Republicans in Congress have unveiled a bill to fulfil their long-held desire to scrap President Obama’s Affordable Care Act (ACA).
What is it?
The America Health Care Act (AHCA) is a draft bill to cut back the government’s role in healthcare with a more market-orientated system. It seeks to replace the ACA, Barack Obama’s flagship domestic achievement and what became known as Obamacare. The proposed changes have inevitably already been labelled Trumpcare.
Does Donald Trump support the plan?
Yes. Trump frequently pledged to repeal Obamacare on the campaign trail and has tweeted his official endorsement of the bill, which his officials helped to draw up.
Donald J. Trump (@realDonaldTrump)Our wonderful new Healthcare Bill is now out for review and negotiation. ObamaCare is a complete and total disaster - is imploding fast!
March 7, 2017
The White House press secretary, Sean Spicer, said the bill was an “important step toward restoring healthcare choice and affordability”.
Does AHCA repeal Obamacare?
Not entirely. It scraps some of the key features of Obamacare, notably the individual mandate that taxes people who don’t purchase health insurance. But its proposed replacements on this and many other aspects represent something of a compromise, reflecting the difficult and unprecedented task of reversing a huge welfare programme and the significant support for the existing system.
Under the AHCA, Americans would have to pay a surcharge if they allow their health insurance to lapse. Insurers would be allowed to charge an extra 30% for a year to those who allow their cover to lapse for more than 63 days.
How will it be funded?
Income-based subsidies will be replaced with aged-based tax credits to encourage people to buy insurances on the open market. The credits will rise with age starting at $2,000 (£1,640) a year for under-30s and rising to $4,000 a year for those aged 60 and over. Whole households would be limited to $14,000 in tax credits and credits would be phased out for those earning more than $75,000 a year.
The bill thereby reverses the current tax increases on higher earners. Those who earn more than $48,280 get no help under Obamacare. The new system would give tax credits to anyone earning under $75,000. Tax levied on drugs, tanning services and health savings accounts would also be dropped.
What else will be scrapped?
It will phase out the expansion of Medicaid – a scheme that helps 70 million poor and disabled Americans. Republicans had initially threatened to immediately halt the expansion of Medicaid in 31 states that opted to participate in it.
Instead, Medicaid expansion will be phased out from 2019. The current open-ended entitlement to Medicaid funding will be replaced with a per-person lump sum paid to the states.
The bill also bows to pressure from anti-abortion groups by making women’s health organisation Planned Parenthood ineligible for Medicaid or federal family planning grants. It also delays until 2025, the “Cadillac tax” – a levy on the highest cost employer-provided plans.
Will older people have to pay more for health insurance?
Yes. Under Obamacare, insurers can charge older people up to three times more than younger people for insurance. Under the Republican plan, this limit will rise to five times more.
What aspects of Obamacare will survive?
The most popular parts of the current system will be preserved. These include: ending lifetime caps on coverage; allowing adult children to stay on their parents’ healthcare plan until the age of 26 and banning insurers from denying coverage, or imposing higher charges, on people with pre-existing medical problems.
How many people will be affected?
Obamacare helped 20 million previously uninsured Americans to get healthcare and it is feared that the bill will leave many of these without health cover. Under the existing system, the poorest get the most help. The Republicans’ proposals are more market-oriented, based mostly on age, with an element on income.
The bill will also reduce the number of poorer people helped under Medicaid. It is feared that of those on marginal incomes only the sickest, who really need insurance, will be prepared to pay the surcharge on lapsed plans. Estimates of the impact of the proposals and their costs have yet to be carried out by the independent Congressional Budget Office.
Will it pass into law?
Although Republicans control both the House and narrowly the Senate, there is a significant minority of Republicans who have voiced their opposition to the plan. Some think it goes too far. Four Republican senators have publicly stated that they cannot support eliminating the expansion of Medicaid. Other Republicans think the bill doesn’t goes far enough, such as Senator Rand Paul, who described the plans as “Obamacare-lite” and Representative Justin Amash, who called it “Obamacare 2.0”. Just three Republican defections in the Senate would be enough to defeat the bill, assuming all Democrats vote against it.
