American Health Care Act offers step in right direction


Dylan Kellos, Reporter

The American Health Care Act, the bill currently making rounds in the House of Representatives, has evolved from the new Trump Administration and the Republican held House and Senate with Speaker of the House Paul Ryan at the helm as a replacement for Obama’s Affordable Care Act (ACA). The bill’s introduction, however, created plenty of controversy, as the staunchest conservative Republicans believe it does not go far enough and most Democrats believe it will “Make America Sick Again.” However, the plan succeeds in its goal to Repeal, Change, and Keep.

First, this plan will repeal the Individual Mandate, Employer Mandate, and Cost-Sharing subsidies completely. The repeal of the Individual Mandate will require that if an individual does not own insurance, insurance companies may apply a 30 percent surcharge from due to lapse of coverage if they seek future coverage past 63 days of removal from insurance.

Removing this allows for more choice within the marketplace, but could sustain a higher number of voluntarily uninsured and increase costs for those insured. However, the AHCA keeps the Essential health benefits provision of the Affordable Care Act which outlines ten benefits that all insurance packages must meet, setting the standard for care. Conservatives in the house however are pushing for an amendment removing the essential health benefits, citing the ability to drive down costs and further specialize healthcare.

Similarly, one new amendment meant to appease Freedom-Caucus conservatives outlines a faster ending to ACA taxes from instead of 2018 to 2017.

The AHCA also removes the Employer Mandate which requires companies with 50 or more full time employees to provide health insurance to 95 percent of their full-time staff or risk a fine. Removing this mandate will take a massive burden off of small businesses and help workers, as it drastically reduces the number of workers employed and business profits.

The ACHA also repealed cost-sharing subsidies as one of the more contentious issues. Cost sharing becomes utilized by lower income Americans who cannot sustain health care costs for the 10 minimum benefits.

However, under the new plan, competition will allow for lower cost plans to coexist with higher cost plans meeting the minimum benefits. This competition will reduce healthcare costs for most Americans as competition drives down prices.

The AHCA will also change parts of the ACA, including premium subsidies, Medicaid expansion, health savings accounts, and restrictions on charging more for older Americans.

The premium subsidies structures the subsidies based on age rather than on income. On average, older individuals typically possess more health issues, requiring more care, and justifying the change of scale. The leaders of the bill have hotly debated criticism that the tax credits do not do enough for older Americans with the ratio of premium charges changing from a 3:1 to a 5:1 ratio, but with the changing scale, a tax credit would offset much of the intense cost facing seniors. Furthermore, a recent amendment to the AHCA would reduce tax deductible healthcare costs from 10 percent of income to 5.8 percent of income starting for seniors almost immediately. This olive branch to age 50-64 American’s who cannot afford increasing costs and do not yet qualify for Medicare quells much of the concern held with the plan.

The Medicaid expansion provision of the bill also spurred debates. The Affordable Care Act previously implemented limited restriction, if any at all, on Medicaid Expansion; under the American Health Care Act, however, that comes to an end. Instead, states will receive an allocated block grant of funds to which they can expand if required or halt expansion depending on local and state needs rather than from top down federally.

The AHCA also changes the enforcement of a work program for non-pregnant individuals. If states see fit, the AHCA would allow them to implement a program where non-pregnant individuals who have coverage under Medicaid must hold a steady job. The argument that people will lose coverage if they do not specifically require it under Medicaid reforms comes from truth, but this provision gives states the ability to provide care for its residents with allocated funds more efficiently with the consideration of regional economic differences.

The last major change of the AHCA targets health savings account reforms previously mentioned by President Trump. Under the ACA, HSA’s contained an investment cap at $3,400 for individuals and $6,750 for families, yet out-of-pocket costs for individuals could reach $6,550 and $13,100 for families with a high-deductible health plan. The AHCA attempts to tackle that by matching high-deductible plans by increasing the investment cap for individuals to $6,550 and $13,100 for families.

Health savings accounts represent an option for Americans looking for alternative healthcare: they have tax deductions, the funds in them may be openly invested in stocks and bonds, and, if used for medical expenses, withdrawals require no tax payments. The AHCA also allows for consumers to use HSA’s for over-the-counter drugs, previously outlawed under the ACA. The freedom of medical choice allows individuals to only pay for the care they need, not a laundry list of needs the federal government believe they need.

The American Health Care Act also keeps provisions which became law under the Affordable Care Act, including dependent coverage until 26, pre-existing conditions policy, essential health benefits, and the prohibitions on annual and lifetime limit.

Centrist Republicans have accepted these provisions, but the changes and repealing do not go far enough for more conservative Republicans. Mostly, what does the government do about the 24 million projected to lose coverage and how do they combat increasing premium costs?

Under the ACA, millions more became insured during its tenure than under the Bush Administration. However, with the tax penalty levied under the ACA, many of those insured did so unwillingly for the sole reason to avoid the tax penalty. The Congressional Budget Office (CBO) estimated that under the AHCA, by 2026, 24 million more individuals will become uninsured.

An important stipulation however remains that the CBO in the past dramatically overshoots estimations on healthcare, and the ACA specifically. In 2014, the CBO projected that ACA enrollees would reach 24 million by 2026, but in reality it only reached around 11 million. The importance of making that clear intensifies as hysteria grows from left-leaning Democrats as the projected number of uninsured becomes analyzed, many times incorrectly for the purpose of pushing their own agendas.

Frequently the figures given or used by the CBO hold little foundation in reality, due to only showing projections. Part of the CBO report states that approximately 8 million of the 24 million losing coverage under the AHCA receive free coverage from Medicaid. Yet again, critics cite the Individual Mandate as the culprit for five million of those signing up under Medicaid to avoid the tax penalty. The concept that the individuals who now receive about $5,000 free from the government for healthcare and still qualify will suddenly give that up because they can does not make sense for the vast majority.

With the repeal of the individual mandate, massive amounts of projections will consist of voluntary removal of insurance, as estimated by the CBO at 14 million in 2018. The freedom of choice in America becomes re-established by the removal of the Individual Mandate in the healthcare markets. Ideally the tax credits and deductions made under the AHCA will incentivize individuals to keep health insurance, even the young and healthy, which will drive down costs.

However, the more complex question still remains over increasing premium costs. In this field, much becomes left up to estimates, projections, and guesswork. The history of success in capitalism serves as the foundation for the AHCA and utilizing the free market, competition, and consumer choice, the plan strives for lowered costs.

The CBO’s estimate shows an increase of premiums for nongroup insurers till 2020 by 15 to 20 percent but reduction by 10 percent from the current rate starting in 2020. The age structure mentioned previously would reduce costs fairly drastically for younger Americans while increasing costs at first for older Americans, offset by the aforementioned tax credits and tax deductions.

The rarely-discussed Patient and State Stability Fund allocates $100 billion to U.S. states over a ten-year period for the use of reducing premium costs, reducing out of pocket cost, increasing affordability, and incentivizing consumer participation. With this fund, the state governments have the ability to tackle the problems facing their residents in regards to healthcare. While funding $100 billion may seem excessive, the removal of the ACA will save $323 billion and AHCA moves policy in the right direction. Although estimates put the AHCA at spending roughly $150 billion in paying tax credits and deductions, along with the Patient and State Stability Fund, it still drastically reduces costs from the ACA.

Importantly, the AHCA serves as the first step of three, as outlined by Speaker of the House Paul Ryan. If the AHCA becomes law, then it will move up to the President and Health and Human Services (HHS) Secretary Tom Price to implement the power of the executive to clarify and continue toward a free market healthcare system.

Similarly, the AHCA still possesses the ability to receive edits and amendments before the House votes on it. One possible amendment proposed by President Trump on March 3, 2017 would call for a cost measure to reduce drug costs across the board, further reducing cost of care.

If the AHCA leaves the House and becomes law, and the HHS Secretary and the President do all they wish, the administration will still need to add on further legislation targeting certain issues and continuing down the ideal path of free market healthcare.

Sadly, due to the ACA, a full free market cannot happen overnight. The intense regulation and control imposed by the Obama administration over the healthcare market limits the ability to feasibly enter fully into free market healthcare without the danger of a monopolized industry and economic turmoil from uncertainty in a massive market like healthcare.

The AHCA, however, steps into the right direction for the American people, allowing for more individual freedoms while reducing costs and still keeping markets stable. The move back toward American individualism in the healthcare market begins with the AHCA, but must not end there; otherwise, the common quip amongst Republicans like Rand Paul calling the AHCA “Obamacare Lite” will become the reality that those who placed the Republicans in power fear most.