PolitiFact's guide to the Republican health care bill
The GOP House health care plan has lots of moving parts, but don’t fret. We at PolitiFact have been analyzing the legislation since its release.
Here’s what you need to know.
The first thing to keep in mind is that the GOP bill, the American Health Care Act, actually retains some important parts of the Affordable Care Act, or Obamacare.
Staying in place are provisions that prohibit insurance companies from denying coverage for a pre-existing health problem, like cancer, and a provision that prohibits insurance companies from raising premiums based on a person’s health. Kids can continue to stay on their parents’ health insurance until they turn 26. Insurance marketplaces where people browse for coverage stay in place. And regarding Medicare, Republicans retain long-range spending limits that they once railed against.
The Republican bill also continues to subsidize premiums to make insurance more affordable, but the size of those subsidies and who gets them changes significantly. The Congressional Budget Office said the average subsidy would be about 60 percent of what people would get under Obamacare. This part of the GOP plan delivers one of the top two spending reduction moves in the overall bill, the CBO said.
To help people who buy insurance on their own, the American Health Care Act uses refundable tax credits based on the following schedule:
• Under age 30: $2,000
• Between 30 and 39: $2,500
• Between 40 and 49: $3,000
• Between 50 and 59: $3,500
• Over age 60: $4,000
No household would get more than $14,000 worth of credits and the credits taper off for single filers making over $75,000 and joint filers making over $150,000.
The GOP bill makes one other key change that affects premiums. It would allow insurance companies to charge older people up to five times more than younger ones. Under Obamacare, the limit is three times more. Combine that with the new subsidy approach and, by the CBO’s estimate, the impact on older, poorer Americans would be large.
A 64-year-old making $26,500 would be responsible for $14,600 in premiums under the American Health Care Act. With the Affordable Care Act, the same person would pay $1,700. A 40-year-old making the same amount would also pay more, but his or her bill would go from the same $1,700 to $2,400 under the GOP bill.
Republicans counter that the CBO analysis fails to take into account future GOP plans to change the health care system through overhauling regulations and additional legislation.
Aside from premiums, Obamacare offered cost-sharing to defray the out-of-pocket expenses, such as deductibles and co-pays, for people making between 100 and 250 percent of federal poverty. The American Health Care Act eliminates that additional assistance.
Another big change in the American Health Care Act is the end of the insurance mandate. Today, nearly everyone must buy insurance or face a tax penalty. The Republicans do away with that, although their bill would allow insurance companies to charge a one-year 30 percent premium fee for those who had failed to buy insurance when they could have.
Big changes for Medicaid
The bill’s Medicaid provisions deliver the other large basket of savings for the federal budget. One of the key balancing acts for Republicans involves the 31 states that chose to expand Medicaid under Obamacare to include people making up to to 138 percent of federal poverty. The standard cut off is 100 percent.
Part of the deal was Washington would cover at least 90 percent of the costs for people in the expansion group. The typical federal match is more in the 50 to 75 percent range. The American Health Care Act takes several steps to eliminate the higher rate.
States that haven’t expanded Medicaid by March 1, 2017, would not be able to get the more generous federal match if they expand Medicaid eligibility. Those that had expanded would see the higher match end as of January 2020, with one exception: The bigger federal share would continue for anyone in the expansion group as of December 2019, so long as that person never had a break in eligibility longer than one month.
2020 marks another game changer in Medicaid. That year federal payment to states would shift to a per person basis with limits on the growth in those payments going forward. Alternatively, states would have the option to shift to a block grant approach, but just for the non-expansion participants. A block is what it sounds like -- a lump sum payment that is independent of the number of people in the Medicaid program or the cost of their care. Either way, the changes put more on the shoulders of the states, either to control costs or raise taxes.
Lastly, states would have the option to impose a Medicaid work requirement for anyone who isn’t pregnant, disabled or elderly.
At the same time the House bill cuts spending, it also cuts revenue for the federal government. Obamacare helped pay to cover the poor and working poor by taxing wealthier Americans, insurance companies and medical device makers. The Republican bill does away with all of those as of January 2017.
Taken together, the most valuable of the tax cuts are the ones for individual taxpayers making over $200,000 and couples making over $250,000. They have been paying more in Medicare taxes and another charge called the net-investment tax. The combined total tax reduction is more than $275 billion over a 10-year period, according to the CBO.
The American Health Care Act also increases tax incentives for Health Savings Accounts and makes more health care expenses tax deductible.
Other important elements
The American Health Care Act creates a $100 billion fund over nine years to help states cover a range of contingencies, including caring for the most expensive patients, lowering the premiums and out-of-pocket costs for people 50 to 64 years old and other health care related expenses.
The bill also aims to prevent government funding for abortion. It bans all money for Planned Parenthood and blocks the use of tax credits to pay for insurance plans that include abortion or abortion services.
For states that choose the Medicaid block grant option, family planning would no longer be a mandatory covered service.
For anyone who wants all the details, we recommend the side-by-side comparison work of the Kaiser Family Foundation.