This article was last updated on March 30
[Latest Update] The repeal and replacement of Obamacare via the American Health Care Act, the Ryan-Trump administration proposal, is officially on hold following a lack on unity across the Republican party to get the AHCA bill approved in the House. With no Democrat member support, it had to be passed by all the factions of the Republican party to clear the house and to the Senate. However due to the various subsidies and tax credits in the AHCA bill, the ultra right wing members (House Freedom Caucus) did not provide the required support.
For now Speaker Ryan has said the AHCA bill is on ice and won’t be resurrected until later this year when it can be rewritten and garner more support. Trump instead is looking to focus on his tax reform plan in the year head.
The house GOP has announced their proposed first phase repeal and replacement of ObamaCare. They are calling this bill the American Health Care Act. It has the following features.
- Expanded tax credits and health savings accounts (HSA) for individuals. For those under 30, a $2,000 tax credit will be provide, while a person over 60 would be eligible for a $4,000 credit. The maximum credit for a family would be $14,000 annually. These refundable tax credits are subject to annual income limits ($75,000 for individuals and $150,000 for married couples)
- Reduced federal spending on tax subsidies and Medicaid. Medicaid expansion will only continue until Jan. 1, 2020, with enrollment and federal funding diminishing after that date
- Eliminating the employer and individual mandate (Obamacare penalty) to provide and carry health insurance. This has been the biggest issue for most republicans and voters, who feel it is just another government imposed tax. However the bill does state that their could be a 30% premium surcharge for those uninsured for more than 63 days
- High income earners medicare tax with AGI of over $200,000 ($250,000 married filers) face an extra tax of 0.9 percent This is in addition to an investment surcharge of 3.8 percent on income. Both these taxes will be eliminated under the AHCA.
- Creation of state-based high-risk pools for people who don’t have access to insurance. This would initially be federally funded with $15 billion annually, but will drop to $10 billion from 2020
- Two popular ACA provisions will stay in place. This includes the provision which allows children under the age of 26 to stay on their parents’ health plans and the inability of insurers to deny coverage or charge more for people with pre-existing medical conditions
- 5:1 rule vs 3:1. Under new health care laws insurance providers will be able to charge older customers up to five times more than younger customers. This is to line up with the higher cost of coverage for older Americans, but is nearly twice the multiple allowed under Obamacare
- The bill will repeal all funding related to public health concerns (under the Prevention and Public Health Fund) like Alzheimer’s research, diabetes prevention, heart disease prevention, anti-smoking initiatives and immunization. While this is needed to pay for the bill it will make a lot of special interest and impacted groups (mainly democratic) very unhappy.
The ACHA or TrumpCare bill will be reviewed over the next several weeks and it is expected to go through a lot of revisions as a number of Republicans (and virtually all Democrats) have already expressed reservations around these changes and coverage impacts for the 20 million Americans currently on Obamacare.
How will people be impacted if Obamacare (ACA) is repealed?
Based on the current provisions, the current plan to repeal the Affordable Care Act will probably benefit the rich and young the most. This is because a number of taxes – e.g the 0.9% high income and 3.8% investment tax – are being eliminated. This will save higher income earners billions in lower taxes. The Tax Policy Center estimates the average household from the top 0.1 percent of income distribution would save $31,000 a year if the tax on high salaries were repealed, and another $165,000 each year without the tax on investments.
[Update Jan 2017] – A Obamacare repeal and replacement may be more politically challenged than thought with a new Wall Street Journal/NBC News poll finds that 45% of Americans think the 2012 health law is a “good idea,’’ the highest mark since pollsters began asking about President Barack Obama’s vision for a health overhaul in April, 2009. The republican dysfunction over coming up with a viable replacement to Obamacare is also creating unease as reflected by some 50% of polled adults saying they had “very little confidence” or “no confidence at all” that Republicans could replace the health care law with a law that would make things better. That was greater than the 26% of people who said they had “quite a bit” or “a great deal of confidence” in that idea and the 23% who said they had “just some” confidence.
Will keep updating with any pertinent information, but feel free to share your comments below and check back in for the latest updates.
With Trump’s surprising win in the US presidential election and the Republicans retaining control of the House and Senate, it looks like ObamaCare’s viability is at serious risk. ObamaCare, officially known as the Affordable Care Act (ACA), has been long maligned by Trump and Republicans and the promise was that it would be repealed on day one of a new Republican presidency. But with over 20 million Americans on ObamaCare, repealing it without providing a replacement would be a politically unwise move, despite the ongoing complaints of increasing premiums and fines. Various other provisions under ACA laws like including covering those with pre-existing health conditions, free birth control and extended coverage for young adults under family health insurance plans, are very popular and not as easy to unwind.
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