Posted by & filed under Noah's Notes.

Congress has now released the American Health Care Act (AHCA), their proposal for replacing the Affordable Care Act (ACA), or what is commonly referred to as Obamacare.

There are some very important distinctions and in order to be informed about policy that impacts all of our lives and it’s helpful to be explicit about the most critical of those differences. So based on a summary that appeared in the New York Times here they are:

Individual mandate:

This is the requirement under the ACA that if you can afford it you must obtain health insurance. This helps to ensure that healthier people are in the market so the costs for those with more disease are less than they would be otherwise.  It is very similar to the requirement to have car insurance.  It makes the entire system sustainable. AHCA eliminates the individual mandate, but if you have insurance and lose it for any reason, you could pay a 30% premium penalty to re-obtain insurance.

Employer mandate:

The ACA requires that larger companies provide affordable insurance with a standard benefit set. AHCA repeals this requirement, which means more employed people may lose health insurance (and be subject to that 30% penalty noted above if they wish to purchase insurance on the individual market.

Subsidies for out of pocket expenses:

Under the ACA there is a federal tax credit for middle-income people to help offset the costs of co-payments and deductibles.  Under AHCA this is repealed.

Premium subsidies:

The ACA provides tax credits to middle-income people to help cover the cost of premiums.  AHCA  re-distributes these credits based on age, rather than income, so younger people and wealthier people will do better, and costs to poorer and older people would go up.  AHCA also expands the kinds of plans that would qualify for subsidy, including more “bare bone” plans that might appeal to young healthy people.

Medicaid expansion:

Under the ACA 31 states have expanded Medicaid coverage.  AHCA would allow that to continue until 2020 when coverage would effectively be gradually reduced for new people covered by Medicaid and those who go off and back on to Medicaid (a very common phenomenon as people on the margins gain and lose employment).  Federal funding per enrollee would be capped at 2016 levels, which would ultimately require reducing the number of people covered as medical inflation has its effect.

Health Savings Account:

The ACA allows an individual to place $3400 and a family to place $6750 a year into a tax free Health Savings Account.  AHCA would increase those amounts to at least $6500 and $13,100 respectively.  A good deal if you have that kind of flexibility with your income.

Increased charges for older people:

The ACA allows the oldest purchasers to be charged 3 times as much as the youngest.  AHCA would increase that to a factor of 5.

Pre-existing conditions:

The ACA prohibits discrimination against people with pre-existing conditions.  AHCA does as well, but that will be difficult to sustain without a mandate for coverage because the costs per enrollee will increase.

Both the ACA and AHCA require essential health benefits and prohibit annual and lifetime limits on coverage.

 

If you would like to learn more about what this might mean for you I recommend the Kaiser Family Foundation calculator, which compares your costs under each plan, should you have to buy insurance on the individual market.  It can be found here:  http://kff.org/interactive/tax-credits-under-the-affordable-care-act-vs-replacement-proposal-interactive-map/

Noah Nesin, MD

Dr. Nesin, Vice President of Medical Affairs for PCHC, is a family doctor with 30 years of experience.

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