Premium Surcharge Could Hit Millions Under Republican Plan

Gregory A. Freeman, March 14, 2017

The GOP proposal to replace the Affordable Care Act includes a penalty for forgoing insurance that can be higher than the current charge. As many as 30 million people could be affected, according to a Commonwealth Fund analysis.

Critics of the Affordable Care Act have directed special ire to the tax penalty for failure to buy healthcare insurance, but the Republican plan for repealing Obamacare would impose a surcharge that could be even higher for some people.

An estimated 30 million working-age adults could be hit with the higher penalty, according to The 2016 Commonwealth Fund Biennial Health Insurance Survey.

"The American Health Care Act" (AHCA), introduced by Republicans to repeal and replace certain provisions of the ACA, would replace the ACA's individual requirement to have health insurance with a requirement to maintain continuous coverage.


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Anyone who applies for insurance in the individual or small-group markets can be charged a penalty by their insurer equal to 30% of their monthly premium if they had a gap in their insurance of more than 63 days in the prior year.

Insurers can levy the penalty for 12 months regardless of how long the gap was. The Commonwealth Fund survey suggests that an estimated 30 million working-age adults would be affected by the penalty, which in some cases is higher than what the ACA imposed on the uninsured.

The Commonwealth Fund estimated premiums for a plan in 2018 with the average medical costs covered for people enrolled in silver-level plans under the ACA. Insurers can currently charge older people only three times more than younger people, but the House bill allows them to charge up to five times more.

That means premiums rise significantly with age under the House bill, and it also means that the amount people can be charged for not maintaining continuous coverage is significantly higher for older people than for younger people, according to a survey report written by Commonwealth Fund Vice President for Healthcare Coverage and Access Sara R. Collins and Senior Research Associate Munira Z. Gunja.

Gregory A. Freeman

Gregory A. Freeman is a contributing writer.

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