WASHINGTON — House Republicans’ plan to dismantle core parts of the Affordable Care Act would provide more government help for Americans to buy health insurance than some conservatives want, but the assistance would take a sharply different form, with clear winners and losers.
The architecture of the tax credits in the legislation, which House committees are to begin debating Wednesday morning, would offer less help to lower-income Americans than the subsidies provided by the current law. It would steer more money to young adults at the expense of older ones. And it would most benefit consumers living in states in which insurance prices already are relatively low.
Such on-the-ground implications began to emerge Tuesday, as health-policy analysts, economists and interest groups absorbed the details of what House GOP leaders hope to do – and not do – to fulfill their long-standing pledge to redirect the nation’s health policies in a more conservative direction.
The House GOP is moving so fast – with debate starting in the Ways and Means Committee and Energy and Commerce Committee less than 48 hours after they unveiled their bills – that lawmakers have not yet received any estimates from congressional budget analysts of how much the plans would cost or, significantly, how many Americans could be expected to gain or lose insurance coverage.
Still, the plans’ tax credits and other elements that would change the insurance landscape have enabled analysts and policy specialists from different ideological perspectives to start forecasting the effects.
An analysis by S&P Global predicts the legislation would lead to a loss of coverage for 2 million to 4 million of the roughly 16 million Americans who bought their own health plans through the ACA’s marketplaces or separately. More adults 35 and younger would gain coverage, while fewer adults 45 and older would be insured, according to the analysis.
Such patterns would arise from subtle but significant differences between the ACA’s subsidies and the way the GOP legislation’s features would work, said Deep Banerjee, an S&P Global director.
Specifically, the current subsidies take into account the cost of insurance in a given area, and they are linked to premiums for the next-to-lowest “silver” health plan – the second rung among four ACA tiers that supply different levels of coverage. Under House Republicans’ plans, those tiers would disappear and the tax credits would no longer vary depending on geography.
As a result, the largest credits, $4,000 for people 60 and older, would cover more than half the typical insurance premiums in New Mexico, for example, but less than a third of the cost in Wyoming, Banerjee said.
The Republican plans also would undo an ACA rule that allows insurers to charge their oldest customers no more than three times what they charge their youngest and healthiest ones. Instead, insurers could charge five times as much.
“Obamacare was specifically calibrated to cross-subsidize the older and sicker patients,” said Dan Mendelson, president of Avalere, a Washington-based health consulting group. The Republican approach “basically moves back in the direction of a less regulated market.”
AARP, the influential lobby for older Americans, has already begun pushing back. David Certner, AARP’s legislative counsel, said the group is particularly concerned about the effect on Americans ages 50 to 64 if that age-charge differential is to increase. Low-income Americans in that older group would “get hammered,” he said. For a 64-year-old earning $15,000 a year, Certner said, the combined change of the subsidy and premium would be roughly $8,500. For a 55-year-old earning $25,000, it would be $3,600. “We think those numbers are pretty dramatic,” Certner said.
Larry Levitt, senior vice president for special in––itiatives at the Kaiser Family Foundation, said more low-income people would have a hard time affording benefits under the Republicans’ American Health Care Act. “There will be more losers than winners,” he said.
Grace-Marie Turner, president of the Galen Institute, a health and tax policy research organization favoring free-market approaches, agreed that for lower-income people, “there is no question (financial assistance is) going to be lower.” But the Republican version of tax credits would be more transparent, she said, enabling people to know based on their age and income exactly how much help they would get. And that, she said, would lead consumers to be more cost-minded shoppers for insurance and help hold down health plans’ prices.
Speaking to reporters at the White House on Tuesday, Health and Human Services Secretary Tom Price said he was confident the House proposal, if enacted, would translate not only into a cut in “the premiums that individuals will see but a decrease in the cost of health care for folks.”
Yet Rachel Bovard, director of policy services at the Heritage Foundation, criticized the Republican proposal as being too generous with federal dollars while failing to address the main drivers of rising health costs. The biggest losers, Bovard said, would be people buying insurance on their own who voted Republicans into office so that they would “fully repeal” the ACA. “It substitutes new funding for old Obamacare funding,” she argued.
Overall, Republicans’ tax credits would reach people at higher incomes than the ACA subsidies, available to people with incomes of up to 400 percent of the federal poverty level – about $47,000 for an individual or $97,000 for a family of four. The proposed credits would be available to individuals with incomes of up to $75,000 and families up to $150,000.