Change Is Coming

What Does The American Health Care Act Mean For Families?

On Monday night, House Republicans unveiled their formal replacement for the Affordable Care Act (ACA), commonly referred to as Obamacare. It’s no surprise: since its inception, the ACA has been met with resistance from Republicans because it increased taxes and forced many to fork over money for mandatory coverage. President Trump has repeatedly referred to it as a “disaster” and vowed to repeal it swiftly. The new bill, which will head to the Hill next week, offers a look at what could be the future of healthcare in the United States.

Known as the American Health Care Act (AHCA), the bill maintains some of the most popular clauses in the ACA. For instance, children can stay on their parents’ plan until the age of 26 and there will be no ban on coverage caps. However, some major components will be dismantled. Income-based subsidies are now gone, Medicaid has been completely restructured, and funding’s stripped from Planned Parenthood and other such institutions.

girl at doctor's office

Obviously, things are subject to change. The Congressional Budget Office, the nonpartisan organization that looks at governmental spending, hasn’t vetted the new plan for cost and efficacy. And, as of now, House Democrats and at least 4 Republicans have voiced their disapproval of the plan. But the big issue is what could this mean for you and your family? Here are a few things to know:

It Impacts Low-Income Families And Elderly More Than Young People

One of the Affordable Care Act’s main components was income-based subsidies. These credits were determined by income level, location, and age — and those who earned less (i.e. lower income families and the elderly) would receive more. In general, more than 80 percent of those enrolled in the ACA receive some type of subsidy.

The AHCA now replaces these income-based subsidies with age-based tax credits. These credits begin at $2,000 a year for people in their 20s and increase slowly over time. Everyone who earns less than $75,000 (or $150,000 per joint filing) would receive the same credit. Here’s how it works out:

  • Under 30: $2,000/year
  • Age 30 to 39: $2,500/year
  • Age 40 to 49: $3,000/year
  • Age 50 to 59: $3,500/year
  • Age 60 and above: $4,000/year

So, let’s say you’re 40. You’ll receive $3,000 per year, which comes down to $250 a month to pay for your subsidies. If you’re middle class, that’s a roughly $1500 increase in subsidies; if you’re upper class, you’re getting, well, an additional $3,000 per year. But if you’re lower income? You’re receiving $1,100 less, which makes it much more difficult to afford payments.  This would result in many people not being able to afford the coverage they and their families need. And, while it seems like the elderly are getting a nice chunk of cash to the tune of $333 per month, the AHCA allows insurers to charge them as much as 5 times the rates of younger Americans.

Pre-Existing Conditions Are Still Covered, With A Caveat

One of the ACA’s main purposes was to put an end to insurer discrimination against people who have diabetes, cancer, or other such pre-existing conditions. The AHCA does away with that. While it doesn’t deny coverage, it makes it harder for those to afford it. The new bill says those who go 63 straight days or longer without coverage and then jump over to the AHCA will be hit with a 30 percent penalty on premiums. And yes, this prevents people from just hopping on insurance when a lingering problem creeps up, but it also makes it difficult for people who can’t traditionally afford insurance from hopping on when they need coverage.

Having A Baby Could Become Way More Expensive

A clause in the ACA stated that come 2019, everyone would receive essential health coverage. “Essential” covers mental health, general hospital visits, maternity care, and like services, and would mean they’re essentially “on the house.” The repeal maintains this clause but ends the tiered coverage quality plans (ie. no Cadillacs of healthcare coverage). Instead, it hands it over to the states to enforce their own coverage plans. Depending on how states want to divvy out their governmental stipend, the already pricey cost of having a baby may greatly increase.

This Could Affect Your Savings Account

So, you know how the whole everyone-needs-to-have-healthcare thing that was the backbone of Obamacare? This new program repeals the penalties associated with having insurance. Those who don’t want to pay for insurance won’t be prodded into getting it. Not only that, but those who don’t want be burdened by current coverage can drop it. Immediately. If you don’t want health care — or just don’t think the government should force you to buy something — that’s entirely your prerogative. But, as Los Angeles Times columnist Michael Hiltzik points out, the sheer amount of people who will do away with their coverage has the potential to really sink the stock market.

Of course, this is just the proposal in its current form, and is subject to go through changes, revisions, and lots of finger pointing in on Capitol Hill. But, if you’re a lower-income family, or have parents who depend on Medicare, keep your eye on this plan as it works its way through Congress.

Read More