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June 28, 2017

The “Pay More for Less” Health Plan

As long as the Senate is changing the name of the “American Health Care Act” (AHCA), they ought to come up with something that paints a more accurate picture of the bill.  Rather than their dull and misleading title, the “Better Care Reconciliation Act of 2017,” the Senate should call its bill the “Pay More for Less Plan.”

In the Senate’s version of ACA repeal, people in the individual insurance marketplace, especially the poor and older adults, will end up paying substantially more in premiums and deductibles for less generous plans.  The revised bill:

  • Links premium tax credits to less generous health coverage (bronze level plan rather than the current silver plan), effectively making across-the-board cuts to premium tax credits.
  • Reduces premium tax credits for older people while increasing them for younger people.
  • Eliminates tax credits for people with incomes between 350% and 400% of the federal poverty level ($42,000 to $48,000 annual income for a single person).
  • Allows insurers to charge older people up to five times as much as younger people in premiums (currently 3 times as much).
  • Like the House plan, makes people ineligible for premium tax credits if they have any offer of employer insurance, no matter how skimpy or unaffordable it may be.
  • Beginning in 2020, eliminates cost sharing reductions – subsidies that help reduce deductibles, co pays and co-insurance for lower-income consumers.
  • Despite the rhetoric, discriminates against people with preexisting conditions by allowing states to choose not to cover essential health benefits – meaning people might be able to buy insurance but it might not cover their necessary diabetes medication or other prescription drugs, cancer treatment, mental healthcare, or substance use treatment.

A new analysis from the Center on Budget and Policy Priorities (CBPP) finds that Wisconsinites who earn 150% of the federal poverty level (FPL), whether they are 30, 45 or 60 years of age, would all see an increase in premium payments under the Senate bill, even after accounting for premium tax credits (see Table 1).  Sixty-year olds in Wisconsin would see the highest increases in premium costs, from an increase of $1,916 for an individual at 150% of FPL to $5,006 at 350% of FPL.

Table 1: Premium Changes in Wisconsin Under Current Law and Senate Changes (includes tax credits)
150% FPL 300% FPL 350% FPL
Age Senate Bill Change from Current Law Senate Bill Change from Current Law Senate Bill Change from Current Law
30 1,340 +549 2,882 -874 4,336 -46
45 1,608 +817 4,119 +362 6,447 +2,064
60 2,706 +1,916 6,463 +2,706 9,389 +5,006
Source: Center on Budget and Policy Priorities   (Note: Assumes state average benchmark premiums)

 

The CBPP analysis also found that out-of-pocket spending will skyrocket for consumers. Those especially hard hit will be marketplace consumers with incomes below 250% of the poverty level, who would lose cost sharing reduction subsidies under the Senate bill (beginning in 2020). As the following bar graph illustrates, these individuals would see a $5,800 per year increase in deductible payments (from $500 per year now to $6,300 in 2020). People above 250% of the poverty level would have their deductibles increase from $3,000 to $6,300.

Cost of Deductibles - CBPP - Senate plan

The Affordable Care Act is not perfect, but the Senate’s “Better Care Reconciliation Act” is far worse. It gives a massive tax cut to the wealthy while cutting health care for low-income people and seniors. Those people who can afford to purchase coverage on the “better” marketplace will pay significantly more for plans that will cover less. Health insurance that you can’t afford to use or that won’t cover your healthcare needs won’t do you much good, but, thanks to the Senate’s “Better Care Reconciliation Act” at least you’ll pay for it.

Sashi Gregory and William Parke-Sutherland