What is the Affordable Care Act?
What is the difference between the ACA and Obamacare?
What are subsidies?
What is the “AHCA” or “Trumpcare”?
Can I still sign up for insurance under the ACA?
Am I going to have to pay more?
Do AHCA’s tax incentives apply to me? What would my tax credit be?
Will I be paying more if I am older and don’t qualify for Medicare?
What if I am not a U.S. citizen?
Will this bill affect access to vaccines and other preventative care?
What does the proposed law say about abortion?
Will young adults under age 26 still be able to stay on their parents’ plan?
Will there be any additional reporting requirements for states?
What does this mean for states that expanded their Medicaid program?
What does this mean for the states that did not expand their Medicaid program?
How will the proposed law affect hospitals and providers?
Is the number of uninsured Americans likely to rise or fall under the AHCA?
Who benefits the most under the AHCA?
What is the Affordable Care Act?
The Patient Protection and Affordable Care Act (“PPACA”) (commonly referred to as the “Affordable Care Act,” the “ACA” or “Obamacare”) is a healthcare reform bill that was passed by Congress and signed into law by President Barack Obama in 2010. The purpose of the ACA is to lower the costs of health insurance and make health insurance available to more Americans.
According to HealthCare.gov, the ACA has three main goals:
1. Make affordable health insurance available to more people. The law provides consumers with subsidies (“premium tax credits”) that lower costs for households with incomes between 100% and 400% of the federal poverty level
2. Expand the Medicaid program to cover all adults with income below 138% of the federal poverty level. Check here to see if your state was one of the 28 states to expand Medicaid.
3. Support innovative medical care delivery methods designed to lower the costs of health care generally.
The ACA pursues these goals through the implementation of new rules and regulations, a new marketplace for subsidized insurance, and the expansion of public healthcare programs. As of November 2016, an estimated 20 million additional Americans are now insured because of the ACA.
“Obamacare” is another name for the Affordable Care Act (“ACA”). There is no difference between the two.
Prior to the ACA, individuals who did not qualify for Medicare or Medicaid, were not insured by an employer, and could not afford individual insurance (or were barred from purchasing due to a pre-existing condition) often went without health coverage at all.
Thus, the ACA aimed to make individual insurance more affordable. To do so, the ACA offers income-based subsidies to enable individuals to purchase health plans in the Healthcare Marketplaces. Based on individual and family income, the ACA’s subsidy program also takes geographic location and premium increases into account.
For more information on the subsidy program generally, go to the Henry J. Kaiser Family Foundation website.
House Republicans have introduced a bill titled the American Health Care Act of 2017 (“AHCA”) (also known as “Trumpcare”). This proposal would change many key features of the ACA, especially for those enrolled under Medicaid programs. However, some provisions remain untouched, such as coverage for young adults.
For more information on what is covered, view our summary of the bill or the Henry J. Kaiser Family Foundation’s comparison tool.
If you are eligible for ACA health insurance, and are in need of coverage, you should consider signing up for it. At this time, the AHCA has not passed both chambers of Congress. As such, there is no guarantee that the AHCA will become law. Until that happens, the ACA remains in effect, and any individuals failing to get minimum health insurance may face a penalty fee.
Even if the AHCA is passed into law, you may pay more for health insurance if you have previously gone without health insurance. Beginning in 2018, if you went without health insurance for at least 63 days during the previous 12 months, and you apply for new health insurance, the insurer will impose a flat 30 percent late-enrollment surcharge on top of the base premium. The surcharge would be removed after one year of coverage.
It depends on how old you are, your income, and how much coverage you want.
The ACA offered tax credits to individuals earning between 100-400% of the federal poverty level. These credits were solely income-based. Under the AHCA, tax credits will depend on both your age and your income level. Individuals earning less than $75,000 per year will receive the full tax credit for their age range, but the credits will phase out at higher incomes.
The AHCA also eliminates the ACA’s restrictions on what percentage of health care costs plans must cover (Bronze 60%, Silver 70%, Gold 80%, and Platinum 90%), which will enable plans to be responsible for a lower percentage of health care costs, which would lower individual premiums (but also increase the risk of higher out of pocket costs to the individual).
Premiums in general may also go up under the AHCA because without the ACA’s individual mandate, healthy people may decide to stop having health insurance, a phenomenon known as adverse selection.
Under the ACA, you must have qualifying health coverage or pay a penalty on your next federal tax return. This is called the individual mandate. The individual mandate is meant to ensure that it is not just the sick who purchase insurance; if enough young, healthy people also purchase coverage, in theory this should spread costs and risks across a larger, healthier group. For an explanation on how the individual mandate works, visit the Kaiser Family Foundation website.
The AHCA eliminates the individual mandate. Consumers would have a choice whether to sign up for health insurance or not (although the failure to have insurance for more than 63 days will result in higher premiums if you eventually choose to purchase insurance). However, if too many healthy people opt out of purchasing plans, overall costs may rise. Risk pools of older and sicker individuals would result in higher premiums.
To incentivize people to sign up for plans, the AHCA proposes age-based tax credits for low- to middle-income individuals instead of a mandate, with older Americans receiving larger credits.
The AHCA further incentivizes people to remain on insurance through additional fees. If an insured person decides to discontinue their policy for longer than 63 days, when they sign up again, they would face a 30 percent premium surcharge for a year.
The AHCA seeks to repeal the ACA’s cost-sharing subsidy program and replace it with a program based primarily on age rather than focusing only on income. Under the proposed bill, tax credits would be as follows:
|Age||Amount Per Individual|
|Up to 29||$2,000|
|60 and older||$4,000|
No family could receive more than $14,000 in subsidies, and no more than five family members could be eligible for subsidies.
Additionally, not everyone will qualify for a tax credit. The tax credits would diminish as individual income rose above $75,000 and are eliminated for income levels above $115,000. For a more thorough explanation of these tax credits, click here.
In addition, the proposed law prohibits tax credits in other circumstances, such as if the purchased plan covers “elective” abortions, or if the purchaser is in jail or undocumented.
For many individuals, these tax credits would be insufficient to help them purchase quality health insurance coverage. Some experts who have considered the issue extensively note that this is not a sufficient amount to cover the full cost of a health insurance plan that provides full benefits. The law would particularly harm those who are lower income, older, or live in high-premium areas.
The Henry J. Kaiser Family Foundation has published an interactive map to illustrate the differences between the ACA and the AHCA’s tax credits. The website also has further discussion of the impact of tax credits. David Cutler and several other experts in the field have done a preliminary economic analysis of the tax credit scheme, published here.
According to the AARP, approximately 6.1 million Americans between the ages of 50 and 64 currently purchase health insurance on the individual marketplace. Under the ACA, insurance companies can charge older enrollees up to three times the amount charged to younger consumers for health insurance. However, under the AHCA, insurers can charge the oldest enrollees five times as much as the youngest. According to Harvard health economists, David Cutler and colleagues, Americans between 55 and 64 will see the steepest premium increases – a $5,269 increase if the bill went into effect today, and a $6,971 increase by 2020.
In addition, as discussed here, the elimination of the individual mandate would increase the costs for sicker and older patients because fewer healthy, young people may choose to sign up.
The AARP has come out in strong opposition to the AHCA in its current form. You can read the AARP’s letter to Congress here.
The proposed law also attempts to limit use of Medicaid funds by individuals who do not have legal immigration status. Under the current law, Medicaid coverage is already only available for individuals who are U.S. citizens or have legal immigration status.
However, currently, state Medicaid programs must provide applicants who attest to being U.S. citizens (or having satisfactory immigration status) a reasonable opportunity to provide documentation. During this reasonable period, states must enroll the applicants in their Medicaid program and will receive federal matching for their care.
Under the AHCA, individuals must provide documentation of citizenship or lawful immigration status before obtaining coverage, which could result in delays of coverage to the individual as well as federal matching dollars to the state.
Yes. Under the AHCA, by 2019, the Prevention and Public Health Fund (“PPHF”) set up by the ACA will be completely repealed. The PPHF allocated money to to enhance healthcare quality and promote preventative health and public health initiatives. Some of the many programs funded under the PPHF include Alzheimer’s Disease Prevention Education and Outreach, Diabetes Prevention, and Centers for Disease Control programs on Lead Poisoning Prevention and Immunizations. In 2016, the PPHF allocated over 324 million dollars to the CDC for immunizations alone.
The AHCA does not replace the PPHF with any other allocated funds for preventative and public health services. This cut will seriously impede the ability to sustain many public health programs. As a result, many state and local governments, as well as individuals, will end up being responsible for covering the cost of public health programs and measures. In California, for example, repeal of the PPHF will mean a loss of approximately $7 million in vaccine funding.
The proposed AHCA significantly restricts coverage and access to abortions, unless the pregnancy is a result of rape or incest, or the mother’s life is in immediate danger. Abortions for any other purpose are designated “elective.” The AHCA prohibits the use of federal funds to pay for elective abortions. The proposed AHCA contains many provisions that emphasize the intended limitation on funding for abortion (See Section 601).
Under Section 103 of the proposed law, no federal funding can be made (directly or indirectly) by Medicaid to any healthcare organization that “provides for abortions.” Under the Hyde Amendment, Medicaid was already barred from using federal funds for abortion or abortion related services. The proposed law goes further, essentially freezing (for at least one year) current funding for community health organizations and non-profit entities that provide abortion services (considered “prohibited entities” under the AHCA). Under this proposal, Planned Parenthood would no longer receive federal funding unless it stopped providing abortion services.
Individuals and state or local governments could purchase separate coverage for abortions as long as the plan is not purchased using federal funds.
The proposed law also restricts the use of tax credits to purchase insurance policies that offer abortion services.
Effectively, this greatly limits Americans’ access to insurance-covered abortions, and may lead to insurers dropping abortion coverage from their plans. Although customers could buy separate policies to cover abortions, the small market size will likely make these plans expensive.
Click here for a discussion on how the abortion provision would affect Californians and their insurance policies.
Yes. The AHCA does not change the ACA’s requirement that young adults up to age 26 can remain on their parent’s health insurance plan.
For more information on your insurance options as a young adult, see our Young Adults page.
In order to adopt this model, the AHCA would impose additional reporting requirements. States would report data on medical assistance expenditures within categories of services and categories of all enrollees in their Medicaid programs.
To help states prepare for these new reporting requirements, the AHCA would provide a temporary increase to the federal matching percentage to improve data reporting systems. The temporary increases would impact expenditures on or after October 1, 2017, and before October 1, 2019.
The AHCA allotted a $10 billion pool of funds to be distributed over five years to support the Medicaid programs of states that did not expand their Medicaid programs. This allows non-expansion states to receive funding to adjust payment amounts for Medicaid providers. Non-expansion states would also receive an increased matching rate of 100% for 2018 to 2021 and 95% for 2022.
Each year, non-expansion states would receive funds based on the number of individuals earning less than 138% of the federal poverty level (“FPL”) in 2015 relative to the total number of individuals with income below 138% of the FPL for all the non-expansion states in 2015. If a non-expansion state implements the ACA’s Medicaid expansion, the state shall no longer be eligible as a non-expansion state for safety net funding for subsequent years.
The March 20th Manager’s Amendment would end the ACA’s mandatory expansion of Medicaid coverage for childless, non-disabled, non-pregnant adults up to 133% of the poverty level. In addition, after 2017, states would no longer receive enhanced federal matching funds if they wish to cover adults above 133% of the poverty level. They would continue to receive the normal federal match if choosing to expand above 133% of the poverty level after 2017.
Individuals enrolled in the Medicaid expansion prior to 2020 would receive “grandfathered” status. Thus, states would receive the enhanced matching rate under current law (90% in 2020) for grandfathered enrollees as long as such individuals remain eligible and enrolled in the program. In other words, as long as a state has expanded Medicaid by March 1, 2017, and an enrollee got coverage under the expansion by 2020, the state would retain the enhanced match rate after 2019.
The amendment also makes a technical change that would allow the AHCA to freeze the ACA-enhanced federal funding that was provided to certain states that covered low-income adults prior to the ACA at the regular matching level.
The American Medical Association, American Hospital Association, and the American Association of Retired Persons have already expressed reservations about the newly proposed AHCA. A large concern is that the AHCA will leave many lower income individuals without any health coverage, resulting in increased uncompensated costs to health care providers. Under the ACA, roughly 20 million Americans that were previously uninsured became insured, and this helped hospitals and providers stay in business.
As more individuals became insured, the ACA planned to phase out mandatory federal payments to hospitals that saw a large proportion of uninsured and Medicaid patients. These payments were known as Disproportionate Share Hospital (“DSH”) payments. DSH payments were intended to offset hospitals’ uncompensated care costs, and therefore could be reduced with a greater percentage of care being covered by Medicaid or insurance.
For more general information on DSH and the ACA, visit the Henry J. Kaiser Family Foundation website.
The AHCA reinstates pre-ACA Medicaid DSH payments for non-expansion states in 2018. In other words, states that did not expand Medicaid under the ACA will receive DSH funds starting in 2018. States that expanded Medicaid would have their DSH payments restarted in 2020.
It is unclear what impact the proposed law would have on hospital financial stability. However, in the face of a mass of newly uninsured patients, hospitals are concerned about both finances and patient access to healthcare.
On March 13, 2017, the Congressional Budget Office (“CBO”) released its analysis of the AHCA and projected that an estimated 52 million Americans would be uninsured by 2026. That would be nearly twice as many uninsured Americans under age 65 than there would be under the ACA.
On March 23rd, the CBO concluded that the changes made under the Manager’s Amendment would not change their projections of uninsured rates under the AHCA.
According to the CBO’s report, whether an individual’s premium increases or decreases under the AHCA is highly dependent upon age and income.
Under the ACA, an older individual can generally be charged three times more for a premium than would be charged to a younger person; under the AHCA, this rate would increase to five times more. As a result, the CBO projects that younger individuals would see lower premiums. On the other hand, older individuals would see “substantially higher” premiums because insurers could charge them five times more than young people.
In addition, because the tax credits are no longer tied solely to income, higher-income young people would likely find coverage more affordable. Lower income people purchasing insurance on the exchange would likely find it much more difficult to afford coverage under the AHCA and may end up uninsured.
You can read our full summary of the CBO’s report here. To see the full CBO report, visit the agency’s website. For an excellent analysis on who benefits and loses under the plan, read the Health Affairs article on the subject here.