The American Health Care Act: A Bill in Transition
Wondering how the changes to the Affordable Care Act (ACA) will affect you? You’ll have to be patient. The American Health Care Act (AHCA) bill is still in flux. Possible enhancements or repercussions are only educated guesses at this time.
The U.S. Senate is reviewing the bill that was narrowly passed by the House of Representatives in May. Observers expect it to be significantly rewritten in the Senate.
The rewrite is necessary because Republicans don’t believe they have enough votes to pass the bill as is. Instead, they want to use the budget reconciliation process, which would allow the bill to pass with only 51 votes. However, only provisions that are related to taxes and spending can be included in the reconciliation bill.
If the Senate version bears no resemblance to the House bill, many pundits expect that lawmakers from both chambers will iron out the differences between the bills. If the Senate approves the bill, it will go to President Trump to sign or veto.
History of the ACA
The ACA, also known as Obamacare, was implemented in 2010 to increase access to health care coverage for all Americans. Key provisions included:
Implementing market reforms
- Establishing health insurance marketplaces
- Expanding Medicaid eligibility for low-income adults.
To meet those goals, the federal government mandated that:
- All individuals must purchase insurance or pay a fine
- Insurers offering health coverage must include 10 essential benefits
- Large employers must provide health insurance to full-time workers.
According to the Department of Health and Human Services, 20 million people were newly insured as a result of the ACA. The law, however, has many detractors. Opponents are concerned that the law could cost the government $1.34 trillion over the next decade, adding to a national debt that already is more than $19.8 trillion.
Health coverage costs also have risen because of ACA rules and regulations and rising healthcare and prescription drug costs, making coverage too expensive for many individuals.
Issues Addressed by the New Legislation
While the future of the ACA and the AHCA is uncertain, it’s helpful to examine the differences between the two to get a glimpse of what we might expect the future of U.S. health care coverage to look like. The AHCA was designed to be more market friendly by cancelling many of the government mandates. Differences include:
Individual mandate – The Republican plan eliminates the mandate that all Americans must have coverage or pay a penalty. The plan, however, permits insurers to increase premiums by as much as 30 percent for people who allow their coverage to lapse, plus states would be able to increase that amount. A new system of tax credits is being proposed to entice people to buy coverage on the open market.
- Medicaid – The Republican plan replaces the open-ended entitlement to health care with a per-capita amount or block grant based on how much each state currently spends.
- Subsidies – The ACA provides income-based subsidies for low income individuals who purchase coverage in the marketplace. The Republican plan offers credits based on age and income.
- 10 essential benefits – The ACA requires insurers to offer a plan that features, at a minimum, 10 benefits the government deemed essential. The Republican plan allows states to establish their own essential benefits.
- Pre-existing conditions – Insurers would still have to offer coverage to all individuals, even those who had a serious illness before applying for coverage. However, each state can allow insurers to charge different amounts to customers who have pre-existing conditions.
- Age 26 – There would be no changes; young people up to age 26 can remain on their parents’ healthcare coverage.
- HSAs – A Health Savings Account allows individuals who have high deductible health benefit plans to save money tax free for health care expenses. The Republican plan increases the annual tax-free contribution limit.
- Age band ratios – Insurers are only able to charge older adults three times what they charge a younger person. The Republican plan changes that ratio to 5-to-1, which should put less of a financial burden on younger people.
- Caps on lifetime coverage – Under the ACA, policy limits were banned. The AHCA allows states to narrow the definition of what constitutes lifetime coverage.
- Planned Parenthood – Services provided by Planned Parenthood were allowed under ACA, but under the AHCA bill federal funding for the organization would be put on hold for a year.
Other Possible Changes
Republicans have listed other goals, if the bill passes the Senate and becomes law, including further easing regulations that cause economic burdens. Proponents also would allow people to buy health insurance across state lines.
Things can change rapidly in Washington but we’ll try to keep you informed and up to date.
In this issue:
This Just In...
The American Health Care Act: A Bill in Transition
Voluntary Benefits: The Upside of Giving Employees a Choice
It’s the Law: Benefits You Must Provide Employees
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