Early this week, two House Committees introduced draft legislation called the American Health Care Act (AHCA) that would make substantial changes to the federal health law. While some news outlets have described the AHCA as “Obamacare Lite,” make no mistake that the changes being proposed would have a significant impact on our members and our communities if it should become law.
Before we go there, let’s understand the process needed to pass the AHCA into law. It’s already cleared the first hurdle, the “markup” in committees. This took only one day. Now the two bills will be packaged up into one piece of legislation, and very quickly sent to the House floor for a vote, possibly during the week of March 20. Then, the AHCA would need to go the Senate where at least some lawmakers are hoping it passes before the Easter break, while others have expressed serious concerns about the changes being proposed.
Most of the major impacts included in the proposed legislation wouldn’t go into effect until January 1, 2020 after a two plus year transition period. On that date, the tax credits that 83 percent of our members enjoy would change substantially. The cost share reductions that lower deductibles and copays for thousands of our members (65% to be exact) would be eliminated entirely in 2020.
The new bill proposes new tax credits that are very different than today’s law. Instead of basing credits on income like the Affordable Care Act, they would be based on age. Everyone the same age across the country would get the same flat tax credit, regardless of their health status, their income or how much health insurance costs in the state they live in. This in effect would be a “redistribution” of the tax credits in a way that is disadvantageous for those with the lowest incomes, and mostly advantageous for people making $50,000 to $100,000. This chart does a great job of illustrating who wins and who loses under the AHCA.
Our view on the AHCA as proposed? First, we are relieved to see a two plus year transition period and would like to see it longer. Right now our members are telling us that they are very worried that their 2017 health coverage is jeopardy. The bill makes it clear that Congress has no appetite for significant change until after 2019.
But, we are very concerned about the impact the AHCA will have on our members’ ability to afford health insurance and the quality of that health insurance. Between cost share reductions going away and changes to tax credits, we do not believe health care will remain affordable for lower to middle income families. Insurance companies may be allowed under the new bill to increase deductibles to make plans more affordable but that only brings down the cost of health insurance and increases the cost of health care. Few people can afford $10,000-$15,000 deductibles but that’s possibly where we are headed.
Many people who are lucky enough to be healthy believe insurance is a “nice to have” protection, but it becomes a “need to have” when illness strikes. To keep people from waiting until they are sick to buy coverage, the AHCA proposes a 30% surcharge on health insurance premiums for individuals that have a gap in coverage. Actuaries that have examined this proposal do not believe it will work; the penalty while very be costly for those that get sick, but it will not be enough to keep healthy people who can barely make ends meet from waiting to buy coverage. Once again, this will lead to higher insurance costs for everyone, as the insurance pool will be sicker. And when uninsured people can’t afford to pay their medical bills, hospitals will tell you that it increases medical costs for everyone on that side of the equation. In other words, it’s a double whammy.
It’s not that we don’t think there needs to be changes to the Affordable Care Act. There are several provisions we would target for change if we could. But what we are scratching our heads about today is the rush to pass something. If the bill includes a two-plus-year transition period, why is Congress gung-ho to pass it before the Congressional Budget Office has time to do their work and Americans have time to understand it? Healthcare is too important to play politics with. Congress should slow down and thoughtfully examine changes that make sense for our families and our economy.
That’s where we stand on the AHCA.