Just days after the release of the Republicans proposed Obamacare replacement program, experts are still hashing out the impact and costs of the program. However, one thing is certain, this program isn’t the friend of the poor and middle class, who are the greatest beneficiaries under the Affordable Care Act.

Based on the enrollment figures, instead of Obamacare, ACA should have rightfully been called “Medicaid for Those Just Above Poverty.” According to healthcare.gov, current Obamacare enrollees are heavily lower income. With about 66% of enrollees having incomes at or below 250% of poverty. That’s approximately $31,250 for a single individual in 2020. The bulk of enrolles, 44%, have incomes at or below 150% of poverty. That’s approximately $18,750 in 2020.

Sadly, these are the same individuals who will be hurt the most under the Affordable Health Care Act (the proposed name for the Republican health plan.) The program eliminates or seriously revises all of the benefits given to individuals with lower incomes under the Affordable Care Act.

Obamacare and the Poor

The ACA provides three types of financial assistance to help people afford health coverage:

•Medicaid expansion for those with incomes below 138% of poverty (the Supreme Court later ruled this to be at state option, which Kansas didn’t accept);

•Refundable premium tax credits for people with incomes from 100% to 400% of the poverty level who purchase coverage through federal or state marketplaces; and

•Cost-sharing subsidies for people with incomes from 100% to 250% of poverty to provide lower deductibles and copays when purchasing silver plans in a marketplace. For example, in 2016, people making between 100 – 150% of poverty enrolled in a silver plan on healthcare.gov received cost-sharing assistance worth $1,440; those with incomes between 150 – 200% of poverty received $1,068 on average; and those with incomes between 200 – 250% of poverty received $144 on average).

Since Kansas chose not to expand Medicaid, I’ll deal with changes in that program later. The biggest change affecting Kansans are changes in the how tax credits are allocated and the total discontinuation of the cost-sharing subsidies.

Both the ACD and the AHCA include tax credits in their approach. However, the law and the proposal calculate credit amount differently. The ACA takes family income, local cost of insurance, and age into account, while the replacement proposal bases tax credits only on age.

New tax credit proposal

Starting in 2020 (noticeably after the mid-term elections), those not offered health insurance at work (this will have to be certified) or eligible for government health insurance (Medicare or Medicaid) will have the ability to use a new advanceable/refundable healthcare tax credit. It’s only available to citizens and green card residents, and is not available to prisoners.

The credit is age adjusted. You simply add up the people in your household to determine the credit size:

•Children and those under age 30

get $2000

•30 to 39 year olds get $2500

•40 to 49 year olds get $3000

•50 to 59 year olds get $3500

•60 year olds to Medicare age

get $4000

Those figures are indexed to inflation plus one percentage point. The maximum credit amount is $14,000. Only the oldest five people in a family count toward the calculation.

As an example, a family of four with two adults in their 40s and two kids would get a credit of $10,000 ($3000 for each adult and $2000 for each child).

Here’s one example of how this change will impact the poor. Using an example of the income of those served most by the ACA, an individual age 60 and over (the group with the highest tax credit under the existing plan would receive a $4,000 tax credit under AHCA. Monthly (divided by 12) their health care insurance would be reduced by $333. Off of a typical silver plan that this person would have taken to get the cost sharing subsidy offered under ACA they would be left paying more than $400 per month for their insurance ($750 average monthly premium – $333 tax credit =$417/month)

Under ACA, this person’s credit would have been increased not only because of their age, but because of their income, and they would have also received a further reduction in their premium in the form of cost sharing assistance of $120 per month (1440/12 months). Under ACA this person’s monthly pay minus adjustments would have been $50 or less.

That’s a big difference that will have a big impact on the majority of the individuals covered under ACA.

While Trump has promised everyone “access” to health insurance, that’s distinctly different from “securing” health insurance, something many poor and middle income individuals won’t be able to afford under AHCA.

Benefits for the Wealthy

On the flip side, very little is gained for those with higher incomes. The tax credits go away totally for those with income above $75,000. That figure would have been $66,572 in 2020 (400% of poverty) under ACA. However, as you might have guessed, the very wealthy benefit

Obamacare’s architects cobbled together a mix of taxes to offset the cost of subsidizing insurance for tens of millions of low- and moderate-income Americans. That has meant some new taxes on insurance companies and medical device makers (both of which, it was reasoned, were benefiting from getting new customers through the law).

Wealthy Americans are paying more too. Families making more than $250,000 a year have seen their Medicare payroll taxes increase because of Obamacare.

The House Republican plan scraps these taxes.

Individual Mandate/Penalties

What else goes away is the individual mandate, the requirement to carry insurance or pay a penalty. As proposed, the repeal of the mandate would be retroactive to 2016. So individuals who have already filed their 2016 taxes and paid a penalty could file to get that money back, if this bill is passed.

The elimination of the individual mandate is a big concern to a number of healthcare organizations including the American Academy of Family Physicians. Their concern particularly by the phasing in of some of the changes and the impact it will have on individuals, families, and the healthcare system at large.

Without the mandate, some healthy people will choose to forgo coverage knowing they can always enroll later if they get sick (since coverage of pre-existing conditions continues under the bill).

In place of the mandate, a penalty is assessed if a person allows their insurance to lapse for as long as two months. Insurers would be “required” to charge them a 30% penalty when they buy a health plan. AHCA drafters hope this penalty will encourage people to keep their insurance. However, the penalty could discourage many people from getting new coverage if they lose their plan because of a job loss or other change, in turn increasing the number of uninsured Americans.

Conservative Republicans who don’t care much for AHCA, are calling the penalty a modified individual mandate that’s paid to insurance companies (do they really need more money) and not the government.

Medicaid Expansion

Finally under AHCA Medicaid, which was expanded by most states, will be changed considerably. As noted earlier, this will not have a major impact on Kansas, which chose not to expand Medicare. However, the impact will be major in the states that did.

The Affordable Care Act extended Medicaid to all Americans earning under 138 percent of the federal poverty line — $16,643 for a single person and $33,948 for a family of four in 2017. Under the Republican plan, enrollment in the Medicaid expansion will freeze starting in 2020. The 11 million Americans who already gained coverage can, in theory, keep it — but only if they never let their enrollment lapse or their incomes rise.

In 2020, Medicaid expansion will go away except for those who are already covered. In AHCA only requires states to cover children in Medicaid who are under the poverty level, reducing the requirement from 133% of poverty. This will have an impact on the Kansas’ health care for children program, CHIPs.

Republicans want to go further, by changing how all of Medicaid is funded: They would replace federal Medicaid payments, which guarantee coverage to anyone who qualifies, with so-called per-person allotments, or per-capita caps. These give states a fixed amount of money for each person on Medicaid, adjusted based on whether the person is blind, disabled, a child, an adult or elderly. The states then decide how to budget the money.

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Bonita Gooch

Since 1996, Bonita has served as as Editor-in-Chief of The Community Voice newspaper. As the owner, she has guided the Wichita-based publication’s growth in reach across the state of Kansas and into...

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