On March 6, House Republicans released their replacement plan for the Affordable Care Act. Like the ACA, the new plan–known as the American Health Care Act–is a way for the federal government to help people afford the high cost of health insurance. But in many other important ways, the new plan is radically different.
So What Has Changed?
All insurance systems rely on the same basic principle: people pay money into the program when they are well so that they can draw money back out of it when they get sick. In essence, then, healthy people are paying for those who are not. Under the Obama Administration’s ACA health care plan, young people and wealthy people paid more so that old people and poor people could pay less. However, under the new plan, this system is reversed: the old and the poor will pay more, while the young and wealthy will pay less.
This is because everyone will receive the same amount of money in the form of refundable tax credits ($2,000 for young people, $4,000 for people in their 50s and 60s). This isn’t enough money for a poor family to purchase an insurance policy, and they may not be able to afford to make up the difference, while a wealthy family could. Also, despite only giving older people twice as much money in tax credits, the new plan allows insurance companies to charge them up to five times what they charge younger people. Also, the ACA was funded largely by a tax increase on the wealthiest Americans, but the new plan scraps those taxes. The wealthiest Americans, therefore, will receive an average tax cut of over $195,000 as a result of ending the ACA structure.
Other differences exist as well. The cost of insurance depends a lot on where you live. Under the ACA, people living in high-cost areas received more money than those who live where insurance is more affordable. Under the new plan, everyone would receive the same flat rate, regardless of health care costs in their area. The Republican Party’s new AHCA plan also takes away the part of the ACA that required everyone to purchase health care. But the problem with that is that the insurance system is based on the healthy subsidizing the costs of care for the sick. If only the old and sick are buying insurance, the insurance companies will have to pay more, insurance premiums will rapidly increase, and no one will be able to afford coverage.
Finally, the new plan will phase out Medicaid expansion. Before the ACA, Medicaid was available for low-income families, pregnant women, children, and the disabled. President Obama’s ACA structure expanded Medicaid coverage to roughly 11 million additional Americans. The new AHCA bill will allow this policy to continue until 2020, when it will end and allow states “flexibility.” This means that the states will then be free to reduce benefits and to turn away people from the program if the state government chooses.
What Is the Response?
Because of these proposed changes, it is estimated that 6 to 10 million people could lose their health care coverage. Both the American Medical Association and the American Hospital Association have come out against the Republican’s new AHCA plan. Before the ACA, hospitals paid millions of dollars to cover the costs of people who were uninsured. When the ACA kicked in, and everyone was insured, hospitals no longer had this expense and could spend the money on other things, such as preventative health care measures. Now, if the ACA is repealed and millions lose their health insurance, hospitals once again will have to make up the difference.
In Washington, Democratic lawmakers are already speaking out against the new plan, and many Republicans are as well. Nevertheless, its biggest proponents, President Trump and Republican House Speaker Paul Ryan, hope that the “repeal and replace” bill will pass within weeks.