HOW THE NEW TRUMPCARE BILL COULD AFFECT HEALTH CARE CONSUMERS

TRUMPCARE BILL

GILLIAN MOHNEY - Good Morning America May 4, 2017After weeks of wrangling, protests and pressure from the White House, a new health care bill was passed by the House of Representatives today. The new bill has changed multiple times since Republicans originally introduced it in March.Here are some key takeaways about the newest version of the American Health Care Act (AHCA), also referred to as Trumpcare.

Pre-existing conditions

Technically, people with pre-existing conditions may not be barred from obtaining insurance coverage under the AHCA. However, their coverage options could be seriously affected by this bill. States would be permitted to apply for waivers to exempt insurance companies from a community rating provision and allow them to charge far higher premiums for people with pre-existing conditions.The community rating provision is a way of setting premiums and is designed to ensure risk is spread evenly across a larger pool. This means that people are charged the same rate regardless of factors like health status. Under the Affordable Care Act, insurance companies may charge different rates for identical plans only on the basis of age, geographic location, the number of people covered and tobacco use, according to the Kaiser Family Foundation.Under the AHCA, people in certain states could face far higher premiums for pre-existing conditions. States that apply for this waiver would have to implement high-risk insurance pools to accommodate them. But health care experts are skeptical that these high-risk pools would have enough money to fully cover people in need.Karen Pollitz, a senior fellow at the Kaiser Family Foundation, told ABC News that if there is no protection from higher costs for their specialized insurance plans, people with pre-existing conditions would likely be priced out ofcoverage. In the 1990s, she added, people with pre-existing conditions who recently lost their jobs were supposed to be protected by the Health Insurance Portability and Accountability Act and not be barred from obtaining insurance coverage. However, insurance companies charged far higher premiums for people with pre-existing conditions.“To actually protect someone with pre-existing condition … they need full protection. Otherwise, it’s like giving someone half a bulletproof vest,” Pollitz said. Top ‘Trumpcare’ takeaways, changes How the new ‘Trumpcare’ proposal could affect consumers

High-risk pools

The newest version of the bill allocates $8 billion over five years for states that apply for the waiver, to help cover the costs of care for people with pre-existing conditions. Most likely, the states would use this money to help fund a high-risk insurance pool for residents with pre-existing conditions.Pollitz said it’s unclear why $8 billion was picked as an appropriate number to fund a high-risk insurance pool, especially since it’s unknown how many states would apply for the waiver and how many people with pre-existing conditions would need help paying for care.“Eight billion is not a number that bears any resemblance … to what this would cost,” she told ABC News. Before the Affordable Care Act, 35 states had high-risk pools to cover residents who otherwise would not be insured because of pre-existing conditions. The Kaiser Family Foundation found that state high-risk pools often had significantly higher premiums and likely included just a small fraction of people who needed coverage.

Health care mandate

The Trumpcare bill does away with the mandate under the ACA that requires people have health insurance or pay a fine. Under the new bill, people who go 60 days without health coverage would be penalized if they rejoin a health plan; they would face a 30 percent penalty on their insurance policy for one year.Christine Eibner, a senior economist and professor at the Pardee Rand Graduate School, told ABC News in an earlier interview that some people would likely not view insurance as a necessity and be more willing to bet that they could afford the 30 percent surcharge on health insurance down the line.“It doesn’t seem that punitive,” she said. “You’re still guaranteed that you can get health insurance … For some people, that might be affordable, and you might end up with employer coverage in the interim.”

Essential health benefits

Under the ACA, certain essential health benefits — including maternal care, prescription coverage and mental health care — must be a part of any insurance plan. Under the new Trumpcare bill, states could apply for a waiver to exempt insurance plans from including these benefits in their plans. To qualify, the states would need to prove they could either lower the cost of health care for people or increase the number of people covered by insurance.Health experts say that if this provision is enacted, costs for people in need of specific essential health benefits will likely face higher premiums because insurance companies will assume that a person who signs up for a plan with maternal care or prescription benefits will be likely to use those benefits.“If somebody needs maternity care, it will be much more expensive,” Eibner said.Pollitz said that insurance companies would likely offer cheaper plans but that under those plans, people would be left vulnerable to high medical costs.“If you waive hospitalization or prescription drugs, then it starts to make the policy cheaper, for sure,” she said. “But you’re also back to part of the [bulletproof] vest again.”

Tax credit changes

Under the new bill, qualifications for tax credits to help pay for health insurance would change significantly.While the ACA offers a scale of credits that take into account family income, cost of insurance and age, the Trumpcare plan would offer flat tax credits per individual, focused on age. The House GOP bill would provide tax credits of $2,000 to $14,000 a year for individuals who don’t get insurance coverage from an employer or the government. The credits would be based on age instead of income and would be capped for higher earners.People who are older, are lower-income or live in areas with high insurance premiums would likely receive smaller tax credits under the new bill than they do under the ACA. Those who are younger, have higher incomes or live in areas with lower insurance premiums would likely receive more government assistance than they currently do, according to the Kaiser Family Foundation.A 64-year-old who makes $26,500 a year could see net out-of-pocket costs increase from $1,700 a year under the current law to $14,600 a year under the GOP plan, according to Congressional Budget Office estimates. A 40-year-old making the same amount would pay a few hundred dollars more after the tax credits, from $1,700 under Obamacare to $2,400 under the GOP bill.

Medicaid

The new bill calls for major changes to the way Medicaid is funded. First, the federal support of expanded Medicaid coverage, to those earning no more than 133 percent of the federal poverty level, would be rolled back. States that expanded Medicaid would no longer receive extra funds for new expansion beneficiaries after 2020, Kaiser Health News said.People who receive Medicaid would be required to work unless they are disabled, pregnant or elderly.Beginning in 2020, federal Medicaid financing would be changed to a per capita cap rather than a matching program, under which the federal government has supplied funds based on the number and needs of the enrollees.Additionally, after 2020, state Medicaid plans would no longer be required to provide ACA-designated essential health benefits, including emergency services, pregnancy and newborn care, prescription drugs and pediatric services. Capping federal funds for Medicaid could have a huge impact on seniors and disabled children who depend on that coverage, according to Pollitz.“There are 75 million people on Medicaid today. It’s the second-largest source of coverage,” she said. Employer coverage is the largest.She pointed out that without federal funds to help with Medicaid coverage, states may have less money to help fund high-risk pools or other subsidies to help people afford health care. The changes would reduce $880 billion in federal spending on Medicaid over the next decade, pushing onto the states more of the financial burden for covering more than 74 million people in the program, according to the Kaiser Family Foundation“It would be a big hit for states,” Pollitz said. “It matters for the coverage and what states are going to be willing to spend in addition to this federal grant money. They’re going to have their hands full.”

Older adults vs. younger adults

Under the ACA, insurance companies may charge an older person no more than three times its premium for a younger person with an identical plan. The new bill would increase the maximum allowable ratio to 5 to 1, which could significantly increase older people’s premiums for comparable plans. States would be able to set different maximum ratios.Eibner said that older Americans not yet eligible for Medicare would be at risk for expensive premiums.“They will face higher premiums than they currently do, and the younger people will face [lower] premiums.”

Join the Conversation on Linkedin | About PEO Compass

The PEO Compass is a friendly convergence of professionals and friends in the PEO industry sharing insights, ideas and intelligence to make us all better.All writers specialize in Professional Employer Organization (PEO) business services such as Workers Compensation, Mergers & Acquisitions, Data Management, Employment Practices Liability (EPLI), Cyber Liability Insurance, Health Insurance, Occupational Accident Insurance, Business Insurance, Client Company, Casualty Insurance, Disability Insurance and more.To contact a PEO expert, please visit Libertate Insurance Services, LLC and RiskMD.