AgileHealthInsurance Report | 2017-03-22
The American Health Care Act
What Would the Republican Health Care Plan, “The American Health Care Act,” Mean to Me?
Following on the heels of the election, Republican legislators have proposed an alternative to the Affordable Care Act (ACA). The draft bill called the American Health Care Act (AHCA), is designed to replace significant aspects of the ACA.
So what does this legislation mean to you? There are several provisions in the bill that will effect on your wallet and health. Let’s break down the major provisions:
What will change?
The Individual Mandate. Under the proposed AHCA, the individual mandate will be repealed. The mandate was designed to reduce costs to both insurers and the insured by requiring consumers to either obtain health insurance or pay a tax (commonly called the Obamacare Tax). The thought was that if everyone shared in the cost of healthcare, the financial burden for those who were most sick (and used the lion’s share of healthcare dollars) would be far more manageable--similar to how health insurance works in a large employer plan. However, many consumers expressed their dissatisfaction and frustration with ACA plans and some chose to pay the tax rather than purchase a plan. Consumers felt that without unsubsidized premiums, ACA plans were unaffordable, complained that the networks were too narrow, and find the deductibles too high.
The AHCA instead has opted to encourage people to obtain coverage but will not penalize those who don’t. To discourage consumers from obtaining health insurance only when they are sick and need it, the AHCA will allow insurers to charge a 30% higher premium for consumers who do not maintain continuous insurance coverage. To avoid this surcharge, consumers should stay insured with eligible health coverage.
Health Subsidies. Health care subsidies will be modified. The health care subsidies that helped lower-income families afford health insurance by offsetting premium costs will be replaced. The new bill instead offers a tax credit for all consumers. These would be based on age but would phase out for individuals making more than $75,000 or a family making more than $150,000.
Higher Premiums for Older Consumers. The age band variation rate, which dictates how much more older consumers can be charged for health insurance than younger consumers would change as well. The current limitation of to 3:1, means older consumers can only be charged three times more than the youngest (and least expensive to insure) consumers. The AHCA would raise the ratio to 5:1.
What will Stay the same?
Pre-Existing Conditions. A hallmark of the ACA was that insurers could not deny a consumer coverage because of a pre-existing condition. The new bill would continue to require plans to cover pre-existing conditions so no one who wants to health insurance can be turned away.
Health Exchange Marketplace. If the AHCA passes, there will still be an online health insurance marketplace for consumers to choose their health coverage. At this point it is unclear if the current marketplace, Healthcare.gov, would remain or if a new version would be created. The Health Exchange Marketplace would maintain a fixed open enrollment period, just as it does now, so that insured individuals wouldn’t be able to jump on and off plans depending on their health at the time.
Adult Children. Adult children up to the age of 26 will still be able to stay on as a dependent on their parents’ health plan.
When will all these changes happen?
That is up in the air at this point. The American Health Care Act has seen major opposition from both Democrats and Republicans. Democrats have insisted that the changes will make getting adequate health coverage impossible for millions of families and Republicans are concerned that the bill does not do enough to reduce the costs that were incurred by Obamacare.
As the ACHA goes through the legislative process, many of its provisions may be changed or removed altogether. We at AgileHealthInsurance.com will continue to closely follow health care reform to keep consumers updated. Check back often.
The AHCA was pulled from a vote by congressional Republicans today over concerns that it lacked sufficient congressional support. After the bill was pulled, President Trump said they would now focus on repealing tax regulations associated with the ACA, and revisit a repeal and replace bill at a future date. Obamacare will stand for the foreseeable future in its current state.
Short-term insurance has long been seen as an affordable option for those who need quality health insurance, but may not be able to afford the high premiums associated with an ACA approved plan. Click Here to learn more about short-term health insurance.