Here are some key takeaways from the newest version of the American Health Care Act (AHCA), also referred to as Trumpcare.
Technically, people with pre-existing conditions may not be barred from obtaining insurance coverage under the AHCA. However, their coverage options could be seriously affected by this bill. States would be permitted to apply for waivers to exempt insurance companies from a community rating provision and allow them to charge far higher premiums for people with pre-existing conditions.
The community rating provision is a way of setting premiums and is designed to ensure risk is spread evenly across a larger pool. This means that people are charged the same rate regardless of factors like health status.
The Trumpcare bill does away with the mandate under the ACA that requires people have health insurance or pay a fine. Under the new bill, people who go 60 days without health coverage would be penalized if they rejoin a health plan; they would face a 30 percent penalty on their insurance policy for one year.
Essential health benefits
Under the ACA, specific essential health benefits – including maternal care, prescription coverage, and mental health care -must be a part of any insurance plan. Under the new Trumpcare bill, states could apply for a waiver to exempt insurance plans from including these benefits in their plans.
To qualify, the states would need to prove they could either lower the cost of healthcare for people or increase the number of people covered by insurance. Health experts say that if this provision is enacted, costs for people in need of specific essential health benefits will likely face higher premiums because insurance companies will assume that a person who signs up for a plan with maternal care or prescription benefits will be likely to use those benefits.
Tax credit changes
Under the new bill, qualifications for tax credits to help pay for health insurance would change significantly.
While the ACA offers a scale of credits that take into account family income, cost of insurance and age, the Trumpcare plan would provide flat tax credits per individual, focused on age. The House GOP bill would provide tax credits of $2,000 to $14,000 a year for individuals who don’t get insurance coverage from an employer or the government. The credits would be based on age instead of income and would be capped for higher earners.
People who are older, are lower-income or live in areas with high insurance premiums would likely receive smaller tax credits under the new bill than they do under the ACA. Those who are younger, have higher incomes or live in areas with lower insurance premiums would likely receive more government assistance than they currently do, according to the Kaiser Family Foundation.
Older adults vs. younger adults
Under the ACA, insurance companies may charge an older person no more than three times its premium for a younger person with an identical plan. The new bill would increase the maximum allowable ratio to 5 to 1, which could significantly increase older people’s premiums for comparable plans. States would be able to set different maximum ratios.
Instability in the market makes insurers more likely to raise rates for everyone – so you can probably expect insurance premiums to take a bigger bite out of your paycheck.