Several health care industry experts have expressed serious concerns about three key areas of the Republican health care bill unveiled this week, proposed as a replacement for the Affordable Care Act, also known as Obamacare.
Some doctors and hospital groups worry that people with lower incomes or who are closer to retirement age would be likely to receive fewer tax credits from the government to help them buy their own insurance than they do through current ACA subsidies. As a result, single people or families who do not get insurance from their employers could end up paying a lot more for coverage out of pocket and may not be able to afford it.
Secondly, experts fear the bill could cause too much uncertainty and create negative effects in the insurance marketplace. Without some of the incentives to get young, healthy people to buy insurance, which helps keep costs down, premiums could rise even higher.
And lastly, they are concerned that by freezing and rolling back the broader requirements to qualify for Medicaid — a government insurance program that helps poor and disabled Americans, as well as students — fewer people will be insured through the program, which is the largest source of healthcare in the nation.
“The replacement bill, as written, would reverse the coverage gains achieved under the ACA, causing many Americans to lose the health care coverage they have come to depend upon,” Dr. Andrew W. Gurman, president of the American Medical Association, wrote in a letter sent from his organization to Congress this week urging lawmakers to rethink the bill.
Though the AMA has, in the past, supported the idea at the heart of the bill — to use refundable tax credits to assist people in buying insurance — the letter went on to criticize the new Republican plan, which determines the size of the tax credit based not just on income, but also on age.
“We believe that credits should be inversely related to an individual’s income,” the letter continued. “This structure provides the greatest chance that those of the least means are able to purchase coverage.”
In telephone calls with ABC News, experts from think tanks and universities said high-income earners would likely benefit most from this plan.
“The thing that is completely gone is the tax increase on high-income people. You need to then pay for that somehow, so they pay for it in two ways: One is with really, really drastic Medicaid cuts and second is by reducing the subsidies for people to buy coverage,” David Cutler, professor of applied economics at Harvard University and former administrator at the National Institutes of Health, told ABC News.
“Huge Medicaid cuts, huge subsidy cuts for low- and middle-income and big tax cuts for high-income people,” he added. “That is the strategy.”
Tax credits may not be enough to pay for individual insurance
While financial services company Standard & Poor’s has estimated that 10 million people could end up losing their coverage under this plan, Cutler said he thought the number could be twice as high.
Matt Fiedler, fellow in economic studies at the Center for Health Policy at the left-leaning Brookings Institution, agreed. He said tax credits, funded at the level Republicans are proposing, could lead to people dropping out of the market.
“They are substantially less generous for people at the lower end of the income scale. So if [Republicans’] position is that insurance is not affordable now, for people at the lower end of the income scale there is no way it is going to be affordable with the tax credits provided here.”
Bigger gap in premium prices between younger and older adults
In addition to the controversial tax credits, the Republican bill reverses part of the Affordable Care Act, which prohibited insurance companies from charging older people more than three times what they charge younger people. With that part of the law gone, premiums could go up for some of the country’s sickest people.
The AARP wrote a statement opposing the bill, citing the potential effect on older Americans.
“Before people even reach retirement age, big insurance companies could be allowed to charge them an age tax that adds up to thousands of dollars more per year,” the statement said. “Older Americans need affordable health care services and prescriptions. This plan goes in the opposite direction.”
Both Cutler and Fiedler argue that if fewer people can afford insurance that could have a negative effect on the prices and benefits for people who do still buy plans. Namely, if people drop out of one market, insurance companies may be less inclined to offer plans.
Could result in fewer choices
Republicans have argued that the current law was in need of saving, in large part because Americans looking to buy their own insurance have had fewer and fewer options on government-run marketplace exchanges.
“Options are disappearing fast,” House Speaker Paul Ryan said Thursday morning. “If we did nothing, simply washed our hands of this … the collateral damage to this country would be awful. More and more people would see zero choices.”
When insurance companies opt out of offering plans, the market can, as the industry says, “death spiral.”
But Cutler told ABC News he was not convinced that the new plan would help this problem.
“For all the talk of ‘death spirals’ in the Affordable Care Act, this is perfectly designed to produce ‘death spirals,'” Cutler said. “Given the price, anyone who is at all healthy will opt out. The subsidies don’t make up for it. So, what you are going to see is this continual erosion of the market.”
And that, in turn, will not be attractive to health insurance providers.
“Bottom line, you are looking at a much more uncertain environment,” Fiedler said. “One thing we have learned in the last few years is that insurers often are just not willing to participate in market where there is uncertainty.”
Impact on Medicaid could result in poorer Americans losing care
Millions of Americans have received insurance in the last eight years directly from the government under the Medicaid program. Under the Obamacare law, states were given an option to increase the number of people who would be eligible for the program.
While the Republican plan allows people who currently qualify for Medicaid in their states to stay in the program, it overturns the rules that allowed for more people to be eligible as of 2020. It also says that states will be allowed to offer Medicaid plans that do not necessarily cover essential health benefits, defined and required under President Obama’s plan, including maternity care and preventative services.
The national Children’s Hospital Association spoke out against this part of the bill.
“The American Health Care Act will move the Medicaid program to a per capita cap system and limit future federal funding to the states, risking significant reductions in the Medicaid budgets providing the care for over 30 million children. If enacted in its current form, the bill could negatively impact children’s ability to get the necessary care required for their health.”