As the U.S. House of Representatives prepares to vote on the American Health Care Act (AHCA) that would repeal and replace portions of the Affordable Care Act (ACA), Covered California issued its analysis of the impact of the AHCA on consumers in the individual market as financial assistance for purchasing health insurance is restructured. Covered California’s Executive Director, Peter Lee, stated, “The current AHCA proposal would dramatically reduce financial assistance for most Californians while increasing costs for those who do not get help.”
The Congressional Budget Office estimates health insurance premiums under the AHCA would increase 15 to 20 percent more in 2018 and 2019 than under the ACA. In addition, the amount of the tax credits available to help offset the cost of coverage would be 60 percent of what is available under the ACA. Covered California warns “that some older Californians, particularly those who are lower-income and live in higher-cost areas, would see large increases in their costs.”
Under the AHCA, tax credits vary based on age but do not consider income, family size or where consumers live. As a result, consumers using the tax credits under the AHCA could fare quite differently depending on their income and where they live. Covered California provided the following scenarios for consumers buying a Silver plan:
- In Sacramento under the ACA, a 27-year-old earning $17,000 would pay 3.7 percent of her income toward health insurance premiums ($622 per year or $52 per month). By contrast, under the AHCA that individual would be asked to spend nearly 25 percent of her income on her health insurance premium, paying $4,036 per year or $336 per month.
- In Kern County, a 62-year-old earning $30,000 a year would pay 8.3 percent of his income toward health insurance premiums ($2,494 per year or $208 per month under the ACA). If the AHCA were in effect, he would be asked to allocate more than 30 percent of his income to health insurance, paying $9,182 a year or $765 per month.
- In Monterey County, a 62-year-old earning $17,000 would receive support under the ACA to limit her premium to 3.7 percent of her income ($622 per year or $52 per month). Yet under the AHCA, this consumer would have to spend 100 percent of her income on her premium and would still fall short of what it would take to purchase a plan that costs $17,873 per year, or $1,489 per month.
It remains to be seen if additional changes will be made to the AHCA, such as adjusting the tax credits based on geographic location, or whether the AHCA will be passed by Congress. The first hurdle for House Republicans is the vote currently scheduled for March 23, 2017. If you want more information on the AHCA as we await the outcome of the House vote, please see our Briefing that includes a comparison chart of the ACA and AHCA.