Benefits Buzz

Just How "Mean" is the American Health Care Act?

Posted on June 20th, 2017

President Donald Trump held a party in the White House Rose Garden to celebrate the passage of the American Health Care Act (AHCA) by the House of Representatives (House). President Trump touted the House bill as being an “incredible health care plan.” The AHCA is now under consideration by the Senate, and in a closed-door meeting held with several Republican Senators last week, President Trump allegedly said the current version of the AHCA is too “mean” and needs to be “more generous.” 
 
Just how "mean" is the AHCA, and who is it "mean" to?
 
Well, from an employer’s perspective, the AHCA seems to be pretty friendly. It gets rid of the Employer Mandate which is widely unpopular, and it delays the Cadillac Tax from 2020 until 2026. The AHCA would also enhance Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) which provide employees the ability to pay for out-of-pocket medical expenses with tax-free dollars. 
 
And, for Medicare purposes, the AHCA keeps everything about the same. It generally leaves the Medicare program untouched, so it’s not any meaner, nor is at any nicer than the Affordable Care Act (ACA).
 
If the AHCA is either neutral or positive with respect to employer-sponsored coverage and Medicare, that would seem to imply the AHCA is neutral or positive to about 70% of the country. The U.S. population is around 323 million, and approximately 233 million people receive health coverage through Medicare or an employer-sponsored plan. 
 
What about the other 30% of the population?
 
The other 30% of the population is mostly comprised of people who buy coverage on their own in the individual market, qualify for Medicaid, or remain uninsured. This seems to be where the real hold up is in the Senate right now, and it’s where arguments can be made that the AHCA is mean. 
 
Let’s start with the individual market. The biggest sticking point in this market is what to do about pre-existing conditions, which is something the ACA prohibits from a being a factor when setting premiums. The AHCA would let insurance companies in some states charge a higher premium to people with pre-existing conditions, but only if they were uninsured and sought to purchase coverage later. The proclaimed intent is that this would prevent so-called hopscotchers from obtaining coverage only when they expect to have a big claim. 
 
What about people who become uninsured for reasons beyond their control?
 
Hard times can fall on anyone, and the AHCA doesn’t provide any relief for these individuals. These people could be charged a higher premium based on their health, and for that, the AHCA in its current format would probably be considered by most as being mean.
 
Then there is Medicaid which was expanded and received additional funding under the ACA. The AHCA would make radical funding changes to Medicaid which ultimately leads to less dollars from the federal government. Estimates from both the Congressional Budget Office (CBO) and the Office of the Actuary within the Centers for Medicare and Medicaid Services indicate the AHCA would reduce the number of people covered by Medicaid. If you judge Medicaid by how many people are covered, then the AHCA would be considered mean. 
 
We know the Senate is stalled on these matters, among others, and it’s to-be-determined how they will modify the bill that was passed by the House. Some have suggested we’ll see a revised bill by the end of June, but who knows?
 

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