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What’s Repealed and What’s Replaced?

The Republicans have repeatedly said that they intend to repeal and replace the Affordable Care Act with better health care for everyone. But just exactly what is the difference between Obamacare and the new GOP plan? Will it really benefit anyone?

It will benefit adult children under the age of 26. As is currently the case with the ACA, parents will be able to continue to cover them under their health insurance plan. No need to repeal or replace.

This bill will not benefit older adults—those age 50-64—who aren’t covered by an employer sponsored health insurance plan and are looking for coverage. Under Obamacare, insurers would be permitted to charge their oldest customers only three times as much as they charged their youngest customer. The Republican House bill would change that: Insurers would be allowed to charge as much as five times as much as they charge their youngest customers. In addition, the states could petition the federal government to make that ratio higher.

Then there’s the individual mandate. Individuals would no longer have to pay a penalty if they don’t have health insurance. Although that probably seems like a good thing to some younger people who don’t want to pay a penalty for being uninsured, this provision doesn’t mean that they are blameless. Should they remain uninsured for more than two months and then buy coverage, there would be a 30% increase in their premiums. Clearly, the idea is that although the penalty is gone, it doesn’t make sense to wait until you’re sick to purchase coverage.

Perhaps the most widely publicized provision of this plan is the “continued” coverage for pre-existing conditions. While it seems like pre-existing conditions are covered and insurance companies are required to sell health care to these individuals, access to and the cost of this coverage will change drastically. States would be permitted to opt out of the requirement for insurers to cover people with pre-existing conditions and set up high-rise pools for these people instead. The bill also provides for $8 billion of additional funding over five years for these potential pools. Prior to the ACA, many states maintained these high-risk pools; yet often individuals were unable to get into the pools and were therefore forced to look to the individual health insurance market for coverage. Needless to say, the cost was often prohibitive. Given the likely size of these pools, the additional funding amount would not be adequate to insure reasonable priced coverage.

Obamacare tax subsidies would now become tax credits dependent upon the individual’s age. Those people under 30 would be eligible for a $2000 credit, with the amount increasing on a sliding scale to $4000 for those over 60. The size of the tax credit would increase with the family size to a maximum of $14,000. These amounts would decrease with increases in household income.

Of course there is more to this bill. And the Senate has already indicated that this bill is unacceptable to them and they will have their own version. In other words, the ACA has not yet been repealed and replaced. Stay tuned.

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