House Republicans have passed the American Health Care Act, a bill that would greatly reduce funding for Obamacare’s coverage programs, leaving millions fewer people with health insurance.
The bill would dramatically remake the American health care system, changing who can afford coverage in the individual market — and who will be left uninsured. It also revealed new fault lines in the Republican Congress, showing who had the power to shift the bill’s priorities and who yielded little influence.
If the bill makes it through the Senate and becomes law, Republicans will have achieved a campaign promise they’ve been making for the past seven years. Millions of Americans will lose health insurance altogether, according to CBO estimates based on an earlier version of the bill. Taxes will drop for the wealthiest Americans. And for those still buying individual plans, the American health insurance system will prioritize the needs of young and healthy people more, and sicker people less.
Here are the winners and losers from this stage of the fight.
Winner: People who are young, healthy, and high-income
If you earn a good salary, are young and healthy, and want to buy a cheaper, skimpier insurance plan, the American Health Care Act could be pretty good for you. It would give Americans who earn upward of $100,000 tax credits to help purchase insurance. Right now, Obamacare’s tax credits are only available to individuals who earn less than $64,000.
The Republican bill makes it easier for insurers to charge lower prices to young people, too. Right now, insurance plans are required to only charge the oldest enrollees three times as much as the youngest enrollees. AHCA would change that rule to allow insurers to charge the oldest enrollees five times as much. This would raise premiums on the elderly but lower them for young Americans. Christine Eibner, a researcher at the RAND Corporation, estimates that this particular policy would lower annual premiums for a 24-year-old from $2,800 to $2,100
AHCA would let states apply for waivers so that insurers in those states could charge people with preexisting conditions higher premiums. For healthy people without preexisting conditions, this would be a benefit: They would no longer have to pay more so that the insurance company could cover the high medical bills of other enrollees. Instead, the Republican bill would move the individual market closer to the one that we had before Obamacare, where health insurance premiums were meant to reflect how much an individual’s own coverage is expected to cost.
If you’re someone who uses little health care, that could be a good deal. If you’re someone who is expected to have high bills, however…
Loser: people who are older, sick, and low-income
For low-income people who get their coverage through either Medicaid or the individual marketplace, though, the AHCA will likely change things for the worse.
The bill would end the Medicaid expansion in 2020, a program that millions of Americans who earn less than 138 percent of the poverty line (about $15,000 for an individual) currently rely on. The end result would be that people eventually get moved into the individual market, where they would have to pay for private insurance coverage. They would get some help from AHCA’s tax credits, but likely not enough to afford to purchase a plan — keep in mind, these are people who are only earning $15,000 or less per year.
People already in the marketplace would see significant change, too. Right now, Obamacare’s tax credits are based on income, with those who earn less getting more help. Under Obamacare, people who earn less than 200 percent of the poverty line (about $24,120 for an individual or $49,200 for a family of four) get the most generous help, enough money so that a midlevel plan would cost no more than 6.4 percent of their income.
Under AHCA, which doesn’t base tax credits on income alone, those people would get substantially less help. The Congressional Budget Office estimates that the average 40-year-old who earns $26,500 would see her tax credit fall from $4,800 to $3,650 under AHCA.
For an older Obamacare enrollee, the problem would be even more acute, because insurers would be allowed to charge the oldest enrollees five times as much as the youngest enrollees. This would have the result of raising premiums for Obamacare enrollees in their 60s.
CBO estimates that a 64-year-old earning $26,500 would see their annual tax credit decline from $13,600 to $4,900. The amount they pay out of pocket for their premiums, meanwhile, would go up from $1,700 in annual premiums under current law to $14,600 under AHCA. Right now, with the tax credit, that person spends very little of her own money on a premium. Under the new bill, she’d spend nearly half her annual income on health insurance.
Winner: the Freedom Caucus
The Freedom Caucus went into the Obamacare repeal fight with two non-negotiable demands. First, they wanted a bill that got rid of Obamacare’s requirement that sick and healthy people be charged the same premiums. Second, they wanted to end Obamacare’s essential health benefit mandate, which requires insurers to cover 10 types of medical care including hospital trips, maternity care, and mental health services.
This was a huge ask. These are two of the most popular parts of the Affordable Care Act. American voters really like Obamacare’s ban on preexisting conditions; a recent Washington Post poll found that 70 percent want that part of the law to stay.
But the Freedom Caucus ultimately got its way, as the Republicans added an amendment that would allow states to waive out of these two provisions. This group of legislators moved the Republican replacement plan sharply to the right, and showed that they could sway the caucus toward a more conservative health care plan.
Loser: the Tuesday Group and moderate Republicans
The Tuesday Group, a loose affiliation of moderate Republicans, had the exact opposite experience in the health care debate. These moderates opposed the first version of AHCA because they felt it didn’t do enough to protect the Americans who rely on the health care law’s programs.
The Freedom Caucus then added a series of changes that made the bill more conservative, the ones described earlier. They let states waive out of the preexisting condition ban and cover fewer benefits.
Moderates, somewhat amazingly, signed onto these changes while getting incredibly little in return. Rep. Fred Upton of Michigan secured an additional $8 billion in funding to help cover people with preexisting conditions. He admitted that he didn’t know whether this would be enough to actually make sure those people receive quality health care.
The moderates went from opposing the more moderate version of AHCA to supporting the more conservative one — which doesn’t speak especially well to their leverage and muscle on Capitol Hill.
Winner: very rich Americans
The AHCA would amount to a huge tax cut for the wealthiest Americans by rolling back key taxes included in Obamacare. One analysis of an earlier version of the bill estimated that it contains $600 billion in tax cuts that would save the wealthiest 0.1 percent of Americans, on average, $200,000 each.
The single biggest tax cut included in the bill is the repeal of the 3.8 percent tax the Affordable Care Act applied to capital gains, dividend, and interest income for families with $250,000 or more in income ($125,000 for singles).
Repealing that tax is a change that, by definition, only helps affluent Americans. If you’re part of a married couple and, like the vast majority of Americans, make less than $250,000 a year, or earn more than that but have little investment income, it doesn’t affect you at all.
Loser: the Senate
The Senate has had the luxury so far of sitting on the sidelines of the health care debate and waiting to see what bill the House passes. Now, the ball is in their court — and they don’t sound entirely excited to receive it.
AHCA is an unpopular bill. Different polls find that somewhere between 17 percent and 37 percent of Americans approve of the Republican plan, and now it’s being dropped squarely in the laps of senators.
Senators presumably don’t want to be the road block to Obamacare repeal — a goal of the Republican party for years now — but also have major concerns about AHCA. Many of them worry about the bill’s deep cuts to Medicaid and changes to private insurance. Now they’ll have to hash out the issues on their own.
A few senators have suggested they will even draft their own competing bill — which will be just as challenging of an effort in the Senate as it has been in the House this year.
Winner: Donald Trump
Trump has spent months now campaigning on his promise to “repeal and replace Obamacare. He has promised, repeatedly, that a plan would be coming soon and Republicans would get it done.
In getting the American Health Care Act through the House, he finally gets to claim progress on that goal. He has a clear political victory he can point at, in a presidency where very little policy has been made.
Loser: Donald Trump
Trump has repeatedly promised a health care bill that will “cover everyone” and take care of people with preexisting conditions.
The bill that just passed the House is decidedly not that bill. The things Trump says are currently in the bill — protections for everyone with preexisting conditions, for example — are not in the American Health Care Act. The most recent CBO estimate says that 24 million fewer Americans would have coverage under AHCA. Clearly, not everyone is covered.
Trump has repeated these claims this week and he may well keep repeating these claims about AHCA in the future too. But eventually, if he signs this bill into law, the way AHCA actually works will become clear to the Americans who lose insurance and the Americans with preexisting conditions who suddenly have to pay more for coverage. That will be a rude awakening for the voters who have, for years now, been promised the exact opposite.