PIVOT Policy Analysis on The American Health Care Act: Fewer Insured, Higher Premiums, Tax Savings to the Rich, and More Deaths

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March 21, 2017

In March of 2017, the U.S. House of Representatives’ Republican leadership proposed the American Health Care Act (AHCA). The AHCA will repeal and replace the Affordable Care Act (ACA, or Obamacare). The PIVOT Policy team has analyzed the AHCA, the Congressional Budget Office review of the AHCA, data from the U.S. Census Bureau and prior studies. We have summarized the major elements of the AHCA and assessed their impact on Americans, Asian Americans, and Vietnamese Americans wherever the data is available.

In terms of coverage, in 2018, 14 million more people will be uninsured under the AHCA compared with the ACA. By 2020, 21 million more will be uninsured, and 24 million more in 2026, at which time there will be 52 million uninsured people in the U.S (about one of every 6 Americans). Because the Asian American and particularly the Vietnamese American population had high rates of being uninsured before the ACA, high rates of poverty, and many work for small businesses, the changes in the AHCA will have disproportionate adverse effects on Vietnamese Americans. Up to 2 million Asian Americans will lose health insurance coverage and about 200,000 Vietnamese Americans. Health insurance coverage is an important factor in health care utilization and health outcomes. Up to 45,000 Americans die each year due to the lack of health insurance[1] before the ACA. With the AHCA, the number will likely rise to that level again.

The key changes and their effects on Americans in the AHCA as compared to the ACA occur in two key areas, the individual health insurance marketplace and Medicaid coverage.

  • Subsidies and tax credits for health insurance premiums in the marketplace:
    • The AHCA removes existing income-based individual health insurance subsidies, which helped people to buy insurance with less out of pocket payment for premiums.
    • The AHCA will gradually phase out income-based tax credits for premiums and create age-based tax credits for starting in 2020, and the credits will be at a lower level than the subsidies.
    • Result: Many more people will not be able to afford health insurance premiums and will be uninsured.
       
  • Mandates and penalties for health insurance:
    • The AHCA removes the individual mandate, which leads to a financial penalty for not having health insurance.
    • For someone who does not have health insurance for more than 63 days in one year, the AHCA will impose a 30% penalty on the premiums for one year when the person gets insurance again.
    • Results: Many people will not buy health insurance until they are sick either because they do not want to or because they cannot afford the premiums without the subsidies. When they have medical emergencies, taxpayers will still have to pay for their health care.
    • Results: Without a large pool of younger and/or healthier people buying health insurance, the risks of financial losses will be higher for health insurance companies, some of which may stop providing insurance in the marketplace, thus decreasing choice.
       
  • Non-employer health Insurance plans:
    • The AHCA will remove the requirement that insurance plans have to cover at least 60% of the cost of covered benefits.
    • The AHCA removes the annual fee for health insurance providers.
    • The AHCA will continue to prevent insurers from excluding people due to pre-existing conditions and to allow coverage of dependents age 26 or less.
    • Results: People with health insurance will pay more for the costs of care through higher deductibles and non-covered services, while insurance companies do not have to pay a fee.
       
  • Premiums for health insurance plans in the marketplace:
    • In 2018 and 2019, premiums will go up by 15-20% because there will be fewer people buying health insurance and thus fewer people to spread the risks.
    • After 2020, premiums will go down but only because insurance policies will cover fewer services and because many older or sicker people will stop buying insurance.
    • Older people could pay up to 5 times more premium than younger people, compared to maximum of 3 times more under the ACA.
    • Results: Everyone will pay higher premiums in 2018 and 2019, and older people will pay higher premiums. Those who do end up paying lower premiums may be getting a policy that is not as good.
       
  • Employer-based health insurance:
    • The AHCA removes the requirement for employers to provide health insurance.
    • The AHCA removes tax credits for small employers.
    • Results: Employers of small businesses with fewer than 50 employees will not provide health insurance for their employees, forcing them to buy it in the marketplace or be uninsured. 2.8 million Asian Americans work for businesses with fewer than 100 employees.[2]
       
  • Changes in Medicaid payment
    • The AHCA reduces the level of payment to the states for those covered via the ACA’s Medicaid expansion.
    • Under the ACA, the federal government paid the states for those covered by Medicaid through a way that helped to cover unexpectedly high costs.  AHCA will eventually change that process to block grants determined by the number of people covered by Medicaid in each state. This will put the states at more risk for the high costs and thus will motivate them to cover fewer people.
    • People with Medicaid will have their eligibility determined every 6 months. This will increase the number who will not qualify because they cannot renew in time. These people are often those who are older, who are immigrants, who do not speak English, or who do not know how to navigate the system, including many Asian Americans and Vietnamese Americans. The 6 month renewal also may affect people who do not have regular employment, as fluctuations in their incomes may lead to loss of eligibility for part of a year.
    • Results: Millions of people will no longer be covered by Medicaid. About 16% of Asian Americans and 35% of Vietnamese Americans may be affected.[3]
       
  • Other significant changes in the AHCA:
    • Reduces taxes for high-income taxpayers through removal of surtax on investment income and hospital Insurance payroll tax leading to a tax break of up to $200,000 per person for top 0.1% of Americans in income)[4]
    • Ends Prevention and Public Health Fund, which helps to keep people healthier.
    • Ends Medicaid payment to large organizations that provides abortions, even though those organizations were not using such funds for abortion services (for example, Planned Parenthood). This will decrease the number of health care providers in underserved communities.
    • Ends Medicaid essential health benefit of mental health and addiction treatment by 2020.[5],[6]
    • Increases payments to community health centers by a small amount.
    • Results: There will be a $600 billion tax cut given to the very rich over 10 year while Americans will have less access to preventive health care and treatment for medical and psychological conditions.

If Congress approves the AHCA and President Trump signs it into law, 24 million more people will not have health insurance. Those who can still buy health insurance in the marketplace will pay higher premiums for insurance plans that may have higher deductibles and less coverage. Up to 2 million Asian Americans and 200,000 Vietnamese Americans will lose health insurance coverage. The main benefit from the AHCA will be a $600 billion tax break for Americans who are already very wealthy while thousands of Americans will die each year from lack of access to health care.  The unknowns are what happens to health care costs since the uninsured will continue to need health care and to the economy. As a result, PIVOT opposes the AHCA on fiscal, health, and humanitarian grounds.

[1] Wilper A et al. Health Insurance and Mortality in US Adults. Am J Public Health 2009 December; 99(12): 2289–2295. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2775760/
[2] US Small Business Administration. Survey of Small Owners Facts: Asian-Owned Businesses in the United States. 2012 Survey of Business Owners, U.S. Census Bureau. http://www.mbda.gov/sites/default/files/SBO_Facts_AOB.pdf
[3] California Health Interview Survey 2015. Percentage of those who are Medicaid eligible
[4] The Wall Street Journal. Top Earners Would Pay Less Tax Under GOP Health-Care Proposal. March 7, 2017. https://www.wsj.com/articles/top-earners-would-pay-less-tax-under-gop-health-care-proposal-1488882602
[5] American Psychological Association. APA Voices Concerns with American Health Care Act. March 9, 2017 http://www.apa.org/news/press/releases/2017/03/health-care-act.aspx
[6] Vox. The House’s Obamacare Repeal Bill would Strand Drug Addicts without Access to Care. March 13, 2017. http://www.vox.com/policy-and-politics/2017/3/7/14841876/ahca-obamacare-repeal-opioid-epidemic