"While we are still doing an analysis ... the likely effect of basing subsidies on age alone — rather than considering income and where an individual lives — is that it will make coverage unaffordable and in many cases, put coverage out of reach,” Lee said Tuesday.
By embracing President Obama's Affordable Care Act, California decreased its uninsured rate from 17 percent to 7 percent. Twelve percent of Covered California enrollees receive more than $10,000 per household, and 16 percent of individuals receive more than $6,000 per year in tax credits.
Original post, March 7: The Republican bill is complicated. But don't worry. We’ve dug into the details to simplify this complex issue and create a cheat sheet for you.
What does the Republican bill do?
- No more individual mandate, meaning no tax penalty for not being covered.
- Large employers don’t have to cover workers anymore, and there isn't a penalty if they don’t.
- Eliminates federal funding for expansion of Medicaid, which 31 states took advantage of. Starting in 2020, no more people who qualify as "expansion" adults can join.
- Caps the subsidies that people can get to buy their own individual coverage on insurance marketplaces (known as Covered California here.) Subsidies are flat tax credits that vary only by age: younger people will get $2,000 and the amount rises to a maximum of $4,000 for people over 60. Subsidies under the Affordable Care Act (ACA) took into account income and the local price of health insurance. They could be as high as 10,000 or more.
- What does this mean? People who previously got subsidies could pay more for their health plans than they were paying in the past.
- Who won't be able to get those new subsidies? Individuals making more than $75,000 a year or more and couples making more than $150,000 a year.
- Bans federal funding for providers that offer abortion, like Planned Parenthood, for one year. That provision would eliminate 80 percent of California Planned Parenthood’s total budget. Since federal funds don't generally pay for abortion anyway, the bill is talking about cutting federal funds for all of Planned Parenthood's other services: contraception, cervical cancer screenings, etc.
- Cuts taxes that were put in place by the ACA to pay for the subsidies and Medicaid expansion. Specifically, it cuts those taxes on insurance, pharmaceutical and medical device companies, and wealthy families.
- What doesn't the bill do? It does not eliminate some ACA favorites:
- Children can stay on their parents' insurance until age 26.
- Insurers still can't put dollar caps on annual medical expenses or lifetime medical expenses.
What are some other important changes?
- People with pre-existing conditions still cannot be denied coverage (like under the ACA) — but if they have a gap in their coverage they will have to pay 30 percent more for the insurance than other consumers, for one year.
- ACA allowed insurers to charge older people three times as much for insurance premiums as younger people. The new bill allows them to charge up to five times as much. This is significant because the new bill only offers subsidies for older people that are, at most, twice as much as those offered younger people. It appears at first that older adults get more money in tax credits, but those dollars won't go as far towards purchasing the higher-priced insurance they will be offered.
- How Medicaid is funded overall, even for traditional patients. The federal government will give each state a fixed amount, called a “cap,” for each Medicaid patient’s yearly care, and no more (that cap could go up every year, but only by the rate of medical inflation in cities). Right now, Medicaid pays all the medical bills, no matter the cost. This will affect a group of very poor and/or disabled people that were never affected by ACA in the first place, experts say.
- Some Medicaid plans may no longer offers some benefits, such as substance abuse. This has raised alarm bells because of the country's ongoing problem with opioid abuse.
What's notably missing from the bill?
- It does not include any analysis of the bill’s effect on insurance coverage, but an outside analysis (from McKinsey & Company and Avalere Health) has predicted millions could lose coverage.
- It does not include a cost estimate, so it's unknown what the effect on the deficit would be.
How could California be affected?
Twenty million Americans got coverage through the law — one quarter of those, nearly 5 million, are in California. So the impact here will be huge.
- The uninsured rate in California fell from 17 percent in 2013 to a historic low of 7.1 percent in 2016.
- Latinos benefited most: The number of Latinos in California who were uninsured fell by 1.5 million, and the uninsured rate in this population fell from 23 percent to 12 percent.
- In San Francisco, the uninsured rate fell from 9.2 percent to 4.8 percent.
- What is this bill’s effect on San Francisco Health Network, the citywide system of 14 public clinics that also includes Zuckerberg San Francisco General Hospital? That system would lose $125 million a year in revenue.
Overall, the new bill is likely to significantly increase the number of people who are uninsured. And in the past, when there were more uninsured, it significantly increased the personal bankruptcy rate and pushed the burden of care into ERs and safety-net clinics — which ultimately are paid for by the state and local taxpayers. Insurance costs also increase for everyone.
How does the Affordable Care Act work in California now, and what would change?
Under the current law, 3.7 million adults became newly eligible for Medi-Cal. The new bill would stop federal payment for those newly eligible adults by 2020. If California decided on its own to keep those people on the insurance rolls, it would cost the state an additional $8 billion a year in federal funding.
An additional 1.2 million Californians get financial help from the ACA to buy individual insurance policies through Covered California. Those Californians are getting about $5 billion in federal aid, in the form of monthly subsidies and other assistance. The Republican bill would replace those subsidies, which track the cost of health care in California, with flat tax credits across the U.S. The credits would give an individual between $2,000 and $4,000 to buy a plan (depending on their age), no matter the cost of the plan.
What is the potential economic impact?
A net loss of 209,000 jobs in California, according to the UC Berkeley Labor Center. The majority of jobs would be lost from the health care industry, but ripple effects would be felt in food service, janitorial services and accounting firms.
