On Monday, the Republican leadership released its plan to modify the Affordable Care Act, called the American Health Care Act. After marathon committee meetings last week, the final House vote is expected the week of March 20. As with any comprehensive legislation, many changes are being proposed. Here are some of the basic features:
Health insurance changes
Individual mandate: The requirement to maintain continuous coverage or face a 30 percent penalty would be repealed. Any applicant that does not have coverage for 63 days or more would face a 30 percent penalty on top of his or her base premium for 12 months in order to re-enroll in a plan. In a 2016 report, the nonpartisan Congressional Budget Office estimated that elimination of the individual mandate would result in an additional 15 million people being uninsured by 2026, although this does not factor other changes that might reduce this number.
Pre-existing conditions: The prohibition on pre-existing condition requirement remains.
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Age-based premiums: Currently insurers cannot charge more than 3 to 1 for the same plan between older and younger adults. This provision loosens the ratio to 5 to 1 and gives states the flexibility to set their own ratios.
Cost-sharing subsidies: Affordable Care Act subsidies would be repealed as of 2020.
Women’s health: Covered plans cannot provide any coverage for abortions (except for life saving, rape or incest reasons). Insurers may offer separate private plans.
Refundable tax credit: Tax credits are presently based on income. The proposed law bases credits on age:
▪ Younger than 30: $2,000
▪ 30-39: $2,500
▪ 40-49: $3,000
▪ 50-59: $3,500
▪ Older than 60: $4,000
The credits are cumulative for a family and capped at $14,000. Credits grow by inflation plus 1 percent. Credits are phased out beginning at incomes of $75,000 per year ($150,000 joint filers).
Over-the-counter drugs: Over-the-counter medications would qualify as for reimbursement a person’s health savings account, flexible spending account or a tax-exempt trust known as an Archer MSA (medical savings account).
Health savings accounts: Withdrawals for non-medical expenses now face a 20 percent penalty, which is lowered to 10 percent.
Flexible spending accounts: The Affordable Care Act set a $2,500 cap, adjusted for inflation, on pre-tax contributions by an employee. The legislation lifts the cap.
Repeal of the Medicare payroll tax: Individuals earning more than $200,000, or $250,000 for couples, pay a surtax of 0.9 percent on top of the 1.45 percent that is withheld from their salaries or wages for Medicare. This would be repealed.
Per capita caps: Medicaid is a joint federal and state program. In Pennsylvania in 2015, federal funds paid just less than 56 percent of the cost. The legislation would end Medicaid’s current open-ended financing system. Instead, states would receive a fixed dollar amount per beneficiary starting in 2020. The fixed dollar amount will use 2016 as the base year, vary by state and by beneficiary designation (elderly, blind and disabled, children, non-expansion adults and expansion adults) and be adjusted for inflation. There would be no provision for federal participation in a state’s increased actual expenditures.
Medicaid expansion. For states opting into Medicaid expansion, current beneficiaries would receive the current federal dollar match for services. Starting in 2020, Medicaid expansion may continue, but states will receive financing at their traditional level. The state can continue to receive the enhanced matching rate after Jan. 1, 2020, for those beneficiaries who were enrolled as of Dec. 21, 2019, and remain enrolled.