The Republican bill to repeal and replace the Affordable Care Act would make significant changes to the U.S. health insurance system. It would unwind many of the taxes and coverage mandates of the law, also known as Obamacare. And it would gradually overhaul Medicaid.
The bill would affect incomes and health coverage for millions of Americans. Some people would be better off. Others would be worse off. The original bill could change as it makes its way through Congress, but here's an early forecast of some of the winners and losers.
Young, healthy people who should find cheaper insurance policies
Under Obamacare, insurance companies selling on the individual market are required to offer relatively robust coverage, and they can only charge their oldest customers three times as much as the youngest. This means young, healthy customers sometimes have to buy more coverage than they want, and pay a higher price for it. (That's one reason buy-in among young people has fallen short of expectations and why the resulting "risk pool" has been older, sicker, and more costly than expected.) The GOP replacement plan would allow insurance companies to sell more stripped-down polices, and they could charge their oldest customers five times as much as the youngest. The result should be cheaper, more attractive policies for the young and healthy. S&P Global Market Intelligence predicts the average premium for a 21-year-old would drop by about 20 percent, to around $2,600 per year, much of which would be covered by the plan's $2,000 tax credit. "Two-thousand dollars for someone in their 20s does go a long way, which is why we think there will be more people in that age group who can afford it and will sign up," says Deep Banerjee, director at S&P Global Ratings.
Residents of low-cost states
Subsidies for insurance customers under the Affordable Care Act are pegged to actual insurance costs in each region: higher where insurance (and medical care) are costly; lower where policies are more affordable. Under the GOP replacement plan, tax credits for each age group would be the same nationwide. That would be a boon for people in areas where insurance costs are low relative to the credits. (This interactive map from the Kaiser Family Foundation shows how the costs vary by state.)
Wealthy people who would see a tax break
Obamacare is funded in part through higher taxes on the wealthy, including a 3.8 percent tax on investment income and a 0.9 percent payroll tax for individuals making more than $200,000 and couples making more than $250,000. The GOP replacement plan would eliminate these taxes, giving a windfall to the wealthy. "Clearly the biggest winners are those people," says Roberton Williams of the nonpartisan Tax Policy Center, who notes the tax savings on $1 million in investment income would be $38,000. "That's not chicken feed."
Libertarians who want to take the risk
People who simply don't want to purchase insurance would no longer face a tax penalty for failing to do so. The penalty under Obamacare for 2016 was $695 or 2.5 percent of income.
Older, sicker people who would likely have to pay more for insurance
Under the GOP replacement plan, insurance companies could charge their oldest customers five times as much as their youngest — up from a maximum 3-to-1 ratio under Obamacare. S&P predicts the average premium for a 64-year-old would jump nearly 30 percent, to $13,125. The GOP plan's maximum tax credit of $4,000 would cover less than a third of that. S&P's Banerjee notes: "$3,500 or $4,000 for someone in their 50s and 60s really doesn't go a long way."
Residents of high-cost states
Unlike the insurance subsidies in Obamacare, tax credits in the GOP plan don't vary with regional insurance costs. So people who live in areas where health care and insurance policies are expensive may end up paying more for their own coverage.
The GOP replacement plan preserves Medicaid as-is through 2019, including the Affordable Care Act expansion, which is funded almost entirely by the federal government. Beginning in 2020, the GOP plan would limit the federal contribution on a per capita basis, while shifting control of Medicaid to the states. Depending on what happens to costs, states could be forced to provide skimpier coverage, reduce their Medicaid rolls, or both. S&P estimates there would be 4 to 6 million fewer Medicaid recipients by 2024.
For hospitals, the 20 million Americans who gained coverage under the Affordable Care Act means 20 million more paying customers. To the extent the GOP replacement results in fewer people having insurance, hospitals could be forced to provide more uncompensated care. The American Hospital Association urged lawmakers to "make continued coverage a priority," so as to avoid harmful impacts on "the backbone of the nation's health care safety net."
"There really needs to be an understanding of the fact that real lives are impacted," says Karen Teitelbaum, CEO of Sinai Health System in Chicago. "People who were just getting used to having care may feel that they don't have the choice now in terms of primary care physicians and good prenatal care. I'd hate to see people go back to using the emergency department or waiting till they're so sick that there's a very high cost to human life with this."
Not Affected (Directly)
People who get health care through an employer
Around half of all Americans get health care coverage through a workplace policy. These people would be largely unaffected if Obamacare gives way to the GOP replacement plan. The Affordable Care Act included a tax on so-called "Cadillac" insurance policies, but Congress has already postponed the effective date to 2020. The GOP plan would push that back further, to 2025. A survey by the Kaiser Family Foundation shows costs for employer-provided insurance have been rising relatively slowly in recent years, since the Affordable Care Act took effect. The slow growth in premiums has been partly offset, though, by rising deductibles and co-pays.
Win Some/Lose Some
Although insurance companies expected to benefit from additional customers under Obamacare, many companies have lost money trying to serve the individual market. S&P predicts insurance company profitability would improve under the GOP replacement plan. However, insurance companies could lose out on a growth opportunity in managing Medicaid for states.
AUDIE CORNISH, HOST:
Medical and consumer groups alike are warning that millions of people could lose their health care if Republicans make good on their promise to scrap the Affordable Care Act. But as their legislation makes its way through Congress, President Trump is saying pay no attention to the critics. Trump tweeted this afternoon that the end result will be, quote, "a beautiful picture." NPR's Scott Horsley reports what that picture looks like depends on where you're standing.
SCOTT HORSLEY, BYLINE: Every insurance system relies on a basic bargain. People pay in during good times so they can draw out when times are tough. With health insurance, people in good health subsidize those who are less so. And since none of us knows when we might get sick, we play along.
Obamacare adds two more subsidies to that basic formula. Young people are asked to pay more for insurance so older people can pay less, and the wealthy pay additional taxes to help cover costs for the poor. By undoing those subsidies, the Republican replacement plan would shift costs from young to old and rich to poor. The forecasting firm S&P Global estimates on balance, 6 to 10 million people might lose insurance coverage. But S&P director Deep Banerjee says more young people would likely sign up.
DEEP BANERJEE: We expect gains from individuals in the age group of 21 to 35 but losses from individuals in the age group of 45 to 64.
HORSLEY: That's because the Republican plan allows insurance companies to offer stripped-down policies that would be cheaper and more attractive for young people even as the price of policies for older customers goes up.
A typical 21-year-old, for example, might be able to find coverage for around $2,600 dollars a year, most of which could be paid for with a $2,000 tax credit from the government. But a 64-year-old trying to buy insurance might have to pay five times as much, and the maximum tax credit in the GOP plan of $4,000 would cover less than a third of that.
BANERJEE: Two-thousand dollars for someone in their 20s does go a long way, which is why we think there will be more people in that age group who can afford it and will sign up. But the 3,500 or 4,000 for somebody in the 50s and 60s really doesn't go a long way.
HORSLEY: So young people win, and older people lose under the GOP plan. There are regional variations as well. Unlike Obamacare in which subsidies are based on actual insurance costs in a given area, tax credits in the Republican plan are the same all over the country. That's good for people living where health care and insurance costs are low, trouble everywhere else.
The American Medical Association and the American Hospital Association have come out against the Republican plan. Both groups say they're worried about what would happen to the 20 million people who got coverage thanks to the Affordable Care Act.
KAREN TEITELBAUM: People who are just getting used to having care may feel that they don't have a choice now in terms of primary care physicians and good prenatal care.
HORSLEY: Karen Teitelbaum is CEO of Sinai Health System which operates four safety-net hospitals in Chicago. Before the Affordable Care Act, about 15 percent of her patients were uninsured, and the system spent $50 million a year on charity care. Both those figures have been cut in half thanks to Obamacare. Teitelbaum says Sinai's been able to invest the savings in preventive health measures and improve treatment for mental illness, programs that could be in jeopardy under the GOP plan.
TEITELBAUM: We're going to have to perhaps cut back on services if the plan really rolls back coverage for those most in need because those are the very people that we see.
HORSLEY: So safety-net hospitals and their patients could be losers. Big winners include the wealthy. Obamacare is funded in part with extra taxes on people making more than $200,000 a year. Roberton Williams of the nonpartisan Tax Policy Center says scrapping those taxes would put tens of billions of dollars back in the pockets of the wealthy.
ROBERTON WILLIAMS: It's almost all the very richest tax payers. And the bulk of the money is coming from people in the very top 1 percent, people with incomes over about $700,000 a year.
HORSLEY: Republican House Speaker Paul Ryan wants the House to pass the repeal and replace bill within weeks. Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.