What Does an ObamaCare Repeal and Replace Plan Mean For America?
We will explain both “what will happen if ObamaCare is repealed” and “what will happen if the latest repeal and replace plan goes through.”
House Republicans passed the latest version of their repeal and replace bill 217-to-213 on Thursday May 4th, 2017. The bill will now go to the Senate for review and another vote.
That repeal and replace plan repeals some of ObamaCare’s provisions and replaces others (it is not a full repeal plan; although this page will essentially explain the effects of a theoretical full repeal).
Here are the basics:
- “ObamaCare” is a name given to the Affordable Care Act and its related rules, regulations, and legislation.
- “TrumpCare” is a name given to all changes to healthcare under Trump.
- This means each term describes a variety of different things.
What is happening in general is that “TrumpCare” (so far a few rules and an executive order) is replacing portions of “ObamaCare.” That doesn’t mean much at the moment, but it could mean some pretty drastic things if the latest bill passes.
A Summary of What Will Happen if the Latest Bill Passes
Under the Republican plan industry and large employers get big tax breaks, cost assistance will be based on age (which means lower amounts for many), and the sick and elderly will be able to be charged more in some states, Medicaid expansion funding will be frozen, and there will be a 12 month long 30% penalty if you drop your plan for any reason and want to reenter the market.
Those with preexisting conditions won’t be barred from coverage, but will potentially face limited benefits, lifetime and annual dollar limits, and higher premiums.
This means people will likely be barred due to cost (an estimated 20 million plus according to the CBO), especially in states that waive essential health benefits and ratios for what consumers can be charged.
However, in general, anyone who can keep up with payments will be able to keep their coverage (as the bill stands now.) Keep in mind the bill needs to pass the Senate to become a law; we could still see major changes, or it could not pass the Senate at all.
What ObamaCare Provisions are on the Line?
The list below includes ObamaCare’s major provisions, including the ones that this first phase of TrumpCare will get rid of (assuming it passes the Senate and no changes are made).
Further iterations of TrumpCare could take away more provisions (or add more), but we aren’t there yet.
TIP: Under a full repeal of the ACA, all the provisions below would be eliminated. Under the current bill, only some things are changed or eliminated (see notations below).
The list below features ObamaCare’s benefits, rights, and protections. It includes annotations to show what is changing under the new bill:
- Letting young adults stay on their parents’ plan until 26
- Stopping insurance companies from denying you coverage or charging you more based on health status CHANGES: They will now be able to charge more based on health in some states which could result in lost coverage.
- Stopping insurance companies from dropping you when you are sick or if you make an honest mistake on your application
- Preventing gender discrimination CHANGES: TrumpCare doesn’t remove all gender discrimination bans or bring back a ratio for women, but it does change a lot for women.
- Stopping insurance companies from imposing unjustified rate hikes
- Doing away with lifetime and annual dollar limits CHANGES: The state based waivers allow these to be reinstated on a state level. So this is changing, but not fully eliminated.
- Giving you the right to a rapid appeal of insurance company decisions
Expanding coverage to tens of millionsby subsidizing health insurance costs through the Health Insurance Marketplaces (HealthCare.Gov and the state-run Marketplaces) CHANGES: Open enrollment and healthcare.gov will continue, and people can still get cost assistance, but out-of-pocket cost assistance is eliminated and tax credits are based on age, so less people will be able to afford coverage. Expanding Medicaid to millions in states that chose to expand the programCHANGES: Medicaid expansion is frozen, so it will no longer be “expanded.” States can still keep their Medicaid program, they just wont get additional funding after 2018 (subject to change). Providing tax breaks to small businesses for offering health insurance to their employeesCHANGES: Small employer tax breaks are gone. Requiring large businesses to insure employeesCHANGES: The mandate to offer coverage to full-time workers is gone.
- Requiring all insurers to cover people with pre-existing conditions
- Making CHIP easier for kids to get (questionable)
- Improving Medicare for seniors (questionable)
- Ensuring all plans cover minimum benefits and ten essential benefits including free preventive care, OB-GYN services with no referrals, free birth control, and coverage for emergency room visits out-of-network. CHANGES: The requirement to cover OB-GYN, birth control services, and other essential benefits on all plans are some of the benefits, rights, and protections in the ACA. The new plan allows for waivers on a state level for essential health benefits, that means people in Republican led states will likely get to choose from plans that don’t cover essential benefits (if the bill passes as is).
Depending on what happens some ore none of the above changes to the ACA may be made, as you can see most of it is some sort of “replace” plan and not a full repeal (which is, for supporters of the law, a better thing than not).
To clarify the above, the new plan that passed the House (The latest Republican bill to repeal and replace ObamaCare, the American HealthCare Act) specifically:
- Repeals the mandates for both individuals to pay a fee for not having coverage and for large employers to insure their employees.
- Freezes Medicaid funding to states beginning in 2018 (this freezes federal funding so states can’t continue to expand Medicaid without raising state taxes).
- Eliminates most of ObamaCare’s taxes on those with higher incomes, employers, and industry (i.e. the bill is most tax breaks for the top fraction of a percent).
- Replaces tax credits and out-of-pocket assistance based on income with tax credits based on age and no out-of-pocket assistance. Income-based assistance like Medicaid remains. Notably, tax credits are offered to those making 400% – 600% of the poverty level. This is unlike ObamaCare and may have a positive impact on people.
- Charges a 30% Fee for 12 months for entering or reentering the market for those who don’t obtain coverage during open enrollment and then maintain coverage.
- However, it doesn’t do the litigation reform, allow sales across state lines, or make the transparency reform promised on Trump’s site. To be fair this is, even if only unofficially, supposed to be phase 1 of 3.
NOTE: The plan also does a few odd things that likely won’t pass the Senate, these include provisions that make it so Planned Parenthood can’t be reimbursed for Medicaid.
Meanwhile, that bill includes an amendment called “the MacArthur Amendment.”
That amendment allows states to undo key ObamaCare protections at a state level.
This will, in many cases, result in Republican-led states being able to charge the sick and elderly more while giving younger and healthier people a break, in the name of “encouraging fair health insurance premiums.”
To offset the fact that the sick can be pushed out of the market on a state level, and to attract insurers to states to increase competition, it also creates a risk adjustment program (like ObamaCare had).
It does all of this via three waivers:
- A waiver for community health ratings so the sick and elderly can be charged more,
- A waiver for essential health benefits so states can exclude certain conditions for annual, lifetime, and other cost sharing limits, and
- A waiver that allows for risk adjustment measures including an “invisible risk pool” which we explain below.