What Does Obamacare Uncertainty Mean for You?

March 8, 2017 -- House Republicans have unveiled their replacement plan for the Affordable Care Act. The bill, called the American Health Care Act, keeps a number of the current law’s provisions in place but dramatically changes others.

Republicans have set a deadline for the repeal of the Affordable Care Act, which is also called Obamacare, by mid-April.

Here are answers to some frequently asked questions about the state of the law and how your health insurance coverage may be affected.

Do I still have to pay the penalty?

The individual mandate requires most Americans to have health insurance or pay a tax penalty. Republicans have insisted all along that any new plan to replace the law will eliminate it.

This bill does away with the individual mandate effective by the end of 2015. Anyone who went uninsured last year (2016) would not be on the hook for the penalty this tax season, avoiding a possible payment of $695 for adults and as much as $2,085 for families, or 2.5% of annual income, whichever is higher. Last year, 6.5 million people paid the penalty.

In place of the individual mandate, the bill calls for people to maintain “continuous coverage.” That means if a person doesn’t have insurance for more than 63 days, insurers could tack on a 30% surcharge on premiums for the first 12 months of coverage.

But Republican leaders working to gain consensus on the bill have since indicated that they may be willing to reconsider this provision. It was included in the bill to encourage young, healthy people to sign up for health insurance. But critics say it could have the opposite effect, and instead deter people from buying coverage until they become sick.

I have insurance under Obamacare. Could I lose it this year?

It’s unlikely you’ll lose the coverage you have for 2017.

“The insurance plans in general are locked in for 2017, so there is little risk it could be taken away,” says Larry Levitt, a senior vice president at the Kaiser Family Foundation.

Next year is a different story. The Congressional Budget Office (CBO), which provides Congress with nonpartisan analyses for economic and budget decisions, estimates that in 2018, 14 million more people would be uninsured than under current law. Many people would likely drop coverage knowing they would no longer face penalties for being uninsured. Others would forgo insurance to avoid paying higher premiums, which are likely to result from healthier individuals dropping out of the market.

Secretary of Health and Human Services Tom Price has said he strongly disagrees with the CBO’s assessment. In a New York Times editorial, he wrote that the current bill is just “one part of President Trump’s plan to provide affordable, quality health care to every American.”

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Could my costs change this year?

Again, insurance plans and premiums are finalized for 2017, so it’s not likely you’ll see immediate changes to your costs.

But going forward, that could change. Exactly how much depends on who you are.

In general, this bill is likely to lower costs for healthy, young people with higher incomes or for people living in places like New Hampshire, where insurance premiums tend to be lower. Conversely, it increases premiums for people who are older with lower incomes or who live in areas with high-cost insurance premiums such as Arizona.

In addition, the legislation Republicans unveiled allows insurers to charge older people as much as five times more for coverage than younger people. Under the Affordable Care Act, that ratio is 3 to 1.

The bill would probably also lead to more plans offering large deductibles before insurance kicks in to help cover medical expenses. Some of the ACA protections are preserved, such as limits on how much you spend on medical care in a year. But the bill does away with the ACA’s requirement that insurance companies sell plans that offer a certain level of financial value. The CBO estimates that most policies will drop to 60% actuarial value. That’s equal to the current bronze plan.

If you now qualify for tax credits to help pay for insurance, the financial help available under the Republican plan may be far less generous. Tax credits are made available based primarily on age. Individual credits ranging from $2,000 to $4,000 will be available to people earning up to $75,000, and $150,000 for people filing taxes jointly. The family maximum for credits is $14,000. A60-year-old living in Yuma, AZ, earning $30,000 per year currently qualifies for a tax credit of $20,190. That same 60-year old would qualify for $4,000 in tax credits under the GOP’s plan -- a drop in financial assistance of more than $16,000 or 80%.

In addition, the cost-sharing subsidies that lower out-of-pocket expenses for people who earn less than about $30,000 annually and who buy silver-level plans in the Affordable Care Act insurance Marketplaces will be eliminated effective 2020.

According to the CBO’s report, health insurance premiums in the individual market will increase by 15%-20% starting next year.

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Could my benefits change?

The proposed legislation doesn’t end the requirement that insurers cover a base set of essential health benefits for plans sold in the private market. This includes services such as maternity care, mental health care, and preventive services at no charge. But the Trump administration can propose regulations that begin to dismantle this part of the law. Republicans have indicated that in the next phase of their plans to repeal the law, they will begin to do so. Given the controversy over contraceptives, for example, many experts view this as one of the law’s most vulnerable provisions.

“The administration has the authority to pull back on the contraception requirement,” Levitt says.

In addition, the bill freezes funding for Planned Parenthood for a year. That, along with the repeal of the Affordable Care Act's Medicaid expansion and dramatic cuts to the broader Medicaid program, is likely to hurt low-income women who disproportionately seek health care services there.

Will the debate have any effect on employer insurance this year?

“It would be difficult for employers, and undesirable, to change things in the middle of the plan year,” says Linda Blumberg, a senior fellow in the Health Policy Center at the Urban Institute.

But the bill immediately repeals the Affordable Care Act's employer mandate, which requires companies with more than 50 workers to provide health benefits or pay a penalty. Most large employers offered health insurance before the health law and are likely to continue doing so -- at least for the foreseeable future.

The bill does repeal Obamacare’s small-business tax credits starting in 2020. This tax credit helped some smaller companies afford coverage for their workers.

Overall, the CBO projects that 2 million people fewer people will enroll in employer-based insurance by the year 2020. That number is expected to grow to 7 million by 2026. Repealing the individual mandate will cause fewer people to sign up. And, over time, it’s likely that fewer employers will choose to offer insurance.

In addition, Blumberg says, because the cost for non-group coverage is likely to be less expensive for young, healthy adults, it’s possible many will choose not to sign onto their employer’s health plan and instead buy less expensive coverage from the private market. In the long run, that could reduce the pool of young, healthy employees and drive prices higher for workers who choose to keep their job-based insurance.

In a blog post about the CBO’s projections, Tracy Watts, senior partner and U.S. health care reform leader with the consulting firm Mercer, says among businesses, “Overwhelmingly, the top concern was that a rise in the number of uninsured will lead to cost shifting by providers to employer-sponsored plans.”

WebMD Health News Reviewed by Arefa Cassoobhoy, MD, MPH on March 08, 2017

Sources

SOURCES:

IRS Letter on Premium Tax Credits.

Larry Levitt, senior vice president, Kaiser Family Foundation.

Urban Institute: "Implications of Partial Repeal of the ACA Through Reconciliation."

Linda Blumberg, senior fellow, Urban Institute Health Policy Center.

Kaiser Family Foundation:" Tax Credits under the Affordable Care Act vs. the American Health Care Act: An Interactive Map," "Compare Proposals to Replace The Affordable Care Act."

Planned Parenthood: "By the Numbers."

Axios: “House Considering Nixing Continuous Coverage Piece of Health Care Bill.”

CNN: “CBO Report: 24 Million Fewer Insured by 2026 Under GOP Health Care Bill.”

New York Times: “The Health Secretary, on the Republican Bill.”

Kaiser Family Foundation: “Tax Credits under the Affordable Care Act vs. the American Health Care Act: An Interactive Map.”

Mercer: “CBO Report Signals Cost Shifting to Employees.”

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