The AHCA- A Bullet-point Analysis

  1. The AHCA shows that Republicans have embraced the framework of Obamacare for the US health system. As far as the Obamacare marketplace goes, it is mainly tweaks. It is clearly not a repeal.
  2. Mostly, it cuts all taxes put in place to pay for the system. These cuts favor the wealthy. To the extent they are paid for, they are paid for by cuts to Medicaid.
  3. Obamacare’s tax penalty/tax subsidy has had a name change. It is now called a tax credit. Bottom line, if you don’t have insurance your tax bill is higher than it would be otherwise.
  4. The people who benefit from the tax credits shift, however. On paper, the tax credits go to every income group (contingent on age) equally. In reality this means that many low-income people of all ages will not be able to afford insurance and, thus, will not be able to get the tax credit. So this is not a “flat” subsidy. It will be more obtainable the wealthier you are.
  5. There are some good tweaks in the bill. These are the types of improvements many have been considering since the ACA was passed in 2010. I think it is important to note that with a bill like the ACA, there were quite a few ways it could not work as well as hoped. Analysts had a list of solutions ready to be deployed to handle these problems if necessary. These have been blocked for the past six years. A couple have been included in the AHCA:

A. Expanded reinsurance/stability fund. There are many ways that states can use this fund, but it basically takes the highest cost patients off of the insurance company’s hands and puts those costs on to the government. Or if states are satisfied with premium prices, they can use it to fund dental/mental/vision insurance.

B. Expanded age rating. Age rating is the difference in cost paid by older Americans compared to young, usually more healthy, counterparts. Getting this number right is key to preventing the “death spiral” and it takes constant tweaking. Under the ACA, older Americans pay 3 times more than younger. Under the AHCA it is 5 times more. If done right, this should result in lower insurance premiums overall by expanding the risk pool, so statements that it necessarily is bad for older Americans are wrong. That said, in the context of the AHCA, the CBO seems to believe it is very bad for the elderly.

C. States are able to pursue these changes, within some limits, under the ACA. For instance, Maine achieved price stability by expanding age rating and funding a reinsurance pool. However, poor states like Mississippi or Alaska would be hard pressed to fund these programs. So these changes have evidence-based reasoning. If the AHCA was just these two things I think it would go a long way towards “fixing” the ACA.

6. Most of the health system change occurs in Medicaid:

A. It rolls back the Medicaid expansion which increased the income range and types (mostly single people w/o children) of people eligible for Medicaid. So the number of people who will lose access to Medicaid + those who have been without in non-expansion states will number in the tens of millions, as noted by the CBO.

B. It changes Medicaid from a benefit program for individuals into a per capita payment to states, who can then design (within limits) their own health program for the poor — basically a block grant program. I have mixed feelings about this. I think it can be done, and done well, but it can be done poorly as well — the devil is in the details. It will take some more time to sift through those details since this is actually a major change to our health system (unlike the changes to the ACA markets). Again, this is something that could be hard on poor rural states like Mississippi or Alaska.

C. Regardless, these changes combined represent a huge cut in a major program providing health care to the poor, which is meant to fund the tax cuts for the wealthy.

7. Errata:

A. Continuous coverage fee: Your premium will be 30% higher if you didn’t have insurance the year before. Meh. I don’t think the calculus changes for most people.

B. Cuts funding for Planned Parenthood, prevention and screening programs. These programs aren’t necessarily cost effective in the first order but it is good for people to catch illnesses early (which is much of what the Planned Parenthood federal funding does — no abortion) and overall better for society at large.

C. Cuts to cost-sharing programs. These programs pay some deductibles and fees for low income and middle class families with health insurance. So, not only is it harder for them to pay the premium, if they manage to do that, they will pay more on the back end too.

D. Repeal of actuarial value standards. These are the famous “Bronze, Gold, and Platinum” ratings. I am very fond of these because it allows people, who have no possible way to value an insurance plan, to compare apples to apples when purchasing insurance. I think removing these allows insurers to screw purchasers by confusing them.

8. What doesn’t change:

A. Insurers must provide insurance to anyone willing to pay (guaranteed issue,) cover preexisting conditions & cover adult children up to age 26.

B. Limits on annual and lifetime payments and specific out-of-pocket expenditures remain.

C. Essential benefits package remains.

D. Health status and other individual rating programs remain. (e.g., insurers cannot charge you more because you are sick, female, a minority, uneducated, etc.)

9. Bottom line: I agree that the AHCA really screws what we call the “core Trump supporter” (whites w/o a HS diploma) and any other low income person. I I would call it Swampcare. I am not sure if the changes are enough to prevent a premium death spiral in the market that remains (CBO thinks it may)but I am certain that low income people will be cut out of that market. This is a far, far cry from the promises Trump made to his supporters. But those promises were as good as just about any other statement made by Trump.

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