The Republicans finally released their replacement plan for the ACA last week and IT IS UGLY— especially for older, lower-income, rural and sick Americans. And if you fall into all those categories, watch out! The implementation of the plan — officially called the American Health Care Act (AHCA) — is delayed until 2020 to push the backlash until after the 2018 midterms.
First, it will end federal funding for new enrollments in the Medicaid expansion. That very popular part of the ACA has enabled 12 million with incomes up to 138% of Federal Poverty Level (individuals below $16,394 and families of four below $33,534 in 2017) to qualify for Medicaid in the 31 states and D.C. that opted into the expansion. Then the GOP plan will gut the funding for original Medicaid by blocking granting it into a lump sum amount intentionally designed to lag further and further behind healthcare inflation.
For the 9 million currently getting tax credits to help purchase private insurance in the exchanges, the size of those tax credits will no longer be linked to your income or cost of insurance in your area. Remember, under the ACA design, you are expected to contribute between 2% and 9.7% of your income towards premiums for the mid-level plan in your area, and then WHATEVER IS LEFTOVER is your tax credit. The result is tax credits are much more generous for lower incomes, older folks, and where cost of insurance is high (often rural areas with fewer healthcare providers). Those are precisely the groups who are most vulnerable and need more help to purchase private insurance.
Instead, the Trump/RyanCare tax credits will be a flat amount with wholly inadequate adjustments for age:
$2,000 per individual up to age 29
$2,500 per individual age 30 to 39
$3,000 per individual age 40 to 49
$3,500 per individual age 50 to 59
$4,000 per individual age 60 and older
Families can claim credits for up to 5 oldest members, up to limit of $14,000 per year. Amounts are indexed annually to CPI plus 1 percentage point. These tax credits phase out for individuals with income above $75,000 and for those filing a joint return with income above $150,000.
It’s curious that the GOP tax credit for the oldest is only 2 times more than for the youngest adult, while at the same time the GOP plan allows insurance companies to charge older folks up to 5 times more (the ACA limited this age banding to 3 times more). Like comedian John Oliver’s thong analogy— the tax credits will be way too skimpy to cover the insurance costs.
The chart above — based on data from Kaiser Family Foundation — shows examples of how lower income, older and/or rural individuals are big losers under Trump/RyanCare, while younger and higher income folks are modest winners. Check out your own results on this interactive map.
Accordingly to a similar analysis by Vox:
“We estimate that (by 2020) the Republican bill would increase costs for families by $4,274. For families with a head of household age 55 to 64, the bill would increase costs by $10,591. For families with income below 250% percent of poverty, the bill would increase costs by $9,024.”
In short, Trump/RyanCare saves money for the federal govt by shifting more costs to individuals, families and states. As a general rule of thumb, when you are sharing costs with anyone – be it your employer or govt — you want your portion to be the smaller, fixed, predictable amount and the other side to shoulder the larger, open-ended, unpredictable amount. It’s the difference between a defined benefit program (like a pension) vs a defined contribution program (like a 401K). Ryan is notorious for trying to shift guaranteed benefit programs (Medicare, Medicaid, ACA tax credits) into skimpy defined contribution programs (aka VoucherCare).
Not clear how the Republicans plan to pay for their albeit stingier tax credits, given that Trump/RyanCare includes repeal of all the new taxes generated by the ACA. Tomorrow the CBO will release its estimates for the GOP plan. Based on past estimates of similar schemes, it will likely drive up the deficit and the number of uninsured (by at least 15 million). No wonder Republicans are working overtime to bash the CBO ahead of the score.
