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ACA Replacement Bill Could Put Health Coverage 'Out of Reach' for Millions

News  |  By Doug Desjardins  
   March 20, 2017

The AHCA would provide lower assistance to current enrollees, meaning fewer would be covered, preliminary analysis shows.

This story originally appeared in California Healthfax.

"Millions of Californians" could lose health coverage under the proposed American Health Care Act (AHCA) due to reductions in federal subsidies and changes to Medicaid funding, according to Covered California Executive Director Peter Lee.

Covered California's preliminary analysis of the Affordable Care Act (ACA) replacement bill suggests the AHCA would "provide lower overall assistance to our current enrollees" and estimates that subsidies could be cut by as much as 40% from current levels for enrollees by 2020.

Covered California did not provide estimates or projections on how the changes would affect overall enrollment.

"The most critical element of the ACA is the subsidies that make coverage possible," said Lee. "The dramatic reduction in the amount of subsidies means there's going to be fewer people covered."

The AHCA's proposed changes to Medicaid—which include phasing out Medicaid expansion and funding Medicaid under a block-grant plan—could also jeopardize coverage for the nearly 4 million state residents who joined Medi-Cal under Medicaid expansion, said Lee.

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Covered California's preliminary analysis estimates that a family of four living in Los Angeles with an annual income of $41,000 would have its annual subsidy reduced from $10,000 a year to $7,812 per year under the replacement plan.

For the individual market, the analysis estimates that a 62-year-old individual with an annual income of $30,000 living in San Francisco would see his or her annual subsidy drop from $9,516 to $4,000.

The report also suggested that people living in Northern California, where premiums are higher on average, would be at a disadvantage under the replacement plan, since subsidies would be the same statewide and would not vary by market.

Lee noted that subsides are designed to "bring premiums within reach" for lower income residents and Covered California estimates that more than 90% of consumers who purchase health plans on the state exchange in 2016 received subsidies.

A Kaiser Family Foundation analysis of the replacement plan reached similar findings.

The Kaiser study noted that tax credits under the ACA "vary with income and cost of insurance where people live, as well as age," while credits under the replacement bill would provide subsidies "that vary with age and grow annually with inflation."

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The replacement plan would also provide financial assistance for people with incomes of up to $75,000 per year and would "provide relatively more assistance to people with upper-middle incomes" compared to the ACA plan that provides more for people with lower incomes.

A comparison of subsides under the ACA and the AHCA estimates that a 40-year-old making $20,000 per year would be eligible for $4,143 in subsides per year under the ACA but would be eligible for only $3,000 under the replacement plan.

The Kaiser analysis found that "the American Health Care Act provides substantially lower tax credits overall than the ACA" and that people with lower incomes, older people, or people living in high-premium areas would be particularly disadvantaged under the replacement plan.

A Congressional Budget Office report estimates that as many as 24 million Americans would lose health coverage through 2026 due to changes brought about by the AHCA and estimates the plan will reduce federal healthcare spending by $337 billion over that time.

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