The American Health Care Act, the bill Republicans released this week to “repeal and replace” the Affordable Care Act, is a public health disaster. It is also a potential political disaster for the Republican Party and appears already to be dead on arrival.
The Freedom Caucus and other ultra-conservatives say they’ll refuse to support this replacement bill because it does not completely repeal every part of Obamacare. Fiscal hawks are disgusted that the bill does nothing to reduce the federal deficit and will, in all likelihood, increase it. Finally, at least four Republican senators have expressed public concern about the long-term political consequences of separating millions of voters from their health insurance.
Yet in the rush to fulfill a key campaign promise – the repeal of Obamacare – Republicans are ramming forward replacement legislation that is sure to alienate just about everyone, including most of the 3 million Californians who’ve become newly insured and many of whom voted for the new president.
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Here’s who loses under the Republican plan:
The very poor: Starting in 2020, the Republican plan would repeal the Medi-Cal expansion, which has benefited almost 4 million Californians. It would convert the entire Medi-Cal program into a per-capita grant program. California would receive federal payments based on enrollment in five eligibility categories, one of which includes the expansion population. But per-capita payments will be damaging because they are based on 2016 spending levels, trended forward using an inflation factor lower than the typical growth in health spending.
This guarantees that federal funding for Medi-Cal will shrink in real terms, forcing California to deal with substantial, permanent shortfalls. Federal funding for the “expansion population” would also be cut from 90 percent to 50 percent starting in 2020, placing further pressure on the state to maintain eligibility for this population.
Covered California enrollees: More than 1 million Californians receive federal tax credits to buy insurance through Covered California based on age, income and place of residence. Under the replacement plan, Californians would receive tax credits based solely on age. In general, these new tax credits will be lower than tax credits under the Affordable Care Act; on average, more than one-third lower based on one recent study. And these new tax credits are indexed to grow more slowly than health premiums, so they will become even less valuable over time. These changes create more losers.
Urban areas and most of Northern California: Because the Republican tax credits don’t recognize geographic differences in premiums, they don’t take into account the high cost of living, for example, in San Francisco compared with Vacaville. Because premiums are generally higher in Northern California relative to Southern California, those in northern counties will be especially hard hit by the new tax credits. If you’re poor or merely middle class and you’re struggling to live in a high-cost area, you’re out of luck.
Near poor: Under the Affordable Care Act, Covered California enrollees who earn up to 250 percent of the federal poverty level receive both tax credits and additional cost-sharing reductions that substantially reduced co-payments and deductibles when they buy a Silver Plan. These cost-sharing reductions will be repealed as of 2020, making insurance even more expensive for these Californians.
Baby boomers: The Republican plan will enable insurers to charge older Californians using tax credits up to five times more than younger Californians – up from the maximum three-to-one ratio under the Affordable Care Act. That means that costs will rise – up to 30 percent according to some estimates – for those at a time of life when health care needs are rising.
Taxpayers: The Republican plan will do nothing to lower premiums or increase coverage; the only costs that will be lower will be federal costs for tax credits. However, because this bill repeals all the tax provisions of the Affordable Care Act, the net cost of this bill is likely to be high, thus increasing the federal deficit. How will Republicans address that problem? Nobody knows, but the Congressional Budget Office analysis will be crucial.
Who are the winners? No surprises here. Those with the highest incomes (above $200,000 for individuals and $250,000 for couples) will get huge tax windfalls because of the repeal of all ACA-related taxes. Even the merely well-off will benefit, because full tax credits will be newly available to everyone with incomes up to $75,000, and partial tax credits available to those with incomes between $95,000 and $115,000, depending on age. Conservative politicians also celebrate, because they’ve been itching to dismantle government entitlement programs in general, and Obamacare in particular, for years.
Baby boomers, urban and Northern California residents, the poor, the near poor and middle-income Covered California enrollees – it’s hard to imagine a piece of legislation that so deliberately disadvantages such a broad range of Californians. Five million Californians who’ve directly benefited from Obamacare’s Medi-Cal expansion and Covered California tax credits are vulnerable. And within a decade, the Draconian inflation factors proposed for the Medi-Cal per-capita rates and individual market tax credits will leave millions more vulnerable to becoming uninsured.
Almost everyone losing benefits or coverage under Trumpcare is a potential voter. As such, the Republican plan seems to be a kind of doomsday clock, not just for the millions of Californians and Americans it will throw under the bus, but for the Grand Old Party itself.
Gerald Kominski is the director of the UCLA Center for Health Policy Research and a professor at the UCLA Fielding School of Public Health. He can be contacted at firstname.lastname@example.org.