Republican Healthcare Plan Devastating to Working Poor, Older Americans

The Republican healthcare plan’s first draft, unveiled on Tuesday and titled The American Health Care Act, has raised immediate concerns about the negative impact it will have on millions of people particularly older and lower-income Americans.

Under the new plan, Americans will no longer be required to purchase medical insurance but would provide a tax credit between $2,000 and $4,000, depending on the individual’s age, with older people receiving a higher credit. The amount does not vary by state, making the credit more valuable in areas with lower healthcare costs.

The plan would go into full effect in 2020.

Experts say the plan will leave millions of Americans uninsured. A report from S&P Global Ratings released Tuesday stated that, under the new proposed plan, “We expect a decline in enrollment in the individual (2 million4 million) and Medicaid (4 million6 million) segments, resulting in a decline in premiums.”

Some populations will see their premiums go down, while others will likely see costs skyrocket. Under the Affordable Care Act (ACA), insurers can charge a 64-year-old three times more for a policy than a 21-year-old. The Republican’s proposed plan will allow insurers to charge the older population five times more than younger people.

According to the report:

“For example, we assumed that average premiums for a 21-year-old would decline by 20% (given the wider age bands and some reduction in actuarial value of plans) as a result of the replacement plan. Using the average national premium price from the 2016 marketplace, a 20% decrease would mean annual premiums of $2,625 compared to average annual premiums of $3,281 for the 21-year-old. However, the wider rate band would mean premiums for a 64-year-old could increase almost 30%, resulting in annual premiums of $13,125 (5x higher than the 21-year-old) compared to $9,844 (currently, 3x higher than the 21-year-old). The proposed tax-credits of $2,000 in the replacement plan, although not covering the entire premium cost for a 21-year-old, would reduce it by almost 75%. The proposed $4,000 tax credit for a 64-year-old falls well short of the potential premium cost, reducing premiums by only 30%.”

Individuals who rely on Medicaid will also face significant financial hurdles, analysts predict. Sixty-nine million Americans are currently enrolled in Medicaid. Under Obamacare, Medicaid covers adults who earn up to $16,400 annually, and those who earn less than $30,000 also receive financial aid.

The Republican plan will repeal Medicaid expansion and leave financial decisions regarding Medicaid up to the states rather than it being a federal issue. Those who are receiving Medicaid prior to the new plan going into effect and who do not have a lapse in coverage exceeding one month will be eligible to remain on Medicaid.

But, CNN Money reports:

“But the Republican bill would go beyond just eliminating Medicaid expansion. It would overhaul the whole program, which covers more than 70 million people, by sending states a fixed amount of money per enrollee, known as a per-capita cap. This would limit federal responsibility, shifting that burden to the states. However, since states don’t have the money to make up the difference, they would likely either reduce eligibility, curtail benefits or cut provider payments.”

Other analysts have also suggested that the allotted tax credit will not be enough to cover premium costs.

“The central issue is the tax credits are not going to be sufficient,” Dr. J. Mario Molina, chief executive of Molina Healthcare, told theNew York Times.

Although premiums will likely be lower for members of the younger generation, if they are not penalized for not having coverage as mandated by Obamacare they may not be inclined to purchase insurance if they are otherwise healthy and will wait until they get sick to seek coverage. The Times further reported:

“The result, said Donald H. Taylor Jr., a health policy professor at Duke University, is that people who buy coverage are sicker, causing the cost of premiums to soar. ‘This looks like to me adverse selection on steroids,’ he said. ‘I don’t see how it doesn’t crater the individual market.'”

The wealthy will likely benefit from the new proposed plan, a Kaiser Health News report states. High-income Americans will no longer have to pay certain taxes that were required under the ACA, including a Medicare taxes and a tax on investment income. The measure will also help those who can already afford to save more in health spending accounts by allowing them to contribute more to these funds.

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