A proposed ACA replacement (Affordable Care Act replacement) has been introduced by House Republicans who are hoping to have it finalized by Easter. The American Health Care Act is a two part measure that would repeal and replace the ACA.
The American Health Care Act overview
The American Health Care Act would eliminate the individual mandate which penalizes those who do not purchase a health plan. In place of the mandate there would be a penalty for individuals who have not maintained continuous health insurance coverage, in the form of increased insurance premiums that would last for a year. The new measure also proposes loosely defined income-based and age-based tax credits to help individuals who do maintain continuous coverage.
Stabilizing the individual insurance market
Insurers are set to decide this spring whether they will remain in the exchanges. There is uncertainty in the market as some of the largest insurers are reporting large financial losses as a result of taking on claims for ACA exchange customers who were more costly than originally expected. Some of the proposals in the American Health Care Act may be intended to address the concerns of insurers and work toward stabilizing the health insurance market. The decisions to continue federal aid to states, reduce the window for open enrollment, and penalize those who are not continuously insured while supporting those who are with tax credits, may help persuade insurers to participate. With the right policies, the more expensive pool of sicker or lower-income Americans may be balanced out by the contributions of younger, healthier individuals paying into the market.
Reactions to the proposed ACA replacement
The proposed legislation has been controversial among Republicans, with some complaining that the income tax credits are a kind of entitlement program and do not make big enough revisions to the Affordable Care Act. Meanwhile other Republicans are concerned that the new legislation goes too far in rolling back Medicaid expansion, vowing to challenge any policies that would eliminate existing coverage for those who became newly insured under the Affordable Care Act.
The reach of the reform will be revealed when it is scored by the Congressional Budget Office according to The Atlantic. At this point the cost of the proposed legislation, and the number of people expected to gain or lose coverage, will be determined.
Main points of the ACA replacement
- Eliminate the individual mandate (the penalty for not being covered by insurance)
- Establish a penalty for not having continuous insurance, via an increase in premiums charged by the insurance provider
- Provide tax credits based loosely on age and income to reward individuals who do maintain continuous coverage. For an idea of how the new plan would affect health care tax credits in your area, check out this interactive map from the Kaiser Family Foundation.
- Increase health savings accounts maximum contributions
- Limit the period of open enrollment on the exchanges
- Eliminate tax-credit-qualifying insurance coverage of abortion, but allow for purchase of supplemental coverage that provides it
- Parents can continue to keep children on their insurance until the age of 26
- Keep the ACA’s requirement for insurers to cover individuals with pre-existing conditions
Changes to the Medicaid program
- Eliminate Essential Health Benefits requirements for certain Medicaid-covered plans
- Eliminate federal funding for Medicaid expansion by 2020
- Provide Medicaid funding to states that did not participate in Medicaid expansion under ACA while eliminating the ability for new states to enroll in the sunsetting program
- Test Medicaid enrollees for eligibility more often
- Eliminate Medicaid funding for providers that perform abortions
- Limit states’ ability to deny Medicaid to Americans based on their home-equity
- Eliminate cuts to hospitals in states that have not adopted Medicaid expansion, when those hospitals help offset the cost of care for uninsured patients
Repeal of mandates and taxes
- Repeal several taxes used to pay for tanning, health insurer, Medicare investment, HSA, medical device, and Medicare taxes, in addition to the “Cadillac tax” on expensive insurance plans.
- Repeal Obamacare’s excessive remuneration rule for insurers, meaning insurance providers can deduct payments to physicians and other qualified individuals in excess of $500,000.
- Repeal the small-employer insurance tax credit.