Kaiser Family Foundation, a health policy research organization. Older adults would almost universally pay more than they currently do. A 60-year-old in Tulsa, Oklahoma, earning $50,000 would pay about 230 percent more than she currently does, and one who earns $100,000 would pay about 25 percent more.
4. Insurance plans could cover less.
Last week’s amendment would also allow states to get a waiver on the essential health benefits required by Obamacare. This provision requires plans to cover a range of services, including hospital, maternity and mental health care. The requirements push up insurance premiums, because insurers must cover more services, but they also provide financial protection for consumers.
This aspect of the AHCA brings up a larger question facing the bill overall. Passage in the Senate is far from certain, but even before that, the AHCA would have to pass muster with the Senate parliamentarian, the gatekeeper for Senate rule making. See, this GOP replacement bill is not really a full replacement; it’s kind of like an update to the ACA. That’s because the GOP doesn’t have the votes to fully repeal the ACA, which would require 60 senators, so it’s using a process called reconciliation, which allows the Senate to to pass bills that affect the federal budget with a simple majority. Much of the AHCA, such as the cuts to Medicaid and changes to insurance subsidies, falls within that mandate. But other changes, such as waivers to essential health benefits, don’t have a direct budgetary impact, leading some experts to believe the Senate parliamentarian will flag those changes as outside the realm of reconciliation.
Of course, that probably won’t be the only problem Republicans will face in getting the bill passed in the Senate. Although recent amendments might have won over senators such as Rand Paul, who thought the AHCA didn’t go far enough in its early stages, others were already concerned about how conservative it was in its early iterations. At least two senators have expressed concern about provisions that would take funding from Planned Parenthood. Others worry about the cuts to Medicaid. Even if the bill makes it through the House — itself a big if — the fight is far from over.