Republicans' Obamacare replacement: What is staying the same and what is changing?

Mythili Sampathkumar
President Donald Trump's promise on the campaign trail to repeal and replace Obamacare is coming together: Jabin Botsford/The Washington Post

Patient care, Trump care, or Obamacare-lite.

Call it what you will, but Republicans have presented their replacement for the 2010 Affordable Care Act.

Here is what could change under the proposed replacement and what should stay the same.

The Congressional Budget Office has yet to finalise the plan but is expected to do so in the next few weeks and this is the first phase of the replacement plan.

HealthGrove | Graphiq

Under Obamacare, approximately 20 million Americans are insured, in addition to those receiving insurance through their employers.

Dr John McDonough, Harvard University professor in the Department of Health Policy and Management, told The Independent that the proposed Republican replacement would "definitely cover far fewer people".

Currently there is an "individual mandate", part of Obamacare that states individuals who do not have coverage will be penalised through a federal tax. Under the proposed replacement, there will also be a penalty.

If anyone has a gap in coverage of 63 days or more over the previous 12 months, he or she will face a surcharge of 30 per cent for the following 12 months before returning to the regular rate.

The surcharge would be the same for healthy and sick people and according to Vox, insurance companies cannot use the premium as an excuse to turn those away who may have high medical costs.

Dr McDonough said the "irony of the substitute penalty is that it is far more costly and punitive than the so-called individual mandate".

The substitute penalty surcharge is so high that healthy people could opt out of coverage until they are able to move on to an employer’s plan.

In the interim, premiums for everybody are driven up since the cost cannot be spread out among a larger number of people.

The ban on discriminating against those with pre-existing conditions will continue and the proposed replacement contains no new language on the issue. The ban on annual and lifetime limits also remains as it is under Obamacare.

Insurance companies currently have a cap on what they can charge older Americans who are insured under Obamacare, but who are still too young to receive Medicare benefits. So those in their 50s and 60s can only be charged three times as much as the youngest people who are enrolled in the market.

This cap is eliminated in the latest draft of the proposed replacement. Christine Eibner, an economist with the RAND Corporation told Vox that no cap "increases the overall number of people with coverage, but older people end up falling out of the market as premiums rise" and actually serves to only lower premiums for younger enrollees.

Medicaid, intended to serve people of all ages not covered by Medicare who do not make enough to pay for insurance, is another part of the health insurance scheme that could change under the replacement. Obamacare expanded the program in 31 states to include anyone making less than approximately $15,000 a year, which is about 138 percent less than the poverty line.

The replacement will allow this expansion to continue until 2020 at which time there would be a "freeze". It would also institute a cap on coverage, which does not exist now.

Dr McDonough explained that consulting firm Accenture estimated the cap and ending the expansion would reduce spending by $584 billion over 10 years, however states would have to make "draconian cuts" as a result of the "wholesale restructuring" of Medicaid.

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Like Obamacare, the Republican replacement employs the use of tax credits - often called subsidies in healthcare language. However, the current tax credits are based on income - the higher the income, the lower the credit a person receives.

People making above $48,240 for an individual or $98,400 for a family of four get no assistance and there is no cap on what they can pay for insurance. The replacement programme takes income into account to a certain extent, but is really an age-based system.

Anyone making below $75,000 a year or $150,000 for those filing taxes as a couple would receive the same exact tax credit.

Those making above that have a graduated system, increasing with age. It seemingly benefits those who are older but coupled with eliminating the cap on what insurance companies can charge older people may minimise the advantage.

Dr McDonough likened the Republican replacement tax credit system to "giving someone a six foot ladder to get out of a 20 foot hole."

He said the whole replacement bill is actually a "major, gigantic cut for wealthy Americans."

According to Dr McDonough, the provisions in the Republican draft give the 400 wealthiest families in the country a tax cut of $700 million a year while the 160 million families that make less than $200,000 a year would get no added benefit.

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