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The Affordable Care Act, President Obama’s signature health reform, had one big goal: to make health insurance more affordable and accessible to those who had trouble getting coverage.
In essence, that meant finding ways to get America’s poor — the millions who couldn’t pay for private health insurance or were ineligible for Medicaid — health coverage.
The new GOP health reform plan, the American Health Care Act, is filled with provisions — some subtle, some not — that’ll undo that work.
1) The penalty for not buying insurance that replaces the individual mandate is most punishing for low-income Americans
It has long been a truism of American health care that a small group of patients cost the most money. And it is this minority, with their hefty medical bills, that are the most challenging group for any insurer to cover.
The Affordable Care Act’s answer to this problem was the individual mandate: Require everybody to buy insurance through the individual mandate, and put the young, old, sick, and healthy into the same pool, evening out the risk and offsetting some of the costs of covering that minority for insurers. Under Obamacare, if you didn’t buy health insurance, you faced a fine, which scaled up based on income.
The Republican plan does away with the individual mandate, and replaces it with a continuous coverage penalty: You can choose to be uninsured if you want, but when you try to buy insurance again, you face a 30 percent higher premium for a year.
A new analysis by the health research firm Avalere finds this new method will be more punishing for the poor than the individual mandate was, and will actually give the wealthy a break.
Just check out this chart from its report. It outlines the case of a 27-year-old seeking new health insurance on the individual market, and compares the fines he’d face under the current law (Obamacare) and under the AHCA:
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The red text indicates a worse deal under the Republican plan, and the green a better deal. You’ll notice that people in the higher income brackets are generally getting better deals than the lowest-income earners.
That means someone who brings home $59,400 a year (500 percent of the federal poverty level) and hasn’t had insurance for a year would effectively pay a smaller penalty under the AHCA than under Obamacare, Vox’s German Lopez writes, and someone who's making $11,880 a year (100 percent of the federal poverty level) would pay more. Here’s Lopez again:
In general, the AHCA penalty is just harder for the poor. Since it doesn’t scale with income, everyone, from Bill Gates to someone making nothing a year, will have to pay the same amount: a flat 30 percent extra on a premium. But that penalty ... is a much bigger share of a person’s income if he or she makes $10,000 a year instead of $100,000, $1 million, or $1 billion.
2) The tax credit changes to help people buy insurance are less helpful for the poor, and more helpful for the upper middle-class
In order to help more people purchase insurance, Obamacare gave people income-based tax credits. Poorer people got more help buying their coverage than richer people. These credits were important for those who didn’t get health insurance through their work, didn’t qualify for Medicaid, and needed a little help to buy their insurance on the individual marketplace.
The new Republican plan gets rid of income-based subsidies and replaces them with a new system of tax credits based on age.
In a sentence: The new system will be less generous than the Obamacare variation for the poor and elderly, and more helpful for the upper middle-class. Just check out this chart, via Cynthia Cox at the Kaiser Family Foundation:
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The group estimates that a 40-year-old making $20,000 (or 160 percent of the poverty line) would get $4,143 in subsidies under the ACA but only $3,000 under the GOP plan. A higher-earning 40-year-old, making $75,000 annually, would get no tax subsidy under the ACA but $3,000 under the Republican plan.
Older folks would also fare more poorly under the AHCA. A 60-year-old earning $20,000 a year (again, 160 percent of the poverty line) would get $9,874 under Obamacare and $4,000 — or less than half that — under the new Republican plan.
That’s why this Kaiser Family Foundation analysis noted, “People who are lower income, older, or live in high premium areas would be particularly disadvantaged under the American Health Care Act.”
3) The plan ends Medicaid expansion, a program designed to benefit people living below the poverty line
After 2020, Republicans also want to end Medicaid expansion, which means the federal government would no longer help states pay for extra enrollees who weren’t eligible for Medicaid before the ACA.
To understand what that means, let’s step back a bit. Prior to the passage of the law, in most states, only children and parents, pregnant women, or the disabled were eligible for Medicaid. So all other poor Americans — the working poor who didn’t have kids or who weren’t disabled — often couldn’t afford private health insurance but also weren’t eligible for Medicaid.
Obamacare came along in 2010 and changed that: Suddenly anyone whose family income fell below 138 percent of the federal poverty level (about $15,000 for an individual) was eligible for government health insurance. The federal government also offered states funding to pay for all the new enrollees in the program.
A majority of the states (32, including Washington, DC) took the money, expanding Medicaid. And it’s no surprise. The feds offered a sweet deal. The states and the federal government share the cost of Medicaid, but the feds paid a lot more for Medicaid expansion enrollees, matching 100 percent of the states’ costs for the first three years, with a plan to phase down to 90 percent by 2020 and beyond.
(Compare that with traditional Medicaid enrollees, whose costs are only partly matched by the federal government based on a formula tied to the state’s wealth. Richer places such as New York get a 50 percent match for Medicaid, while the feds pay poorer states like Mississippi up to 73 cents for every Medicaid dollar they spend.)
The ACA’s Medicaid push was a huge success. Of the 20 million-plus who got health insurance through Obamacare, at least half of them got it as a result of Medicaid expansion.
Now these folks are in jeopardy. Again, in 2020, the federal government will end Medicaid expansion. At the individual level, that means ACA Medicaid expansion enrollees would be covered until December 31, 2019 — assuming states don’t drop expansion before then in anticipation of the coming cuts.
Then in 2020, when Medicaid expansion ends, their health insurance status wouldn’t be secure anymore.
The government would only continue to match spending on the ACA Medicaid expansion enrollees who maintained continuous Medicaid coverage by staying below 138 percent of the federal poverty line. In practice, the continuous coverage requirement would mean a lot of people dropping from the program or facing a huge disincentive to earn more, said Benjamin Sommers, a Harvard health care researcher. “It’s a stealth attack on Medicaid expansion,” he said. "The reality is people move in and out of Medicaid a lot as they go between jobs, or their seasonal income goes up and down.”
4) The plan gets rid of Medicaid expansion for children living in poverty
It’s not just adults living in poverty who will get hurt by this plan. It’s kids too.
As Vox’s Dylan Matthews reports, the new plan would change how Medicaid and CHIP, (the Children’s Health Insurance Program) work together for children.
Prior to the enactment of the ACA, there were a bunch of different income levels qualifying children of different ages for Medicaid. This meant a lot of confusion for families, who might have some kids in a household on Medicaid, and others on CHIP.
The ACA expanded the eligibility rule by setting a uniform 133 percent of poverty Medicaid threshold for kids. The result was that a lot of kids moved from CHIP — which can charge premiums — to Medicaid, and families finally had their kids on one health insurance plan.
The AHCA would allow states to reverse that change, and the result will likely be moving kids back to the less generous CHIP program. “This is particularly concerning,” Matthews explained, “because CHIP funding is still slated to expire in September of this year, unless Congress acts.”
5) People living in “trigger states” are going to fare particularly badly
There are even more immediate risks to Medicaid expansion in some states. Eight of the 32 states (including DC) that expanded Medicaid under the ACA included language in their laws that said they’d only continue with the program as long as the federal government paid for most of it.
These “trigger states” were Arizona, Arkansas, Illinois, Indiana, Michigan, New Hampshire, New Mexico, and Washington. And in these places, Medicaid enrollees would be in particular jeopardy if the AHCA passes.
According to analysts at Georgetown University, if the AHCA were to pass, the trigger states could drop 3.3 million people from Medicaid in 2020 or revoke some of their benefits, depending on the language in the state’s legislation. (This is unlike the other states that expanded Medicaid, which might keep on ACA Medicaid enrollees so long as they maintained continuous coverage.)
6) For the first time, the plan caps spending on Medicaid — which will inevitably lead to cuts
Right now the federal government matches all the dollars states spend on Medicaid, based on the needs of people on the program. But Republicans are proposing a new funding approach, to kick in in 2020, whereby the feds will only match Medicaid spending to a certain fixed amount. If states exceed that cap to cover the needs of enrollees, they’re on the hook for 100 percent of their Medicaid costs. Researchers project the change will amount to a $280 billion cost shift to states over 10 years.
Because Medicaid spending can fluctuate a lot year to year — depending on the cost of drugs, for example, or any health crises that arise — a cap system like this could be really punishing to state economies. And this will most certainly put governors in the position of having to pare down Medicaid services, limit coverage, or drop people from the program altogether.
Medicaid researcher Joan Alker called this a politically “ingenious part of the Republican plan” because it’ll shift the burden to the governors to decide what to do to balance their books, and they’ll get blamed for the coverage losses that ensure. “They are going to have to raise taxes, cut services, or cut people off,” she added.
7) The plan discontinues retroactive medical bill coverage for the poor
There’s another stealth attack on Medicaid enrollees in the new GOP plan: It will also discontinue a program that got the medical bills of people who signed up for Medicaid covered retroactively for 90 days.
Under the ACA, people’s coverage extended back three months from before they enrolled in Medicaid. This was designed to protect people living in poverty who may end up in the hospital or sick with a lot of medical bills and only then learn that they were eligible for the program.
The GOP plan includes details that’ll undo this rule: People would only be eligible to get claims covered from within the same month in which they made their Medicaid application. This means that if they happen to apply for Medicaid at the beginning of the month, after racking up hospital charges for expensive treatments the month or months prior, they’ll be on the hook for all those bills. It’s another subtle change that’ll clearly sting people.
