Who Gets Hurt and Who Gets Helped if Obamacare is Repealed

The legislation, titled the American Health Care Act, now moves to the Senate, where it will likely change a lot when or if it lands on President Trump's desk. But it's already possible to identify who will get helped and who will get hurt by the bill.

The legislation calls for providing refundable tax credits based on a person's age and income. It allows states to waive some protections for those with pre-existing conditions, while letting insurers charge higher rates to older consumers and levy a 30% surcharge on the premiums of those who let their coverage lapse.

The bill also eliminates the enhanced federal match for Medicaid expansion starting in 2020 and curtails federal support for the entire Medicaid program, which covers about one in five Americans. And it lifts the taxes that Obamacare had imposed on the wealthy, insurers and companies.

Republican lawmakers and supporters say the bill will lower premiums and deductibles and give consumers more control over their health care. But an array of opponents, including many consumer and patient advocacy groups, say this bill could leave millions facing higher health care bills and less coverage.

Here's whom the American Health Care Act would likely help:

Younger Americans could get cheaper plans

Obamacare was designed so that younger policyholders would help subsidize older ones. That would change under the Republican bill because it would allow insurers to charge older folks more.  This means that younger Americans would likely see their annual premiums go down. Enrollees ages 20 to 29 would save about $700 to $4,000 a year, on average, according to a study by the Milliman actuarial firm on behalf of the AARP Public Policy Institute.  Those under age 30 would also get a refundable tax credit of up to $2,000 to offset the cost of their premiums, as long as their income doesn't exceed $215,000 for an individual.

The GOP tax credits would also likely be more generous than Obamacare's subsidies for these folks. For example, a 27-year-old making $40,000 a year would receive $2,000 under the GOP plan, but only gets a $103 subsidy from Obamacare, on average, a Kaiser analysis found.

Also, the bill keeps the Obamacare provision that lets young adults up to age 26 stay on their parents' insurance plan.

The healthy could buy less expensive policies in some states

Obamacare requires insurers to provide an array of health care benefits, including maternity, mental health, prescription drugs and substance abuse. This comprehensive coverage, however, jacks up premiums and provides services that some consumers find unnecessary -- think, a couple in their late 50s who aren't having any more kids likely don't need maternity coverage.

The bill would allow states to waive this federal mandate, which would allow insurers to offer skinnier plans that offer fewer benefits with lower premiums.

Middle class and higher-income Americans could get tax breaks and perks

The Republicans would enable people higher on the income scale to claim the tax credit to help pay their premiums. Under Obamacare, an enrollee who makes more than $47,500 is no longer eligible for a premium subsidy. The GOP plan would let a policyholder making up to $75,000 claim the full tax credit. The benefit would phase out slowly until the enrollee hits $215,000 in income.

The legislation also would eliminate two taxes that Obamacare levied on the wealthy to help pay for the law. Under the Affordable Care Act, single taxpayers with incomes above $200,000 and couples making more than $250,000 annually have to pay an additional 0.9% Medicare payroll tax on the amount they earn above these thresholds. These taxpayers may also be hit with a tax surcharge of 3.8% on investment income above those thresholds.

And the bill would allow folks to contribute more to Health Savings Accounts, which are primarily used by better-off Americans who can afford to sock money away for health care expenses.

Here's whom the American Health Care Act would likely hurt:

Lower-income folks could be left uninsured

Obamacare contains many provisions to help poor and lower-income Americans.

Primarily, it expanded Medicaid to cover adults who earn up to $16,400 a year. The American Health Care Act would end the enhanced federal Medicaid funding for new enrollees starting in 2020. And it would curtail federal support for the entire program by sending a fixed amount of money per enrollee or by providing a block grant. States would likely have to either reduce eligibility, curtail benefits or cut provider payments.  All this could hurt not only poor adults, but also low-income children, women, senior citizens and the disabled.  Also, Obamacare provides those with incomes just under $30,000 with generous subsidies to lower their deductibles and out-of-pocket costs in individual market policies. The legislation would eliminate the subsidies.  Finally, the premium tax credits the legislation would provide would not go as far Obamacare's subsidies for lower-income consumers

Folks making $20,000 a year would take the biggest hit at any age under the GOP plan, a Kaiser study found. A 27-year-old earning this amount would only get $2,000, instead of $3,225 under Obamacare, on average. Meanwhile, a 40-year-old would get $3,000 versus nearly $4,150. However, the biggest loser would be a 60-year-old, who would receive only $4,000, instead of nearly $9,900 under Obamacare.

In its review of an early version of the bill, the non-partisan Congressional Budget Office estimated that 24 million fewer people would have coverage by 2026 as compared to current law. The majority of those would have qualified for Medicaid under Obamacare.

Major health insurance lobbying groups are concerned about the bill's impact on all these folks, many of whom are their customers.

"The American Health Care Act needs important improvements to better protect low- and moderate-income families who rely on Medicaid or buy their own coverage," Marilyn Tavenner, CEO of America's Health Insurance Plans, said after the bill passed the House Thursday.

Older Americans could have to pay more

Enrollees in their 50s and early 60s benefited from Obamacare because insurers could only charge them three times more than younger policyholders. The bill would widen that band to five-to-one. That would mean that adults ages 60 to 64 would see their annual premiums soar 22% to nearly $18,000, according to the Milliman study for the AARP. Those in their 50s would be hit with a 13% increase and pay an annual premium of $12,800.  Also, the GOP bill doesn't provide them with as generous tax credits as Obamacare. A 60-year-old making $40,000 would get only $4,000 from the Republican plan, instead of an average subsidy of $6,750 from the Affordable Care Act, according the Kaiser study.  States could also receive waivers to allow insurers to charge older Americans even more than five times the premiums of the young.

Those with pre-existing conditions could be charged more and get less coverage

States could allow insurers to charge higher premiums to those with pre-existing conditions who let their coverage lapse. These states would have to set up high-risk pools or other programs to help lower the costs of insuring these folks, but many experts say the $138 billion set aside through 2026 for that funding would not be enough.

Consumers with health issues may also find that their policies don't cover all of their needs. That's because states could allow insurers to offer skimpier plans. It's likely many carriers would take them up on that offer since few would want to sell policies that attract the sickest and costliest patients.

CNNMoney (New York)

First published May 4, 2017: 9:10 PM ET

GOP Fails To Get Enough Support For American Health Care Act

Friday GOP House leaders were unable to get the support needed to move the American Health Care Act forward.  Seeing the "writing on the wall", President Trump withdrew the AHCA and is now focused on Tax Reform.  "Obamacare will remain the law of the land", said Speaker of the House Paul Ryan.  With that said, employers with over 50 employees should continue as usual, complying with the rules, regulations and reporting required under the Affordable Care Act.  Hopefully lawmakers can make changes to the ACA helping business owners by removing fines, penalties and burdensome reporting required each year under the current Health Care Law.

Legislative Update: ACA Repeal, Replace Advances Through House

Early this morning the House Ways and Means Committee approved the American Health Care Act—to replace tax elements of the Affordable Care Act (ACA)—by a vote of 23-16.

House Republican leadership introduced the legislation March 6. The American Health Care Act was created under the budget reconciliation process and requirements and is limited in its scope to amend only the tax provisions of the ACA. It does not amend the insurance and the underlying coverage requirements of the ACA. Using this process allows supporters of the American Health Care Act to pass changes to the ACA in the Senate with a simple majority of 51 votes instead of the 60 votes needed to override an expected Democratic filibuster. 

In introducing the legislation, House Speaker Paul Ryan outlined three steps Congress and the Trump Administration will now take to replace the ACA:

1. Pass the American Health Care Act.
2. Make additional changes to the rules that govern the ACA through the regulatory process.
3. Work with Democrats to pass legislation to address the insurance elements of the ACA that need reform, which will require support of Senate Democrats in order to avert a filibuster. 

The Ways and Means and Energy and Commerce Committees began work on the bill this week and the legislation will likely change as it works its way through the legislative process.  The House Budget Committee is expected during the week of March 13 to package the Ways and Means language with provisions from the Energy and Commerce Committee, which is yet to vote on the bill. If passed by the Committees, the legislation could be considered by the full House as early as the week of March 20.

Key issues of interest to the HR profession and the workplace: 

• Reduces employer mandate penalty. Under current law, certain employers are required to provide health insurance or pay a penalty. This bill would reduce the penalty to zero for failure to provide minimum essential coverage. The employer mandate will remain and would have to be repealed through future legislation. The effective date would apply beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
• Reduces individual mandate penalty. Under current law, most individuals are required to purchase health insurance or pay a penalty. This bill would reduce the penalty to zero for failure to maintain minimum essential coverage. The individual mandate will remain and would have to be repealed through future legislation. The effective date would apply beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.  
• Creates a continuous coverage requirement surcharge. This bill creates a new continuous coverage requirement surcharge. To avoid a 30 percent premium surcharge, individuals must prove that they did not have a gap in creditable coverage beyond 63 continuous days during the 12 months preceding coverage. Individuals aging out of dependent coverage must prove that they enrolled during the first open enrollment period after which dependent coverage ceased. The penalty does not vary by health status but would be greater for older individuals since premiums may vary with age. The penalty lasts for the remainder of the plan year for special enrollments during 2018, and for the 12-month period beginning with the first day of the plan year for 2019 and succeeding years.
• Delays excise tax on high-value health care plans. The ACA imposed a 40 percent excise tax on high cost employer-sponsored health coverage to benefits exceeding certain thresholds ($10,200 for individual coverage and $27,500 for family coverage). Under current law, the tax is scheduled to go into effect in 2020. This bill changes the effective date of the tax for taxable periods beginning after Dec. 31, 2024.
• Repeals the health insurance tax. The ACA imposed an annual fee on certain health insurers. The proposal repeals this health insurance tax beginning after Dec. 31, 2017.
• Repeals increase of tax on HSAs. The ACA increased the percentage of the tax on distributions that are not used for qualified medical expenses to 20 percent. This bill lowers the rate to pre-ACA percentages. This change is effective for distributions after Dec. 31, 2017.
• Repeals the limit on contributions to FSAs. The ACA limits the amount an employer or individual may contribute to a health Flexible Spending Account (FSA) to $2,500, indexed for cost-of-living adjustments. This bill repeals the limitation on health FSA contributions for taxable years beginning after Dec. 31, 2017.

As noted above, the bill does not repeal the ACA insurance reforms, including the following health plan requirements:

• Coverage of pre-existing conditions;
• Guarantee availability and renewability of coverage;
• Coverage of adult children up to age 26;
• Cap out-of-pocket expenditures;
• Prohibitions against health status underwriting, lifetime and annual limits, and discrimination on the basis of race, nationality, disability, age, or sex.

Since the legislation does not eliminate the employer mandate, employer reporting requirements under the ACA would not change.

-SHRM-By Chatrane Birbal, March 9, 2017