What Happens to My Insurance If Obamacare Substitution Becomes Law?
Finally, we have some evidence that the Republican-proposed replacement of the Affordable Care Act will affect coverage and health insurance costs. The Congressional Budget Office estimates that 24 million of us will lose coverage and the rest are likely to see our premiums grow.
You can read the full report here . The CBO only looks at general issues, such as what happens to the deficit and how many people lose coverage each year. It is not a crystal ball that can tell you what is happening with a particular plan that you are currently carrying out. But with this information, we can make some good guesses.
Incidentally, this law is still far from becoming law, although the Republicans in Congress are trying to rush it. It has not yet passed the full vote of the House of Representatives, and after that it will need to be submitted to the Senate. President Trump will be able to veto thereafter if he wants to keep his campaign promises to “reach everyone” and impose “no cuts to … Medicaid.”
This bill is also only the first stage of a three-position plan. Later, Congress will consider cutting basic benefits, such as maternity care, so that insured people get even less for their money. But that’s all in the future – let’s look at the law that is currently before Congress.
Will I lose my insurance coverage?
You could. If the bill is passed, 24 million people will lose coverage by 2026.
Now about 10 percent of people are not insured. If the ACA remains in place, this number does not change. If the American Health Care Act replaces it, the country’s total uninsured will rise to 19 percent. This is even higher than the pre-ACA numbers.
CBO believes that among people who have lost coverage will be:
- 4 million people stop buying insurance this year because the tax penalty will not be applied. If you have insurance now just because you are afraid of a fine, this is you.
- 14 million people who would otherwise be eligible for Medicaid. This includes many low-income adults in 31 states who have participated in the expansion of the Medicaid program . Medicaid also provides long-term care for children, the disabled, and the elderly. Medicaid cuts and restrictions begin in 2020.
- 2 million people (every year) who had a coverage gap and would have to pay a 30 percent penalty within a year when they buy coverage again. The penalty forces people to keep coverage when they have it, so the initial $ 1 million will avoid ending coverage at the beginning.
- Plus a bunch of people who say no thanks when premiums get too high . Seniors face serious premium increases; young people will not be hurt as badly, but other changes mean that insurance will not be as beneficial for them.
Many of the uninsured will be people who buy their insurance on exchanges or use Medicaid, but the CBO also estimates that some employers will stop offering insurance as a benefit, affecting perhaps 2 million people who may still choose to buy the plan on their own. On the other hand, your employer can take the money saved and invest it in various benefits, or give you a small boost.
Will my premiums cost more or less?
First this and then the other – if you are young. For seniors, premiums will continue to rise.
Initially, premiums in the individual market will grow by 15–20 percent. After the abolition of the tax penalty, young, healthy people who decide to give up insurance will not pay under the insurance plans. This means there are bonuses for those who stay.
By 2026, premiums will, on average, be slightly cheaper than if we continued to operate under the ACA. (The CBO has not compared these to today’s premium prices, so this may be more than what you currently pay.)
But there is a catch. The premiums will be cheaper because the insurance covers less . You don’t get the same coverage for less money, you just get less coverage. As we will see below, you will face additional costs due to high deductibles and cost sharing.
The ACA currently helps people buy insurance by paying a portion of your premium if you fall below a certain income level (400 percent of the federal poverty line, or about $ 24,000 this year). The amount of help you get depends on your income level and the cost of insurance in your area.
AHCA’s plan to help people afford insurance is to drop it and offer a higher tax credit for seniors. But at the same time, they allow insurers to charge five times as much from older people as from younger customers. The new tax credit will hardly affect the expected premiums.
Here’s an example: in 2026, according to the ACA, a single person who earns $ 26,500 will pay $ 1,700 in premiums every year, regardless of their age. According to the AHCA, if it passes, a 21-year-old man will pay $ 1,450 (hey, not bad), and a 60-year-old man will pay $ 14,600. This is more than half of their very small income. If this person had an insurance gap, the fine would increase to 77 percent of their income, and only $ 6,000 would be left for everything else that person has to pay for in their life. Including their franchise.
Will my deductible continue to be high?
Yes.
In fact, it will probably get even worse. The cheapest insurance plans right now have to cover at least 60 percent of their clients’ expenses. These are “bronze” plans, and other levels cover more: 70 percent for silver, 80 for gold, 90 for platinum. If an insurer wants to participate in the Marketplace, they must offer a silver and gold plan.
The AHCA is waiving these requirements, so an insurer may choose to only offer low-coverage plans. CBO suggests plans that cover less bronze will be rare. It is also assumed that plans that cover more than bronze will be rare because these plans will attract sicker people, which will increase medical costs, so insurers will not be able to make them profitable.
High deductibles are a very easy way to make insurance cheaper (to get people to buy), but they also make insurance less useful. If the plan only covers 60 percent of the cost on average, many people will maximize their contributions and may also pay co-insurance and copayments. The ACA is currently subsidizing these “cost-sharing” measures to some low-income people. These subsidies are going away, so the deductions will be even higher.
Will I be able to purchase coverage if I want to?
The good news is that the CBO sees the insurance market as stable – with no death spiral that would lead to industry collapse – both with the ACA and its replacement. So there will still be insurance. As we mentioned, some employers will opt out of insurance as a benefit, but you can still buy your own.
However, it can be more difficult to compare plans. Without plan levels, it will be harder to tell which plan is better than the other. And there will no longer be a requirement for plans to sell their insurance on exchange websites like healthcare.gov, which was a convenience store.
Your choice of plans is likely to change. There will likely be many less coverage plans available that are the cheapest. But if you want to buy insurance with high coverage (for example, with small deductibles), there is no guarantee that insurers will offer it.
You may also simply not be able to afford insurance if you are older, if you have a low income, or if you live in an area where insurance is usually very expensive. ACA subsidies helped in this situation, but they will disappear if the new law is passed. In a sense, you will have a “choice” of leaving insurance or buying a low-coverage plan, but without a lot of cash, you have no choice at all to buy insurance.