The American Health Care Act is Republicans’ plan to repeal and replace Obamacare.
The 123-page bill would retain some of the most popular parts of Obamacare, including a ban on preexisting conditions, allowing young adults to stay on their parents’ plan up to age 26, and banning lifetime limits in health insurance. It would eliminate the mandate that all Americans purchase health coverage or pay a fine.
The AHCA gets rid of some popular parts of Obamacare, too. It will roll back much of the health law’s insurance expansion, which currently covers about 20 million people. It does this by making the two big sources of coverage under the law — Medicaid and private individual insurance — less accessible to low- and middle-income Americans.
In private insurance, AHCA provides much lower subsidies for those who buy coverage on the individual market — especially people who are low-income. The Kaiser Family Foundation estimates that, on average, the subsidies in this plan are 36 percent lower than those in current law. This means that it would become harder for people who earn about $20,000 or $30,000 a year to afford coverage if they don’t get it at work.
Obamacare expanded Medicaid to cover all Americans who earn less than 138 percent of the federal poverty line (about $15,000 for an individual). Before the health care law, only certain low-income people could use the program (pregnant women below a certain income threshold, for example, or the blind and disabled).
AHCA would keep the Medicaid expansion but only until 2020. At that point, states would have to stop enrolling people and anyone who fell off the program — perhaps because their income went up, or they simply forgot to enroll — would not be allowed back on.
AHCA changes the rest of Medicaid, too. Right now, the federal government pays a certain percent of every Medicaid enrollees’ bills no matter how high they go. AHCA would change that: It would have the federal government give states a lump sum for each person in Medicaid, meaning states could run out of money for especially high-cost patients.
We’re still waiting for more analysis on how much this particular provision could cut Medicaid. A lot depends on key details, like how big that lump sum is and how quickly it would grow.
There are other important changes in the AHCA that advantage higher-income people and disadvantage low earners. Obamacare did not give any financial help to individuals who earn more than about $48,000. AHCA will give subsidies to people who earn as much as $75,000. The subsidies will be the same for everybody who earns less than $75,000 — and that’s a huge change from the current health law. Right now, someone who earns $20,000 gets way more help than someone who earns $40,000.
We do not know how many people this bill would cover, or how much it would cost. The nonpartisan Congressional Budget Office will produce that information, but it has not yet been released.
Want more? Read a longer explainer on the American Health Care Act here.