What’s inside the Republican health care bill?

Republicans divided over Obamacare replacement

House GOP lawmakers finally revealed their plan to repeal and replace Obamacare last week.

Called the American Care Act, the bill has already made it through two marathon committee hearings. With response to the plan decidedly mixed, a lot may change before it reaches President Trump’s desk.

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Critics have ranged from conservative Republicans to insurers to the AARP. Conservatives complain that the bill does not fully repeal Obamacare and that many provisions are too similar to the health reform law. Insurers worry that Republicans would cut federal support for Medicaid and tax credits, leaving millions of their lower-income customers unable to afford coverage. And the AARP fears that Americans in their 50s and early 60s would see their premiums skyrocket and federal assistance reduced.

Proponents of the bill say it would save the individual health market from collapse. The legislation would create a patient-centered health care system that provides Americans more choice, greater control and lower costs.

Related: Who wins and who loses under the bill

What the bill calls for

Repeal the Obamacare subsidies. The GOP’s plan would eliminate the Obamacare subsidies, which are advanceable refundable tax credits based on a person’s income and cost of coverage in their area. More than eight in 10 enrollees on the Obamacare exchanges receive this assistance, but individuals making more than $47,500 and families of four earning more than $97,200 do not qualify. This provision would take effect in 2020.

Provide refundable tax credits based on age and income instead. The Republicans want to issue advanceable refundable tax credits to help people afford coverage on the individual market, but these credits will be based mainly on a person’s age. The credits will range from $2,000 for 20-somethings to $4,000 for those in their early 60s. The credits will also have an income cap. Those making more than $75,000 would see their tax credits start to phase out, and an enrollee making more than $215,000 would no longer be eligible. Families with incomes above $150,000 would see their credits dwindle, while those earning more than $290,000 would not longer qualify. This provision would take effect in 2020.

Repeal the individual and employer mandates. The GOP’s bill would get rid of the Obamacare requirement that people must have health coverage or face a tax penalty. It would also eliminate the requirement that employers with at least 50 employees provide health insurance to their workers. Under Obamacare, these companies were required to provide affordable insurance to staffers who work more than 30 hours a week. They would face a penalty if they did not meet this criteria and their employee sought subsidies on the exchanges. These provisions take effect retroactively to 2016.

Related: Millions could lose insurance under repeal bill

Put in place a continuous coverage requirement instead. The Republican plan seeks to allow insurers to impose a 30% surcharge on the premiums of those who let their coverage lapse for at least 63 days. The plan would enable insurers to levy this surcharge for one year, but it would only apply to policies bought in the individual or small group markets.

Repeal cost-sharing subsidies to lower deductibles and co-pays. The bill would kill the additional help that individuals earning less than roughly $30,000 a year receive to cover their out-of-pocket costs. More than half of the enrollees on the Obamacare exchanges receive these subsidies. This provision would take effect in 2020.

Related: Insurers worry low-income Americans won’t have coverage

Delay the Cadillac tax. The Republican plan keeps but delays the controversial Cadillac tax, which calls for imposing a 40% excise tax on generous employer health insurance plans. Originally scheduled to go into effect in 2018, the law would have taxed employers on any premiums that exceed $10,200 for individual policies and $27,500 for family plans. After intense lobbying by companies and unions, lawmakers pushed back the start date to 2020. The Republican plan delays it until 2025.

Loosen the age-band so insurers can charge older folks more. Under Obamacare, insurers could only charge older enrollees three times more than younger policy holders. The GOP bill would widen that band to five-to-one, which would hike premiums for those in their 50s and early 60s, but reduce them for younger folks.

Related: Older people would pay more under new health care bill

Revamp Medicaid funding. The GOP bill would send the states a fixed amount of money per Medicaid enrollee, known as a per-capita cap. This would limit federal responsibility, shifting that burden to the states. However, since states don’t have the money to make up the difference, they would likely either reduce eligibility, curtail benefits or cut provider payments.

End enhanced federal funding for Medicaid expansion. It would also end the enhanced match rate for Medicaid expansion for new enrollees starting in 2020. Those already in the program could stay as long as they remain continuously insured.

Related: Governors divided over Medicaid’s future

Restore federal support for hospitals who cover many uninsured patients. The legislation would restore Medicaid Disproportionate Share Hospital payments in 2018 for states that didn’t expand Medicaid and in 2020 for states that did. Under Obamacare, these funds were set to disappear by 2020 since the original law called for all states to expand Medicaid.

Create more generous Health Savings Accounts. Seeking to get more people to save money for health care expenses, the Republican bill includes several provisions aimed at making Health Savings Accounts more attractive. It raises the annual contribution limits to equal the maximum sum of the deductible and out-of-pocket expenses one would pay in a high-deductible insurance plan. So the limit would be at least $6,550 for an individual and $13,100 for a family in 2018.

The bill would also end the Obamacare prohibition on paying for over-the-counter medications with funds from tax-advantaged accounts, such as HSAs and flexible spending accounts. And it reduces the penalty from 20% to 10% if funds from an HSA are used for non-medical purposes. These provisions begin in 2018.

Related: Companies offering HSAs could bank on big profits under GOP plan

Lift contribution caps on flexible spending accounts. Obamacare put a cap on annual contributions to flexible spending accounts based on cost of living figures. For 2017, that cap was $2,600. The GOP bill would do away with that limit as of December 31, 2017.

Offer two tax cuts for the wealthy. The bill would eliminate two taxes that Obamacare imposed on the well-to-do to help pay for the law: The 3.8% tax on investment income and the 0.9% Medicaid payroll tax on incomes over $200,000 for individuals and $250,000 for married couples who file jointly. The provision would take effect in 2018.

Related: Here’s how much millionaires would save under GOP Obamacare repeal bill

Repeal the taxes on health insurers, prescription drug makers and medical devices. The bill seeks to lift the annual tax Obamacare imposed on drug makers and health insurers and It would also get rid of the 2.3% excise tax on the sale of certain medical devices that was put in place. The taxes would disappear in 2018.

Say goodbye to the tanning tax. The bill would eliminate a 10% tax on indoor tanning services that was introduced as part of Obamacare. It would take effect in 2018.

Related: Republican health care plan would repeal ‘tanning tax’

Repeal the tax break for health insurance executives’ pay. The legislation would roll back the Obamacare provision that placed a $500,000 limit on deductions for each executive’s compensation. Top insurers pay their leaders millions in compensation every year so this provision could mean a nice tax savings for the companies. The provision would begin in 2018.

Related: Health care plan has tax break for insurance execs

Reduce the income threshold for deducting medical expenses. Under the GOP bill, taxpayers would once again be able to deduct medical expenses that exceed 7.5% of their adjusted gross income. Obamacare had raised the threshold to 10%. This would begin in 2018.

Defund Planned Parenthood. In keeping with long-standing Republican beliefs, the legislation prohibits federal funding for Planned Parenthood. But the restriction is only for a year.

Eliminate support for CDC Prevention and Public Health Fund. The bill would eliminate nearly $1 billion in funding for this program, which Republicans call a slush fund. The Centers for Disease Control says the money supports heart disease and stroke prevention, immunization, lead poisoning prevention and diabetes prevention, mostly through grants to states and local programs.

Related: Advocates call foul on CDC cuts in repeal bill

Increase funding for community health centers. The bill would provide an additional $422 million this year for community-based outpatient facilities that provide health services — such as medical, dental and mental health — to lower-income populations.

Create the patient and state stability fund. This $100 billion fund would be available to the states between 2018 and 2026 for a number of reasons. Among them: offering financial assistance to high-risk patients, reducing the cost of providing coverage in the individual market, promoting access to preventative services as well as dental, vision, mental health and substance abuse services, and helping people reduce their out-of-pocket costs.

Related: These low income kids could lose access to dental care

Allow insurers to sell plans that cover less of the costs. Obamacare created four tiers of coverage, each with a requirement to cover a certain share of policyholders’ costs, on average. The bill would eliminate this rule. Presumably, insurers would be able to offer plans with higher deductibles and co-pays. However, since the legislation does not lift the cap on out-of-pocket expenses, insurers could not require consumers to pay more than that for covered services. The deductibles for many bronze-tier plans are already pegged to that cap.

What the bill doesn’t change

Protections for those with pre-existing conditions. Insurers are not allowed to discriminate against those with pre-existing conditions. They cannot deny them coverage, nor charge them more.

Allowing kids under age 26 to remain on their parents policies. The Republicans want to keep this Obamacare provision, which has helped insure young adults. By one estimate, 7 million people get coverage as a result.

Keeping annual and lifetime limits. Prior to Obamacare, many insurers in the individual market had caps on how much they’d cover each year or over an enrollee’s lifetime. Some would not pay anything after an enrollee’s care costs more than $500,000 or $1 million. Obamacare banned those limits.

Retaining out-of-pocket maximums. Under Obamacare, consumers don’t have to pay anything after they hit the out-of-pocket maximum for in-network coverage. For 2017, the max is $7,150 for an individual and $14,300 for a family.

Maintaining comprehensive benefits packages … for now. Obamacare requires insurers to cover 10 essential health benefits, including maternity, prescription drugs and mental health services. The Republicans want to jettison this rule, but can’t do so under the budget reconciliation process.

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Article source: http://money.cnn.com/2017/03/12/news/economy/republican-health-care-bill/

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