A look at the American Health Care Act | Jul 03, 2017

The Affordable Care Act devised by President Obama has been the law of the land since it was signed into legislation on March 23, 2010. For as much backing as the bill earned, there was just as much criticism. Since that time, Republican lawmakers have talked about repealing and replacing the ACA with another, less mandate-heavy piece of legislation.

Their efforts culminated with the American Health Care Act, a bill touted by House Speaker Paul Ryan and other GOP politicians.

The history of the AHCA

In March 2017, Republicans from the U.S. House of Representatives publicly released the American Health Care Act. The bill was meant to act as the replacement for the Obama administration’s Affordable Care Act. After attempts to garner support for the piece of legislation failed, the AHCA was pulled before it could undergo a house vote.

In early May, GOP lawmakers presented an amended version of the law, which passed the House of Representatives. Now the AHCA is in the Senate’s hands for deliberation. According to the New York Times, the Senate has already indicated it will come up with an entirely new iteration of the legislation as opposed to using the House proposal.

Let’s take a look at some of the elements of the law that make up the backbone of the AHCA:

Elimination of ACA mandates

The ACA set up two important stipulations that Republicans were opposed to from the beginning. The first, the employer mandate, required companies with 50 or more full-time equivalent workers to provide minimum essential coverage at an affordable rate for their employees. The second, the individual mandate, made it necessary for every person in the U.S. to have minimum essential coverage. Employer-offered coverage meets this rule, as does insurance purchased via the Marketplace for people who don’t have access to health care through their employer. Failing to comply with either obligation resulted in costly penalties for businesses and people alike.

The AHCA aims to eliminate both of these requirements by reducing the fine for non-adherence to $0. That means that while the mandates would still exist, there would be no consequence for not following the rules. The employer and individual obligations would then have to be completely repealed by future legislation. The AHCA does include at least a 30 percent late-enrollment penalty, however, for people who have not maintained continuous coverage, according to the Kaiser Family Foundation.

Republican lawmakers have long been against these mandates, as they believed they upped organizational spending and made citizens purchase insurance they didn’t necessarily need.

Medicaid rollbacks

As of March 2017, 74 million Americans are enrolled in Medicaid, the health insurance program that serves low-income families, individuals, people with disabilities and the elderly. The offering is dually funded by the federal government and states themselves, aiming to ensure people living under a certain income level still have access to health benefits they need.

To qualify for Medicaid, citizens have to meet certain requirements – income, household size, family status, disability, etc. – which are dependent upon the state where they live. Under the Obama administration, states could expand their Medicaid coverage so that eligibility includes those with a household income below 133 percent of the federal poverty level. Today, only 19 states have decided to forgo this expansion, according to the National Conference of State Legislatures.

The AHCA enables Medicaid expansion to continue until January 2020, after which funding for the states that chose to do so would be limited and on a per-person premise. Furthermore, the option to enhance coverage would end on Dec. 31, 2017.

Medicaid is currently an entitlement program, which means the federal government is responsible for paying for the health expenses for everyone who qualifies. The Republican legislation aims to change that, and proposes to transform Medicaid into a grant plan. With this model, states have the choice to receive a fixed-dollar block grant or a set amount of funds for each enrollee. Furthermore, states can also set eligibility standards for Medicaid provisions. One such example is the requirement for nondisabled, nonelderly and nonpregnant enrollees to work in order to qualify for Medicaid coverage.

A push for age-based tax credits

With the individual mandate in place, individuals are required to have insurance in their name. With 43.1 million people living in poverty as of 2015, according to the U.S. Census, it can be difficult to afford the coverage they truly need.

As a result, the federal government provides tax subsidies to lower the cost of health care. Under the ACA, these credits are based on a person’s income – resulting in those with lower annual salaries receiving more funds than those with higher incomes. The AHCA replaces these credits with age-based subsidies, the amounts of which range as follows:

  • $2,000: People under 30 years old.
  • $2,500: People ages 30 to 39.
  • $3,000: People ages 40 to 49.
  • $3,500: People ages 50 to 59.
  • $4,000: People 60 years and older.

Increased use of health savings accounts

To give individuals more control over their health care and reduce costs for businesses, Republican lawmakers continuously tout using health savings accounts. This account-based solution is a critical element of the AHCA, as the legislation attempts to encourage more people to enroll by increasing the annual tax-free contribution limit.

To utilize HSAs, people must first be enrolled in a high -deductible health plan. These initiatives offer people lower premiums, but require a higher deductible as well. Once they’ve begun participating in an HDHP, people can sign up for an HSA. These funds offer three tax advantages, according to the IRS:
1. Contributions are tax deductible.
2. Interest and other earnings on the assets in the account are tax-free.
3. Distributions are also tax-free when used for certain medical expenses.

Additionally, any money put in the account by individuals or their employers will remain in the fund until they are used, meaning they are transferable from job to job if need be.

While HSAs offer citizens a number of benefits, they tend to be a challenging option for low-income individuals. People must not only be able to save their money to deposit it into their account, but decide which health care expenses are most important when paid out of these funds. HSAs offer a strong alternative for people in good health, but those struggling with chronic illness may struggle to use these accounts, thanks to the unpredictability they face when it comes to medical needs.

Applying for waivers

Under the AHCA, states have the option to forgo certain elements that were once required under the ACA, including regulations and consumer protections.

According to NPR, these waivers enable insurance companies in certain states to complete the following:

  • Charge more for – or deny – coverage to people with certain pre-existing conditions.
  • Eliminate essential health benefits, such as maternity care, mental health services and prescription drugs.
  • Charge older people up to five times what they charge younger people for the same policy.

States that apply – and are approved – for these waivers may need to find other ways to ensure their citizens have access to the health care they need. The Patient and State Stability Fund serves this purpose.

Establishment of the Patient and State Stability Fund

Every state has its own idea of how to best serve its citizens, especially when it comes to providing health care. In an effort to give these jurisdictions more control and allow them to create innovative tools and solutions, the AHCA establishes a Patient and State Stability Fund.

This initiative enables states to utilize a $15 billion contribution from the U.S. Treasury in 2018 and 2019, and $10 billion per year starting in 2020 until 2026. This money can be used to address high-risk pools, stabilize individual markets and help citizens afford coverage. States would have to file an application to receive the money, and starting in 2020, would have to provide a match for the funds.

What’s next?

The House iteration of the AHCA will not pass the Senate, various Republicans have stated. Instead, a 12-member team will completely overhaul the legislation to create a new health care bill, according to The Washington Examiner.

The AHCA bill that was passed by the House of Representatives did so without a score from the Congressional Budget Office, a nonpartisan organization that measures the short- and long-term outcomes of certain legislation. CBO released their findings for the updated AHCA on May 24. The report estimates that 14 million more people would be uninsured in 2018 if the law passed and around 51 million people under the age of 65 would be uninsured by 2026. The latter statistic is compared to the 28 million who would lack coverage by 2026 if the ACA remained in place.

The next step for the Senate after finalizing its own ACA replacement will be getting senators on their side to vote for the measure. Republican lawmakers will use reconciliation to attempt to pass their bill. Although that requires a simple majority of votes, Democratic support will still be necessary, according to The Washington Post.

It’s important for public health officials to remain updated on this issue as it affects individuals living with a variety of income levels, which will impact their access to coverage. Earning a Master of Public Health from the University of Arizona will give public health students the knowledge and expertise they need to communicate these changes to the citizens and communities they serve.

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