Understanding the GOP's Latest ACA Replacement Plan

Speaker of the House Paul Ryan intends to make good on his pledge to have a plan to repeal and replace the Affordable Care Act ready for when Congress is back from recess next week.

A 106-page draft of the legislation, leaked to Politco Friday, provides the most comprehensive look yet at how House Republicans plan to replace the ACA, also known as Obamacare. The proposal—as yet unnamed—sets a two-year timetable to transition to a new system by January 1, 2020.

This is not likely to be the final plan. Key House committees must first mark up the legislation. There are also several competing bills in the Senate. And Republicans are bitterly divided about how much of the law to eliminate, replace or just “repair.”

But the document charts a clear direction, and shares many of the same elements as the other GOP proposals.

“Republicans may not be able to achieve everything they want,” says Ron Pollack, executive director of Families USA, a non-profit that focuses on consumer healthcare issues. “They’re getting a lot of blowback from constituents worried about losing their health insurance. But this is their wish list and it really reflects what they want to do.”

Consumer Impact

Pollack says the plan could cause huge numbers of people to lose their insurance and others to be forced to pay a lot more to have health care coverage.

That’s a worry many consumer advocates share. “This leaked proposal is not a valid replacement for the Affordable Care Act. The proposal fails to meet even the basic standards contained in the current law,” says Laura MacCleery, Vice President of Policy and Mobilization for Consumer Reports.

Consumers Union, the policy and action arm of Consumer Reports, recently sent a letter to Congress outlining principles that any potential replacement plan should meet, and is sharing these principles with policymakers.

Many Americans are worried about their ability to afford health insurance, according to Consumer Reports’ new Consumer Voices Survey. It found that 55 percent of Americans are not sure that they or their loved ones will be able to pay for the health insurance they need.
 

What The Changes May Mean For You

Here’s how some of the key provisions in the House legislation would change the ACA and how they could affect you.

Affordability. Under the ACA, people get subsides to help pay insurance premiums based on their income. The House bill replaces subsidies with tax credits that vary based on your age. A credit reduces how much you owe in taxes. A person under 30 is eligible for a $2,000 tax credit while a person over 60 is eligible for a $4,000 credit. If you don’t earn enough income to pay taxes, the credit comes to you as a payment.

Essential health benefits. The ACA mandates that insurance plans offer 10 essential health benefits, such as maternity care, mental health care, and prescription drug coverage. The House plan would allow states to determine for themselves what is essential. More generous coverage is more expensive, Pollack says, and states will likely let insurers offer skimpier plans.

Age rating. While premiums can’t be based on gender or health status under the ACA, the current law does allow older people, who tend to have higher medical costs, to be charged up to three times more than they would pay for standard premiums. Under the House Republican plan, that would rise to five times more.

Medicaid. The House Republican plan would eliminate Obamacare’s Medicaid expansion in 2020. Medicaid enrollment increased significantly due to the expansion—about 15 million more people now get get coverage through the program. That could be vastly reduced under the proposed House plan, Pollack says. States could still cover those people if they want to but they’d get a lot less federal money to do it.

Health savings accounts. House Republicans propose helping people pay for healthcare by expanding health savings accounts. HSAs allow individuals to put pre-tax money away to pay for healthcare expenses.

HSAs are now available only to those who have high-deductible health plans, which means they have deductibles of at least $1,300 for an individual and $2,600 for a family. The new House plan would allow people to contribute more than the current amount—$3,350 for singles and $6,750 for a family. In the House plan, people would be able to contribute up to the amount of their deductible. That might not help the many Americans who can’t afford to stash away so much money, but it could be a lucrative tax break for wealthier people.

Requirement to be insured. There is no individual mandate requiring people to have health insurance in the leaked House plan. But to encourage people to be insured, the proposal imposes penalties on those who don’t continuously have health insurance. If you have a lapse in coverage—say you lose your job and your employer-based health insurance, or for whatever reason can’t afford your insurance premiums—an insurer enrolling you in a new plan can charge you up to 30 percent more than the standard premium price for one year.

High-risk insurance pools. Nothing in the House plan explicitly spells out protections for people with pre-existing conditions. But those who are turned away by insurers would be able to join high-risk insurance pools, and states would get  “innovation grants” to set them up. The federal government would spend $100 billion over 10 years to fund the pools, starting in 2018. That’s more generous than other Republican plans currently out there.

But high-risk pools don’t have a great track record. Before the ACA, 35 states offered insurance to people considered at high risk for needing costly care. Those high-risk plans were very expensive, offered limited coverage, and programs were underfunded in some states. As a result, there were waiting lists and no guarantee you could get coverage.

As for how much the House plan will cost, that remains to be seen. No price tag was attached to the proposal. The non-partisan Congressional Budget Office must “score” any plan to estimate the cost.  For now, the House plan eliminates virtually all the taxes that paid for the premium subsidies and Medicaid expansion such as a tax on medical device makers. It leaves in place a tax on high-end employer insurance plans.

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