By Margot Sanger-Katz, March 07, 2017
Republicans in the House have performed major surgery on the Obamacare replacement plan they circulated a few weeks ago. But compared with the Affordable Care Act, the new plan still shifts a lot of benefits from the poor to those who earn more.
Legislative language for what House leaders call the American Health Care Act, released Monday evening, would substantially cut back funding to states that cover poor adults through their Medicaid program. It would cut back on financial assistance for relatively low-income insurance shoppers above the poverty line.
It would offer new financial benefits for the upper-middle class and the rich. Americans higher up the income scale would be eligible for subsidies to help them buy health insurance. Taxes on high incomes would be reversed. And the law would allow people to save more money each year in tax-free health savings and flexible spending accounts — accounts that are most valuable to people who pay high income tax rates and have money to save.
The bill even does away with a provision meant to tax incomes of insurance executives that top $500,000.
The bill is still subject to amendments and debate. The two House committees that wrote the legislation have scheduled hearings in the coming days. But the legislation was drafted in consultation with House leadership and Republicans on the other committees that oversee health care. President Trump, in a tweet and a brief statement from his press office Monday, signaled his general support for the plan.
The legislation comes with some numbers that we didn’t know before. Young adults who buy insurance coverage get $2,000 in federal cash to help them pay health premiums. Older adults get $4,000. Those numbers are higher than we’ve seen in previous G.O.P. proposals. But they would still mean that the Americans who have benefited most from the tax subsidies in the Affordable Care Act — individuals earning less than about $30,000 — would get substantially less help.
Obamacare’s subsidies were calculated to ensure that middle-class people didn’t have to spend more than a set percentage of their income on insurance. And a timely analysis from the Kaiser Family Foundation (based on a slightly earlier draft) shows that, in most parts of the country, low-income people would face a much larger gap between the value of their tax credit and the retail price of insurance than they do now.
Poor, older adults would face the largest crunch: The magnitude of their tax credits shrinks, even as a separate provision in the bill allows insurers to charge older people substantially higher prices than are allowed under the Affordable Care Act.
In some ways, the bill is less generous to the rich and less punishing to the poor than previous drafts of the legislation. The super-rich no longer qualify for a tax credit. Unlike previous drafts, which allowed anyone, regardless of income, to qualify for assistance, the bill offers the full subsidies only to individuals earning less than $75,000 a year or to joint filers earning $150,000. The subsidies slowly decrease above that threshold, meaning the country’s unemployed millionaires would still have to pay full freight for their health insurance.
The Medicaid provisions also give states more money to care for the poor adults who were newly covered by Obamacare for longer. Until 2020, states would continue to get the funding levels mandated by the Affordable Care Act.
But, after that, the Medicaid program would change in two important ways. Instead of paying a set percentage of medical bills, the new system would instead hand states a flat payment for each person who is signed up. And the amount states would get for the people signed up under the Obamacare expansion would be substantially reduced, by more than a third in some states, except in the case of people who stay continuously enrolled in Medicaid, a somewhat rare circumstance in a program in which people tend to cycle in and out of eligibility as their incomes change. States will retain the option of eliminating coverage for the Obamacare expansion population, and many may do so if their federal funding is cut and they can’t make up the difference.
Four Republican senators signed a letter Monday, before the bill was released, saying they could not support a plan that reversed the Medicaid expansion in their state. We will have to see whether this set of revisions is enough to overcome their concerns. (To pass, the bill needs 50 Senate votes, which means that leadership can’t afford to lose even three senators.)
The bill keeps some of Obamacare’s most popular provisions: Insurers have to offer health plans to people regardless of their health history. Plans cannot cap the amount they pay in claims in a year or the life of their customers. Adult children can continue to stay on their parents’ plans until they are 26. A list of required benefits that include preventive medicine and maternity care will still be required of all plans.
The numbers that are still missing are important. The nonpartisan Congressional Budget Office is still reviewing the bill. When it finishes its estimates, we’ll have a better sense of how much health insurance would probably cost under this plan and how many people would be covered. But it is reasonable to predict that the plan will cover fewer people than the current law does, and that the people who lose coverage will be those who are poorer.