President Donald Trump is doing his best to make good on his campaign promises, and one of the biggest was that under his administration, the Affordable Care Act, or Obamacare, would be repealed swiftly and replaced with something better. When Republicans moved shortly after Election Day to begin the process of repealing the law, Trump insisted that a replacement law would be introduced just about simultaneously.
As a first step toward fulfilling that promise, House Speaker Paul Ryan today unveiled the broad outlines of a plan that would replace Obamacare once it's repealed. Although House Republicans' proposal leaves some questions unanswered, it does provide some big clues as to how health insurance is likely to change for all of us in a post-Obamacare world.
To enact the changes more quickly, and avoid being blocked by congressional Democrats, Republicans plan to make these changes using the budget process. That means the repeal of Obamacare and enactment of the new law can be passed by a simple majority, but it limits the changes to matters that directly affect the budget.
Here's what we know so far:
1. You won't have to pay a penalty for not buying (or offering) insurance.
Some of the most unpopular provisions of Obamacare are the individual and employer mandates. Individual mandates require taxpayers not covered by their employers to purchase health insurance or pay a penalty. Employer mandates require employers with 50 or more employees to either offer insurance to those employees or pay penalties. Although both individual citizens and employers objected forcefully to these mandates, they were intended to compel younger, healthier people to obtain insurance coverage, thus allowing insurers to pay for expanded coverage as required under Obamacare and still make a profit. But insurers report that even with the penalties in place, not enough healthy people signed up for insurance under Obamacare. In the Republican proposal, these penalties would go away immediately.
2. You'll be able to contribute more to your HSA.
If you're earning enough that you need bigger tax deductions, the Republican proposal is good news for you. They say they will increase tax-deductible Health Savings Account contributions to the maximum level allowed by law. That would increase maximum annual contributions from $3,400 per individual and $6,750 per family up to $6,550 per individual and $13,100 per family.
For clarity, Health Savings Accounts are savings accounts that individuals or families are legally allowed to contribute to only if they have high-deductible health insurance. They are different from the Flexible Spending Accounts many employers provide to employees, which are not affected by the proposed changes.
3. Funding for Medicaid expansion will be cut.
Obamacare expanded Medicaid programs in states that participated in that expansion, and according to the Congressional Budget Office, providing health insurance to 12 million people who could not afford it otherwise. Under Obamacare, the federal government paid 90 percent of the cost for these newly eligible Medicaid recipients, but the Republican proposal would cut that to 50 percent, and replace open-ended payments with capped "block grants" to states. That means states could conceivably run out of money to cover Medicaid recipients. As The New York Times notes, that change would not only affect poor people, but also elderly people who need extended nursing home care and often rely on Medicaid after their own funds run out.
4. If you were earning too much for a tax credit under Obamacare, you'll get one now.
One important feature of Obamacare is the income-based tax credit that subsidizes health insurance costs for those with low, or even mid-level incomes. The Republican proposal will replace that subsidy with a tax credit based entirely on age. On one hand, this is logical: Health insurance premiums go up as you get older. On the other hand, it may mean that wealthy older people will get credits they don't really need, while poorer younger people may no longer be able to afford insurance.
Also, under the current rules, you're only eligible for the tax credit if you purchase your insurance through one of the state exchanges. Under the Republican proposal, anyone who buys insurance will be eligible for the age-based tax credit.
5. It will be easier to purchase insurance across state lines.
The Republican proposal would make it easier for people to buy insurance from a company in another state, one of the key improvements Trump promised for his Obamacare replacement. But for that to work, insurers have to be willing to sell insurance across state lines, which would mean a huge expansion in the number of doctors and hospitals they work with. Will insurers offer insurance across state lines? We don't yet know.
6. Insurers will still have to cover wellcare and can't charge you more because your health is bad.
Obamacare requires insurers to cover a specific bundle of treatments, many of them preventive "wellcare" items such as mammograms and colonoscopies. Republicans have said they would like to change these rules but because they don't directly affect the budget they can't be changed as part of budgeting.
Unanswered Question: What will happen to people with pre-existing conditions?
One of the most popular provisions of Obamacare disallows insurers from refusing coverage to those with pre-existing conditions. What will happen to that rule in the Republican replacement for the law? The proposal doesn't answer that question. It may be that because they are using the budgeting process, Republicans can't change that rule even if they want to.
Before he became secretary of Health and Human Services, Tom Price was one of the only Republicans to offer a detailed plan to replace Obamacare. In his plan, insurance companies were required to cover those with pre-existing conditions, but only those who had not had a gap in their coverage over the previous 18 months. (Insurers complain that many people don't buy insurance until after they get sick.) Will that rule be part of the new law Republicans plan to introduce? We'll have to wait and see.