Worried about Trumpcare And What The Healthcare Plan Will Offer?
House Republicans managed to get enough votes – barely – to pass the American Health Care Act, and or Trumpcare, through the lower chamber of Congress on Thursday, May 4th, 2017. No Democrats supported the bill, and quite a few Republicans objected as well. The controversial healthcare proposal introduced by conservatives in March failed to garner enough support to get a vote when it first got passed around, but the revised version was enough to sway far-right holdouts and some moderates, allowing the bill to pass in the House. Since yesterday, there’s been outcry from all sides of the political spectrum, combined with fear from millions of Americans who worry that Trumpcare might force them out of their insurance plans for good.
We’re here to answer your questions about Trumpcare, we understand you may have many concerns. There’s a lot that we don’t know about the new healthcare bill, but there are also quite a few rumors and plenty of unfounded speculation circulating the news that it might not be in your best interest to pay much attention to.
For starters, it’s important to note that the bill has not replaced the Affordable Care Act (Obamacare) – yet. Right now, the AHCA has only passed in the House, which is the lower chamber of Congress. It still has quite the uphill climb in the Senate, where it might die altogether. Trumpcare is even less popular with senators – Democrats and Republicans – than it was with moderate Republican representatives.
To reiterate: the Affordable Care Act is still the law of the land right now, and it will be until the new healthcare bill passes the Senate and gets signed into law by President Trump. The Senate has not released an official timeline for when they might even bring the bill in to the floor for debate, let alone voting. Nothing about your healthcare will change until the new bill becomes law, and it has not become law yet.
Let’s outline what we know about the American Health Care Act (Trumpcare) as of right now:
#1 – States now have greater power.
Republicans are adamantly opposed to wide sweeping federal power, believing that states should retain control over the day-to-day operations of their governments. As such, the AHCA returns power to the states that Obamacare relegated to the federal government. Under Trumpcare, states would be able to:
- Stop Medicaid expansion (and be incentivized to do so)
- Choose from two options for Medicaid funding: per-capita grants based on Medicaid enrollment or an upfront block grant
- Require Medicaid recipients to work
- Decide whether to include the 10 essential health benefits defined by the Affordable Care Act; they could also decide which benefits to include in mandated plans on the exchanges
- Charge people with pre-existing conditions more for health insurance if their coverage lapses
This last point regarding charging more for pre-existing conditions does come with restrictions. States could not just decide to drop people with medical problems from their plans. In fact, as discussed in the next point, people with pre-existing conditions will not be denied access to coverage under Trumpcare, there are however many unknowns as to whether or not they would have coverage options that are better or worse than what Obamacare provides them with.
As the AHCA is written currently, states can now allow insurers to charge more based on medical underwriting, similar to how things worked before Obamacare, if people with health problems allow their coverage to lapse for more than two months. The states would have to set up high-risk pools in order to do this, and they would have to allot funding to help people with pre-existing conditions cover the higher cost of premiums. The AHCA creates a “Patient and State Stability Fund” to help states cover these costs, though critics argue that it’s woefully insufficient in terms of actual funding. States would also have to demonstrate that their high-risk pool would benefit consumers as a whole.
Even more disconcerting to some is the states’ ability to waive the 10 essential benefits requirement under the ACA. Republicans celebrate this measure as a way to give consumers more control over their healthcare packages, something they’ve been lobbying for since the ACA was first created.
On one hand, allowing insurers to offer less expensive, less comprehensive policies may benefit some consumers and insurance companies as a whole, which could lure them back into the individual market since they would no longer be losing money on plans no one was buying. On the other hand, this also means that states could offer bare-bones plans, and people who really need more comprehensive coverage would be unable to afford more robust insurance.
#2 – Pre-existing conditions are still covered.
One key point of contention over the new healthcare bill is how the AHCA handles pre-existing conditions. In December 2016, Kaiser Family Foundation analyzed the impact of new healthcare legislation on people with medical problems. They estimated that before Obamacare, about 27 percent of the U.S. adult population under age 65 would have been uninsurable based on widespread medical underwriting policies. In other words, 27 percent of people have a pre-existing condition that makes them too costly to insure.
Under Trumpcare, the same provision for pre-existing conditions exists as it does under Obamacare: insurers cannot deny access to health insurance based on medical underwriting. However, there are new stipulations attached to this provision.
If the AHCA became law, people with pre-existing conditions would have to maintain continuous coverage in order to keep paying the same rate as healthy people. Right now, a system known as community rating keeps health insurance level across age groups. If you have a chronic condition, such as asthma, then you’ll pay the same for your health insurance as someone who doesn’t (within the same age demographic). Under Trumpcare, this could change.
Let’s say that you do have asthma and have health insurance, but you lose your job and therefore your coverage. If you went too long without a new plan, then you would be subject to medical underwriting the next time you buy a policy. There’s no limit on the increase in pricing, either, which could force millions of people out of the individual marketplace once more.
You should also know that the definition of “pre-existing condition” still remains at the discretion of insurers, but it does not – in most cases – include things like sexual assault and domestic violence. One popular but false story circulating right now is that the AHCA forces victims of sexual assault or domestic violence to disclose this information, effectively penalizing them for being victims of a crime. This is not true. Most states already have laws in place that prevent insurers from discriminating based on a history of domestic violence and sexual assault, and it’s not a practice that insurers typically adopt anyway, for obvious reasons. Trumpcare will not force victims of rape, for instance, to pay more for health insurance solely based on this aspect of their medical history.
#3 – Financial assistance will change.
Obamacare created different forms of financial assistance for low- to moderate-income Americans who needed help paying insurance premiums and covering certain out-of-pocket expenses. You’re probably familiar with these subsidies since well over 8 out of 10 people qualified for tax credits on the Obamacare exchanges. Subsidies, also called advance premium tax credits, varied based on a number of factors, including where you lived and your income. Under Trumpcare, financial assistance still exists, but it’s limited.
The AHCA allows for subsidies based on age alone, with older Americans getting a higher credit. Individuals can get between $2,000 and $4,000 per year while families might get up to $14,000. These amounts might sound reasonable, but they’re far less than the current subsidies under Obamacare, and older people will be hit the hardest by the reduction in tax credits. This is because older people could be charged up to five times more than younger people for health insurance. Under the ACA, the age-based ratio is 3:1 instead of 5:1.
This feature of the AHCA would reduce premiums for younger, healthier enrollees while increasing prices for older, sicker Americans by 2026. Next year, however, the bill would increase premiums by about 15 percent for everyone before leveling out over the next 10 years. According to a Commonwealth Fund analysis, everyone over age 47 would face higher premiums under Trumpcare. And based on the new, lower premium credits, health insurance might become unaffordable for the age demographic most affected by the changes.
#4 – Essential benefits may be modified.
Obamacare required all health plans created after March 23, 2010 to cover 10 essential health benefits. These are:
- Preventive care
- Outpatient services
- Hospital services
- Maternity care before, during and after labor
- Pediatric services
- Lab testing
- Rehabilitative care and equipment
- Mental health services
- Prescription drugs
- Emergency services
No matter the plan type or how much you pay for it, if you buy a new major medical policy, whether it’s an individual plan (on or off the marketplace) or one that’s sponsored by your employer, then your coverage includes these benefits. The only difference is in how much you’ll have to pay out of pocket for each service, which is determined by your tier of coverage.
In its original form, the AHCA kept this provision of Obamacare, but the revised version includes an amendment that allows states to apply for a waiver to the essential health benefits requirement. There are advantages and disadvantages to this proposal. Pros include:
More flexible plans
Supporters of this proposal point to the fact that current major medical plans are costly because they must cover a host of benefits as outlined above. People who will never need certain services, such as maternal or pediatric care, still have to pay for policies that cover these benefits. Under Trumpcare, states could be allowed to let insurers create more flexible levels of coverage for people. Younger, healthier people who wanted fewer benefits for a lower cost could get policies to fit their needs. Insurance companies wouldn’t be forced to offer comprehensive coverage to its entire risk pool. Flexibility could spur enrollment and insurer participation in the individual, exchange-based market.
Greater insurer participation
One of the primary reasons that insurance companies started pulling out of Obamacare exchanges was financial loss. They were required to offer comprehensive policies, but not enough healthy people signed up to offset the cost of covering people who needed greater care. If states were allowed to define essential health benefits – and allow insurers greater flexibility in creating policies for people – then insurers may be more inclined to re-enter the exchanges since they could, theoretically, recoup their losses with better nationwide enrollment. More insurers mean more choices, and it could drive up competition as insurance companies competed to offer better coverage at reasonable prices.
The MacArthur amendment, which is the name given to a series of last-minute amendments to the AHCA designed to sway rightwing House members into voting for it, succeeded in getting enough support from conservatives to pass. But it’s not universally popular, and there are disadvantages to allowing states to pick and choose which essential benefits to mandate, including:
Fewer benefits for sick people
The ACA mandated essential benefits to make sure that people who needed robust healthcare could get it, even if it meant distributing the cost of that care to everyone (healthy and sick) who has insurance. If states are allowed to cut down on essential benefits, then the people who really need care may not be able to afford it. The AHCA does protect people with pre-existing conditions in that they can still purchase health insurance. However, there’s no regulation on cost, meaning states could create high-risk pools that effectively price people out of the market. Meanwhile, plans could become less comprehensive. If you have a chronic diseases, such as diabetes, then you know that you need to see a doctor more frequently than someone without health problems. You also need medication and other medical services that a healthy person doesn’t. Under Trumpcare, your health plan may eliminate benefits that it considers unnecessary, including prescription drugs.
The potential impact on employer-sponsored plans
One argument against allowing states to define essential benefits is that it has a ripple effect on employer-sponsored health plans. Nearly all of the discussion on healthcare reform has been centered on the individual, non-group market since employer plans still account for a majority of the health plans in America. But Trumpcare could change that. To understand why, we need to break down how the ACA affects catastrophic coverage.
Under Obamacare, there are limits on how much you’ll have to pay out of pocket in a plan year. It’s set up like this so that medical bills don’t become unduly burdensome. Likewise, insurance companies can’t place a cap on their coverage (lifetime limits). As long as you’re paying your premiums, your insurer can’t decide to stop paying covered claims. Here’s the thing: catastrophic limits only apply to essential health benefits under the ACA. Insurance companies operate within the guidelines of their states. But for large employers with presence in multiple states, they can take their pricing and regulation cues from any state.
Right now, this loophole doesn’t matter since every state is subject to federal guidelines regarding essential health benefits. Under Trumpcare, however, states could apply for a waiver of this mandate, which may allow large employers to choose a state with fewer essential health benefits, thus narrowing its definition of lifetime limits and caps on out-of-pocket spending. Opponents of the measure argue that allowing states to choose benefits creates a slippery slope not only in the individual market but in the group one as well.
#5 – Medicaid will be radically altered.
Medicaid has existed since 1965, and it’s been funded essentially the same way over the last 50 years. Right now, each state Medicaid program gets open-ended funding from the federal government. It’s at least dollar-for-dollar, meaning that for each dollar a state spends on Medicaid, the federal government matches it.
Trumpcare wants to change Medicaid in significant ways, primarily funding. Under Trumpcare, states could choose to fund their Medicaid programs in two different ways: per-capita caps or block grants. Per-capita funding would give states a set dollar amount for each enrollee. With a block-grant system, states would receive a lump sum for their entire program regardless of how many enrollees they had. Both measures would limit how many people a state could enroll, and states would be forced to come up with ways to improve spending on Medicaid in order to take care of those who needed help.
Funding isn’t the only thing that Trumpcare would change. Traditionally, Medicaid served low-income people in specific groups, such as pregnant women, children and people with certain disabilities. Under the Affordable Care Act, Medicaid was expanded to include everyone who earned less than 138 percent of the poverty limit. The U.S. Supreme Court ruled that states could choose whether to expand their programs or not (31 did, plus the District of Columbia), but states have always set their own guidelines for eligibility.
The AHCA would end this expansion nationwide. States could still set their own guidelines, but there wouldn’t be any incentive in doing so since federal funding would be capped per person or per program without regard to actual enrollment. In other words, states wouldn’t have the money to expand their programs. Expansion would end on January 1, 2020 under Trumpcare. After that date, states could no longer enroll people under expanded federal guidelines.
Finally, states could also introduce work requirements for Medicaid under the AHCA, a first for the program. Some conservatives argue that forcing able-bodied Medicaid recipients to work would ease the burden on the program as a whole by reducing the number of people who are dependent on government-funded health insurance in the long run.
#6 – Mandates are gone.
Arguably the most unpopular provision of Obamacare, individual and employer mandates would be eliminated under the AHCA. The individual mandate requires every eligible American citizen (practically everyone) to have health insurance, whether that’s through a job, individual policy or government program. If you don’t sign up and you’re eligible, then you’ll pay a fee (shared responsibility payment) when you file your taxes. Large employers have similar obligations. Obamacare requires employers to provide health insurance to their employees if they have more than 50 workers. They also pay a fine (per employee) if they fail to meet this obligation.
No one liked the mandates, but some argued that the individual mandate was necessary to encourage young and healthy individuals to sign up for health insurance. Without it, there’s no motivation for healthy people to get coverage since Obamacare made plans guaranteed-issue. If you don’t have any health problems, you could skip insurance and just sign up when you develop a condition or break your leg. The mandate was designed to ensure that people signed up for coverage before there was a problem, which saves money.
Trumpcare eliminates the mandates entirely. However, the new law would allow insurers to impose a penalty that effectively acts as a surrogate mandate. If you buy a policy, lose it or drop it for more than two months, and then reapply for coverage later, then your insurer can charge a penalty fee of 30 percent on top of your premiums. The fee would last for the duration of your plan year. For some, the 30 percent penalty won’t make much of a difference. But for others, particularly low-income families, that 30 percent surcharge could be the difference between being able to buy health insurance and not. Opponents of the AHCA argue that the bill’s other features – less robust coverage and cuts to Medicaid – could force a lot of people into coverage gaps. This would in turn lead to a penalty charge once people can afford coverage again.
Changes in the Works
These are the facts that we know so far, but much of the American Health Care Act may change once the Senate takes over. Several senators have been outspoken in their frustration with the current bill. Sen. Lamar Alexander (R-Tenn.) is just one of several conservative lawmakers who believes that the bill will change completely once senators start working on their own version. Alexander chairs the Health, Education, Labor and Pensions Committee, which will play a critical role in the success of Trumpcare. The Senate tends to be more moderate than the House, and senators may be able to strike a better compromise. In fact, several Republican senators are not willing to drop Medicaid expansion or protections for people with pre-existing conditions.
The Senate has not offered a timeline for its debate or vote on the American Health Care Act. Unlike the House, the Senate is not willing to push through legislation without carefully reviewing and understanding its economic and political impact. Millions of Americans await the fate of healthcare reform in the meantime.
In closing we want to remind you that it is critically important that you stay updated with the latest developments with Trumpcare. It’s not law yet, and there are any expected revisions that will be forthcoming from the new version the Senate is expected to bring forward. That’s one version that’s being drafted by a mostly Republican and entirely male group, this hasn’t gone unnoticed. So we can only speculate at this point about that versions future, but we think it is safe to say that there very well could be a second or third version coming from various members or groups within the Senate.
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