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Will Health Insurers Win Under Obamacare Replacement Plan?

The much-awaited repeal and replace plan pertaining to Obamacare has finally been disclosed.
Trump’s “The American Health Care Act” largely replaces Obamacare. During his campaign,
Trump was vociferous about bringing changes to Obamacare. He had even called the former
president’s signature achievement treacherous and a nightmare.

Last month, Trump told the Congress that his replacement of Obamacare will expand choice,
increase access, lower costs, and at the same time provide better health care.

The Provision in Detail

The new plan includes age-based refundable tax credit to help individuals buy insurance and
expands Heath Savings Account. The plan also puts an end to the individual mandate that
required every individual to have health insurance or face a penalty. It also relaxes the
requirement by businesses to offer coverage to their workers. Though the individual mandate
provision has been stripped off, it will levy a penalty on individuals who fail to maintain coverage

The provision includes restructuring the Medicaid program by giving the states a block aid for
Medicaid instead of open-ended funding under Obama. Open-ended funding provided greater
flexibility to the states to manage their Medicaid program, the premiere health insurance
program for low-income Americans.

Open-ended funding, by both federal and state governments, led to Medicaid expansion and
brought more than 20 million people in the U.S. under the insurance net. If a state falls short of
funds like in the case of excess expenditure on Medicaid, it can turn to the federal government
for extra funding.

The provision calls for cutting Medicaid funding by giving a block of fund to each state after
which the states will be on their own, without recourse to federal funds in case of a shortfall.
This will take away their flexibility. It is being widely anticipated that in order to manage their
funds, the state governments might cut off benefits under Medicaid, impose premium or make
other changes such as elimination of subsidies that would make Medicaid unattractive and drive
people away.

The individual mandate and Medicaid expansion under the Affordable Care Act (ACA) provided
coverage to nearly 25 million people. A repeal of this is expected to leave 20 million people

A threat to ACA’s individual mandate provision and Medicaid expansion spell trouble for
companies with Medicaid-centric business such as Molina Healthcare Inc. (MOH), Centene
Corp. (CNC) and WellCare Health Plans, Inc. (WCG). The stocks of these three companies
have suffered the most since Nov 9, 2016, the day when the outcome of election was revealed.
But some of the provisions that had bipartisan support have been kept intact. These include
maintaining coverage for people with pre-existing conditions and allowing children to stay on
their parents' plans until the age of 26.

Effect on Health Insurers

While retaining the pre-existing conditions clause might hinder health insurers’ business, their
ability to charge a penalty on those who fail to maintain coverage is being seen as a positive.
Also, the provision to sell plans across state lines and Trump’s tax credit proposal, which will
presumably keep consumers in the market, are being appreciated.

Health insurers who had a bitter experience with individual exchanges are hopeful that the new
provisions would give them more flexibility to offer lower cost plans and greater flexibility with
regards to age. This will help in drawing the younger and healthier population to the insurance
net and in turn improve the risk pool. Big players like UnitedHealth Group Inc. (UNH), Anthem
Inc. (ANTM), Aetna Inc.(AET) and Humana Inc. (HUM) are hopeful of an improved operating
environment in the post Obamacare era.

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Republicans Unveil Health Care

Bill to Bridge Gaps in Party
 Plan would create tax credits, end health insurance mandate

 No estimate of proposal’s cost or how many will be covered

March 7, 2017, 4:34 AM GMT+5:30 March 7, 2017, 10:43 AM GMT+5:30

 Plan would create tax credits, end health insurance mandate

 No estimate of proposal’s cost or how many will be covered

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Here's How the GOP Plans to Unwind Obamacare

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Here's How the GOP Plans to Unwind Obamacare

Republicans unveiled their long-awaited legislation to repeal and replace the Affordable Care Act, proposing to phase out
key parts of the law over several years as they try to break through a stalemate between moderates and conservatives in
their party.

Called the American Health Care Act, House Republicans’ proposal includes a refundable, age-based tax credit to help
people buy insurance. It also ends a requirement to have coverage, and would eventually eliminate many taxes used to
fund the 2010 law. Other changes, like a wind-down of an expansion of Medicaid, are phased in over a period of years.

It’s not clear whether the proposal can win the support of House conservatives or clear the Senate -- where Republicans
possess a razor-thin margin and are relying on a fast-track legislation procedure full of limitations. There’s also been little
involvement from President Donald Trump, who has eschewed detailed policy proposals in favor of tweets and broad
promises about better health care for less money.

Yet seven years after Republicans began promising repeal, the proposal is the most comprehensive look yet at how the
GOP will approach replacing the health law, which brought coverage to an estimated 20 million people. Republicans have
blamed the ACA for rising insurance premiums and high out-of-pocket costs, and criticized its requirement that everyone
have health insurance or pay a penalty.

Republican Splits

The proposal released Monday night represents an attempt to appease different factions within the party. While
conservatives have pushed for full, immediate repeal, one concern among some moderates is that too-sudden changes
would callously toss people out of coverage right away -- particularly those in Medicaid, the federal-state program for the
poor that was expanded under Obamacare.

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“It looks like they’ve moved toward a better transition period, more flexibilities for the governors and ability for the
Medicaid expansion population to have the assurance that they’re not going to be left out in the cold,” said Senator Shelley
Moore Capito, a West Virginia Republican who had threatened not to support the proposal if Medicaid wasn’t addressed.
“It’s moving in the right direction.”

House Speaker Paul Ryan said in a statement the plan is designed to “drive down costs, encourage competition, and give
every American access to quality, affordable health insurance.”

Bill Details

A copy of the bill is available here, and two House committees will start work on moving it forward on Wednesday.
Key provisions include:

 An advanceable, refundable tax credit to help buy insurance for individuals, that phases out for people making more than
$75,000 ($150,000 for a couple filing jointly). The credit starts at $2,000 per person and grows to $4,000 with age. A
family can get as much as $14,000 in total.
 Immediately ends a requirement that individuals have insurance coverage and another rule that requires some businesses to
offer coverage to their workers.
 Expands the allowable size of health-care savings accounts that can be coupled with high-deductible insurance plans, up to
$6,550 for an individual or $13,100 for a family.
 Winds down Obamacare’s expansion of Medicaid. Changes it to a per-capita system, where states are given a set amount
for the number of people in categories including the disabled, elderly, childless adults and pregnant mothers.
 Allows people with pre-existing conditions to buy insurance, but requires “continuous” coverage to discourage people
from buying it only when they get sick. Individuals who go uninsured for longer than a set period face 30 percent higher
premiums as a penalty.
 Gives states a $100 billion fund over a decade to help lower-income people afford insurance, and to help stabilize state
insurance markets. The fund could be used to help lower patients’ out of pocket costs or to promote access to preventive
 Delays until 2025, instead of permanently repealing, a tax on high-cost health insurance plans.

No Cost Estimate

There was no estimate of how much the bill will cost or how many people it will cover, creating a risk for Republicans as
they move forward. The proposal is paid for for by eventually repealing Obamacare’s expansion of Medicaid, cutting
insurance subsidies and by keeping, but delaying, a tax on high-cost insurance plans.

“You want to know it’s fiscally responsible,” Senator Bill Cassidy, a Louisiana Republican, said in an interview. “You
want to know the taxpayer can’t get hosed, without gimmicks, right? And you’d want to know that folks, that President
Trump, who said he wants as many people covered, you’d want to see his pledge fulfilled, at a lower cost."

It’s not clear whether the measure can win the support of House conservatives, who have demanded a more complete
repeal. Earlier drafts prompted stiff criticism from some who complained that concerns over the cost, size and nature of
the tax credits weren’t adequately addressed.

Representative Mark Walker, the chairman of the Republican Study Committee and critic of earlier drafts, said the bills
move "in the right direction" and that his group’s steering committee will meet Tuesday evening to consider them.

“I applaud the movement and believe it is the right direction,” Walker, from North Carolina, said in an emailed statement.
“We are carefully reviewing this legislation looking in three main areas of shared conservative concern: protection of the
unborn, elimination of Obamacare’s Medicaid expansion and ensuring the tax credits are fiscally responsible.”
Republican Mark Meadows, also of North Carolina and chairman of the House Freedom Caucus said they too will meet
Tuesday to discuss the legislation.

And even with the Medicaid provisions, there are other risks. Two Senate Republicans -- Susan Collins of Maine and Lisa
Murkowski of Alaska -- oppose plans to defund Planned Parenthood that are included in the bill.

Democrats React

Democrats immediately panned the bill, which the GOP has kept out of sight during its drafting.

“Congressional Republicans are leading a desperate forced march to pass a dangerous bill written in secret which few
members of Congress have seen, let alone read,” Senator Ron Wyden, of Oregon, said in a statement Monday night.

Democrats also argued that people currently covered under Obamacare would be worse off.

“The Republican repeal bill would charge them more money for less care,” representatives Frank Pallone of New Jersey
and Richard Neal of Massachusetts said in a statement. They are the top two Democrats on the House Energy and
Commerce Committee and Ways and Means Committee, respectively.

Read more: Why repealing Obamacare could be harder than it sounds

For Republicans and Trump, gutting the ACA became a campaign rallying cry. Trump told Congress on Feb. 28 that he
will “replace Obamacare with reforms that expand choice, increase access, lower costs, and at the same time provide better
health care.’’

“Time to end this nightmare,” Trump tweeted on Monday night after the bill was released.


Are Health Insurance Stocks Winners Under the Obamacare Replacement Plan?

republicans put out a new health care plan. how will insurance stocks fare if it is
Washington (CNN) House Republicans introduced their bill to repeal Obamacare's individual mandate that also aims to
maintain coverage for people with pre-existing conditions and allow children to stay on their parents' plans until the age of 26.

The measure would offer individuals refundable tax credits to purchase health insurance
and restructure the country's Medicaid program so that states receive a set amount of
money from the federal government every year -- changes experts warn could result in
millions of people losing access to insurance they received under the Affordable Care
It also largely would keep Obamacare's protections of those with pre-existing conditions,
but allows insurers to charge higher premiums to those who let their coverage lapse.
Full text: GOP plan to repeal and replace Obamacare
House Speaker Paul Ryan said Obamacare is "rapidly collapsing" and it is "time to turn
the page."
"The American Health Care Act is a plan to drive down costs, encourage competition, and give every American access to quality,
affordable health insurance. It protects young adults, patients with pre-existing conditions, and provides a stable transition so that no
one has the rug pulled out from under them," Ryan said in a statement.

The measure sets up a political battle that could consume Congress for much of the year.

Polls: Support for Obamacare at all-time high

White House spokesman Sean Spicer praised the bill's release.

"Obamacare has proven to be a disaster with fewer options, inferior care, and skyrocketing costs that are crushing small business
and families across America," Spicer said in a statement. "Today marks an important step toward restoring health care choices and
affordability back to the American people. President Trump looks forward to working with both Chambers of Congress to repeal and
replace Obamacare."

The two top Democrats on the two House committees that crafted the bill -- Reps. Frank Pallone of New Jersey and Richard Neal of
Massachusetts -- railed on Republicans for writing the bill without broader input. The measure was kept in a room in a House office
building last week to let members review it without risk of it leaking to the press.

Pallone and Neal invoked Trump's prior commitments, saying the proposal "would rip health care away from millions of Americans,
ration care for working families and seniors, and put insurance companies back in charge of health care decisions -- contrary to
everything President Trump has said he would do with his health care plan."

Conservative and moderate Republicans have raised concerns about key provisions within the bill. Conservatives say have argued
that refundable tax credits are little more than a new entitlement program and some Republicans from Medicaid-expansion states
have said they would not support plans that could kick millions of people off the Medicaid rolls.

Bowing to pressure from the right, House leaders instituted an income cap on the tax credit to prevent wealthier Americans from
claiming it.

The House plan would also retain the so-called Cadillac tax -- which has never gone into affect -- in order to hit the budget targets
required under the maneuver used to pass the bill, called budget reconciliation.

Still, Republican leaders are committed to moving forward with major tenants of the legislation and are hoping that President Donald
Trump and his administration can bring wavering members on board and get the bill across the finish line.

Monday, the bill was released without any Congressional Budget Office score, a sign that Republicans may be worried about the
fallout once Americans understand how many people could be affected by changes in coverage.

Strip funding for Planned Parenthood

The GOP bill also includes a provision to strip all federal funding for Planned Parenthood, which is something Republicans has
vowed to do for years citing concerns over the use of taxpayer money for abortion services.

Planned Parenthood rejects Trump proposal to stop abortion services

Even though current federal law bars the use of money specifically for abortions, conservatives have complained that the women's
health services organization does support research they oppose. Planned Parenthood has warned that cutting off their funding will
have major impact on Medicaid recipients, millions of whom obtain health care services in their clinics.

Waiting for this moment

After years of attacking Democrats for Obamacare's shortcomings and running dress rehearsals to repeal it, Republicans this week
are finally facing the praise -- as well as the consequences -- of trying to revise the nation's health care system

Rep. Kevin Brady, a Republican from Texas and the House Ways and Means chairman, said in a written statement, "our legislation
transfers power from Washington back to the American people. We dismantle Obamacare's damaging taxes and mandates so
states can deliver quality, affordable options based on what their patient populations need, and workers and families can have the
freedom and flexibility to make their own health care choices."

GOP leaders may dare fellow Republicans to vote against Obamacare repeal

Two House committees have scheduled meetings on the bill for Wednesday, according to aides and committee members. Since this
is the first time most lawmakers and the public will actually see the bill, it's also the most significant test to see that the legislation
can at the very least survive early flogging from all sides.

The lack of a CBO score may concern lawmakers.

While Republicans had long argued their plan would give consumers more flexibility, the reality is that the GOP replacement bill was
not necessarily designed to cover more people than the Affordable Care Act did. The CBO score is expected to reflect that reality,
which is part of the reason it was not part of the bill's initial unveiling.

Difficult politics ahead

Schisms over how to overhaul Medicaid and how to structure refundable tax credits won't be solved anytime soon.

Republican leaders have worked aggressively to forge consensus with their members in listening sessions and meetings behind
closed doors in recent weeks, but the divides between conservatives and moderates, and those between moderates and lawmakers
from states that expanded Medicaid under Obamacare are not going away.

GOP tries to keep agenda on track, despite Trump tweets

On Monday morning, Budget Director Mick Mulvaney, a former congressman with ties to House Conservatives, warned members of
the Freedom Caucus about bucking their party on something as key as Obamacare repeal.

The White House hosted a "large staff meeting" Friday with administration and congressional staff to resolve outstanding issues, a
senior GOP aide said. The House committees "worked over the weekend with the White House to tie up loose ends and incorporate
technical guidance from the administration."

House Speaker Paul Ryan, Energy and Commerce Chairman Greg Walden, Mulvaney, HHS Secretary Tom Price, Domestic Policy
Council Director Andrew Bremberg and House, among others, held a conference call Saturday to discuss the bill.

The goal in the weeks ahead will continue to be simply making enough members happy to reach 218 votes in the House and 51 in
the Senate. That's the number of votes needed to pass the "repeal-plus" measure and number of people they need to convince
Trump to sign it.
Republicans in the House and the Senate voted in 2015 to repeal President Barack Obama's signature legislative achievement, but
members then knew they'd be protected by Obama's veto pen from suffering any of the political consequences if it went poorly.

Angry voters at town halls

This time around -- as some members have said -- the party is playing with real bullets.

Already, Democratic backlash against attempts to repeal the Affordable Care Act has been intense. Republican members across the
country have returned to their districts only to be confronted by raucous crowds of constituents at town halls and outside their
offices. The high-stakes negotiations have drawn such consternation that the evolving draft of the bill was being kept in an Energy
and Commerce Committee office room last week, only available for Republican members of the committee to see.

Contentious moments from US town halls 01:22

The parallels to 2009, when the Democrats started work on Obamacare, are hard to ignore. Town halls, industry participants
hammering away behind the scenes to save tax breaks and carve outs, allegations that leadership is hiding the details, even some
of the proposals themselves appear to more closely mirror those pursued by Democrats than most Republicans would care to admit.

This is the House GOP leadership's trust fall.

The divides are only expected to get more pronounced now that the bill has been released.

Republicans from states that expanded Medicaid under Obamacare have voiced serious concerns about rolling back a program that
helped low-income people back home get health care. Non-expansion state Republicans, on the other hand, have voiced opposition
to any program that allows expansion states to receive more money in the future.

"The reality of it is there is no way to get this done if you don't make whole those states that were more fiscally responsible and did
not expand," Sen. Tim Scott, a Republican from South Carolina, a state that didn't expand Medicaid, told reporters last week

House Republicans release long-awaited plan to replace Obamacare

The inside track on Washington politic

House Republicans on Monday released long-anticipated legislation to supplant the

Affordable Care Act with a more conservative vision for the nation’s health-care
system, replacing federal insurance subsidies with a new form of individual tax credits
and grants to help states shape their own policies.

Under two bills drafted by separate House committees, the government would no
longer penalize Americans for failing to have health insurance but would try to
encourage people to maintain coverage by allowing insurers to impose a surcharge of
30 percent for those who have a gap between health plans.
The legislation would preserve two of the most popular features of the 2010 health-
care law, letting young adults stay on their parents’ health plans until age 26 and
forbidding insurers to deny coverage or charge more to people with preexisting
medical problems. It would also target Planned Parenthood, rendering the women’s
health organization ineligible for Medicaid reimbursements or federal family planning
grants — a key priority for antiabortion groups.

The debate, starting in House committees this week, is a remarkable moment in

government health-care policymaking. The Affordable Care Act, former president
Barack Obama’s signature domestic policy achievement passed in 2010 with only
Democratic support, ushered in the most significant expansion of insurance coverage
since the creation of Medicare and Medicaid as part of President Lyndon B. Johnson’s
Great Society programs of the mid-1960s.

There is no precedent for Congress to reverse a major program of social benefits once
it has taken effect and reached millions of Americans.

(Sarah Parnass/The Washington Post)

Taken together, the bills introduced Monday night represent the Republicans’ first
attempt — and best shot to date, with an ally in the White House — to translate seven
years of talking points about demolishing the ACA into action.

At the same time, major aspects of the plans, notably the strategy for tax credits and
Medicaid, reflect the treacherous terrain that Republicans face to win enough votes
within their own conferences in the GOP-controlled House and Senate.

The bills must address concerns of both conservatives worried about the cost of the
overhaul and worries that it might in effect enshrine a new federal entitlement, as well
as more moderate members who want to ensure that their constituents retain access to
affordable health care, including those who received Medicaid coverage under the

Even so, signs emerged on Monday that Republicans in Congress’s upper chamber
could balk either at the cost of the proposal or if it leaves swaths of the country
without insurance coverage.

Sen. Rand Paul (R-Ky.), one of at least three conservative senators who opposes the
plan to provide income-based tax credits, tweeted: “Still have not seen an official
version of the House Obamacare replacement bill, but from media reports this sure
looks like Obamacare Lite!”
And four key Republican senators, all from states that opted to expand Medicaid
under the ACA, said they would oppose any new plan that would leave millions of
Americans uninsured.

“We will not support a plan that does not include stability for Medicaid expansion
populations or flexibility for states,” Sens. Rob Portman (Ohio), Shelley Moore
Capito (W.Va.), Cory Gardner (Colo.) and Lisa Murkowski (Alaska) wrote in a letter
to Senate Majority Leader Mitch McConnell (R-Ky.).

(Alice Li/The Washington Post)

The four senators were split on exactly what proposals would meet their standards, but
with 52 Republicans, McConnell would not have enough votes to pass repeal without
the support of at least two of them.

Democrats, meanwhile, have given no indication that they intend to work with
Republicans, and top party leaders decried the GOP plan Monday as a betrayal of
everyday Americans. “Trumpcare doesn’t replace the Affordable Care Act, it forces
millions of Americans to pay more for less care,” said Senate Minority Leader Charles
E. Schumer (D-N.Y.).

In particular, the plan to target Planned Parenthood has already generated fierce
pushback from Democrats and doubts from some Republicans who have noted that
federal funds are already barred from funding abortions and that Planned Parenthood
provides routine medical care to millions of American women.

The tax credits outlined by the Ways and Means Committee’s portion of the
legislation incorporate an approach that Republicans have long criticized: income-
based aid to help Americans afford health coverage.

Until now, the GOP had been intending to veer away from the ACA subsidies that
help poor and middle-class people obtain insurance, insisting that the size of tax
credits with which they planned to replace the subsidies should be based entirely on
people’s ages and not their incomes. But the drafts issued Monday proposed
refundable tax credits that would hinge on earnings as well as age — providing bigger
credits for older and poorer Americans.

This big pivot, developed by the Ways and Means Committee under the guidance of
House Speaker Paul D. Ryan (R-Wis.), stems from a combination of problems that
were arising with the idea of age-only credits that would have been available to any
individual or family buying insurance on their own, no matter how affluent.
The Republican plan would offer tax credits ranging from $2,000 per year for those
under 30 to $4,000 per year for those over 60. The full credit would be available for
individuals earning up to $75,000 a year and up to $150,000 for married couples filing
jointly. The credits would phase out for individuals earning more — for each $1,000
in additional income, a person would be entitled to $100 less in credit, meaning a 61-
year old could make up to $115,000 and still receive some credit.

The income-based phase-out of the credit allows the GOP plan to be funded without
taxes on employer-provided insurance that had been considered earlier in the drafting
process. In addition, the latest proposal would delay the ACA’s “Cadillac” tax, a levy
on the most generous employer-provided health plans, until 2025. It also retains the
tax exclusion for premiums paid for employer-provided health plans.

Estimates from congressional budget analysts and the White House’s Office of
Management and Budget kept showing that the credits would be both too small to
provide enough help to lower-income people and too expensive overall for a GOP
determined to slash federal spending that the ACA has required.

Those analysts have not had time to assess how this new configuration would affect
federal spending or the number of people with insurance coverage.

While the number of Americans who can afford health insurance has never been the
priority for the GOP that it is for Democrats, President Trump has made clear that he
is sensitive to any changes that would strand large numbers of people who gained
coverage under the ACA.

[Conservative groups and lawmakers demanding ‘full repeal’ could derail

Obamacare rollback]

Compared with the ACA’s subsidies, the tax credits would go to more people but
provide less financial help to lower-income people, according to Larry Levitt, senior
vice president of the Kaiser Family Foundation.

Meanwhile, the portion of the legislation drafted by the Energy and Commerce
Committee would substantially redesign Medicaid in a way that attempts to balance
the GOP’s antipathy toward the ACA’s expansion of the program against the concerns
of a significant cadre of Republican governors — and the lawmakers from their states
— who fear losing millions of dollars that the law has funneled to help insure low-
income residents.

Medicaid would be converted from its current form of entitlement to anyone eligible
into a per capita cap on funding to states, depending on how many people they had
enrolled. In states that expanded Medicaid under the ACA, the government for now
would continue paying for virtually the entire cost of the expansion.

Thirty-one states, plus the District of Columbia, have adopted that expansion. Starting
in 2020, however, the GOP plan would restrict the government’s generous Medicaid
payment — 90 percent of the cost of covering people in the expansion group — only
to people who were in the program as of then. States would keep getting that amount
of federal help for each of those people as long as they remained eligible, with the
idea that most people on Medicaid drop off after a few years.

For the other 19 states that did not expand Medicaid, the legislation would provide
$10 billion spread over five years. States could use that money to subsidize hospitals
and other providers of care that treat many poor patients.

[A divided White House still offers little guidance on replacing Obamacare]

While members of the two committees working on the replacement drafts were
determined to begin considering legislation this week, final work on them was still
underway over the weekend and Monday, according to three individuals with
knowledge of the process.

The change in thinking about tax credits emerged since Friday, when a White House
meeting chaired by Budget Director Mick Mulvaney and attended by key GOP
congressional figures was called to finalize key provisions.

At the same time, the shift to take income into account could create a potentially
difficult ripple effect for Republicans, who regard a reduction in the federal
government’s role in health care as a central reason to abandon the sprawling 2010
health care law. One motivation for the GOP thinking that credits could depend only
on age was that the Internal Revenue Service would no longer have needed to verify
the eligibility of people for financial help, as it has for ACA subsidies. If income is
taken into account, the IRS would still need to be involved.

Coming out of a closed-door GOP conference meeting last week, several House
Republicans expressed concerns that the committees might start to work on the
legislation without a complete fiscal assessment. To be eligible for special budget
rules known as “reconciliation” — allowing bills to pass in the Senate by a simple
majority — the legislation cannot increase the deficit after its first 10 years in effect.

Several House GOP aides involved in drafting the legislation could not say when the
Congressional Budget Office would provide its formal analysis of the bill, but the two
committees of jurisdiction are poised to advance the bill without it. One said
committees “regularly go through the markup process without a formal CBO score.”

But House Minority Leader Nancy Pelosi (D-Calif.) said Monday that Republicans
should not move the legislation through committees without the CBO analysis: “The
American people deserve to see what Republicans are trying to do to their health

The American Health Care Act: The

Republicans’ bill to replace
Obamacare, explained
Updated by Sarah Mar 6, 2017, 10:25pm EST

House Republicans released their long-awaited replacement plan for the

Affordable Care Act on Monday.

The American Health Care Act was developed in conjunction with the White
House and Senate Republicans. Two big questions — how many people it will
cover and how much it will cost — are still unresolved: It will likely cover fewer
people than the Affordable Care Act currently does, but we don’t know how
many. And the Congressional Budget Office has not yet scored the legislation,
so its price tag is unknown.

But what we can say for sure is this:

 Some of Obamacare’s signature features are gone immediately, such as the

tax on people who don’t purchase health care. Other protections, including
the ban on discriminating people with pre-existing conditions and the provision
that allows young adults to stay on their parents’ plan through age 26, would
 The plan maintains the Medicaid expansion — for now. The Affordable
Care Act expanded Medicaid to cover millions of low-income Americans. And,
in a big shift from previous drafts of the legislation, which ended Medicaid
expansion immediately, this bill would continue to that coverage expansion
through January 1, 2020. At that point, enrollment would “freeze,” and
legislators expect enrollees would drop out of the program as their incomes
 The replacement plan benefits people who are healthy and high-income,
anddisadvantages those who are sicker and lower-income. The replacement
plan would make several changes to what health insurers can charge enrollees
who purchase insurance on the individual market, as well as changing what
benefits their plans must cover. In aggregate, these changes could be
advantageous to younger and healthier enrollees who want skimpier (and
cheaper) benefit packages. But they could be costly for older and sicker
Obamacare enrollees, who rely on the law’s current requirements.
 The bill looks a lot more like Obamacare than previous drafts. A curious
thing has happened to the Republican replacement plan as it has evolved
through multiple drafts: it has begun to look more and more like Obamacare
itself. The bill keeps some key features of Obamacare, like giving more help to
lower-income Americans and the Medicaid expansion, around in a scaled-back
form. This speaks to how entrenched the health care law has become since its
enactment 7 years ago, and how difficult it will be for the GOP to repeal it

AHCA would end Medicaid expansion in 2020

One of the main ways that Obamacare increased insurance coverage was by
expanding the Medicaid program to cover millions more low-income
Americans. Prior to the health law, the entitlement was restricted to specific
groups of low-income Americans (pregnant women, for example, and the blind
and disabled).

Obamacare opened the program up to anyone below 138 percent of the

poverty line (about $15,000 for an individual) in the 31 states that opted to

Initial GOP plans would have ended this coverage expansion outright — but in
a big reversal, the replacement bill will allow Medicaid expansion to continue
through January 1, 2020. States will be able to continue to enroll people in the
program. States that haven’t expanded yet but are considering the option
could join the Medicaid expansion, and enroll people over the same time
period as well.

In 2020, enrollment in the Medicaid expansion will “freeze” and states with no
longer be able to sign new enrollees up for the program. Legislators expect
that enrollment would slowly decline, as enrollees’ incomes change and they
shift off the program.

This change is near certainly due to intense pressure from the 15 Republican
governors who run states that have expanded Medicaid, and have lobbied
aggressively in favor of the keeping the program alive. It could encourage
some states eyeing Medicaid expansion like Kansas and Maine to move
forward before the enrollment freeze.

There are significant changes to Medicaid in the American Health Care Act
outside of the expansion, too. This bill would convert Medicaid to a “per capita
cap” system, where states would get a lump sum from the federal government
for each enrollee.

This is different from current Medicaid funding. Right now, the federal
government has an open-ended commitment to paying all of a Medicaid
enrollee’s bills, regardless of how high they go.

Previous analyses of different version of this proposal suggest it could lead to

very deep cuts to Medicaid. It’s unclear, at this point, how much this new
version of the policy would reduce Medicaid spending.

The AHCA bans discrimination against those with pre-existing

conditions — but charges more to people who have a break in coverage

AHCA keeps many of the popular health insurance reforms from Obamacare.
This includes a ban on annual and lifetime limits, allowing kids to stay on their
parents’ plans until they’re 26, and requiring insurance plans to offer coverage
to all patients regardless of how sick they are. But AHCA, unlike Obamacare,
does not mandate that all Americans be covered by health insurance or pay a

Instead, it has a different way of penalizing people who decide to remain

uninsured: requiring those who don’t maintain “continuous coverage” to pay a
hefty fine when they want to re-enter the insurance market.
This continuous coverage policy has shown up a lot in Republican
replacement plans. It was part of Speaker Ryan’s A Better Way proposal and
Rep. Price’s Empowering Patients First Act.

Here’s how it works: If a worker goes straight from insurance at work to her
own policy, her insurer has to charge her a standard rate — it can’t take the
cost of her condition into account.

But if she had a lapse in coverage longer than 63 days — perhaps she
couldn’t afford a new plan between jobs — and went to the individual market
later, insurers could charge her a 30 percent premium surcharge. She would
need to pay that higher premium for a full year before returning to the
standard rate.

A Congressional aide clarified that this surcharge would be the same for both
healthy and sick people; insurers could not use it to turn away people they
expect to have significantly higher medical costs.

But this might end up having unintended consequences, because only the
people who really need insurance — and who have high medical costs — may
want to pay the surcharge. Healthy people might be more comfortable staying
out of the individual market for longer, perhaps until they get a job that offers
coverage. That could drive up premiums for everybody.

The weird thing is, this discourages people from re-entering the health insurance
market *unless* they are sick.

— Josh Barro (@jbarro) March 6, 2017

This is a less harsh penalty than the one that Price suggested in his 2015
Empowering Patients First Act. In that bill, he would have allowed insurers to
charge people like this 150 percent of the standard premium for 18 months.

The leaked draft does have a safety net for people who can’t afford to buy this
more expensive coverage. It would invest $100 billion over 10 years into a
Patient and State Stability Fund. States could use this money to bump up the
size of the tax credits in the individual market (more on that in a minute), build
high-risk pools for those with exceptionally costly medical conditions, or send
money to insurers who get stuck with especially costly patients (people who
have claims above $50,000 in a single year).

The AHCA would let insurers charge older enrollees more

Obamacare currently restricts how much insurers can charge their oldest
enrollees in the individual market. It says that insurers can only charge the
oldest enrollee three times as much as the youngest, which pushes down
premiums for those in their 50s and 60s. This used to be a group that faced
prohibitively steep premiums on the individual market.

The AHCA would get rid of that regulation, allowing insurers to charge their
oldest enrollees as much as they want. This change “increases the overall
number of people with coverage, but older people end up falling out of the
market as premiums rise,” says Christine Eibner, an economist with the RAND
Corporation who has modeled similar changes to Obamacare’s age-rating

Eibner estimates that this particular policy would lower premiums for a 24-year-
old from $2,800 to $2,100. But premiums for a 64-year-old would rise from
$8,500 to $10,600.

And while young people might have cheaper premiums and an easier ability to
enroll, older Americans could struggle to purchase coverage in this market,
where their costs would rise. These are people who tend to have more urgent
health care needs and could be in a worse position without health care than a
young adult might be.

This worries some Obamacare supporters, who say the goal of insurance
reform isn’t just to expand coverage — it’s to expand coverage for people who
really need health care.

“If you replace a 60-year-old with a 20-year-old, that doesn’t change the
number of people covered, but it changes the value of the coverage and of the
program,” says Jonathan Gruber, the MIT economist who helped the White
House model the economic effects of Obamacare.

The AHCA provides tax credits for the individual market that would
benefit high-income Americans

The Republican replacement, like Obamacare, envisions that Americans will

use tax credits to purchase individual health insurance. But the structure of
the tax credits is very different.

Obamacare’s tax credits are based on income, with those who earn less
getting more help. Under Obamacare, people who earn less than 200 percent
of the poverty line (about $24,120 for an individual or $49,200 for a family of
four) get the most generous help. They would get enough money so that a
midlevel plan would cost no more than 6.4 percent of their income. People
who earn more than 400 percent of the poverty line ($48,240 for an individual
or $98,400 for a family of four) get nothing at all. There is no cap on what they
have to pay for insurance.

The Republican plans would be based mostly on age and a bit on income.
Everyone who earns less than $75,000 (or $150,000 for a couple filing jointly)
would get the same amount of help. Those above the income threshold would
have the help slowly phased out in 10 percent increments. The tax credits
would be doled out this way:

 $2,000 for those under 30

 $2,500 for those between 30 and 40
 $3,000 for those between 40 and 50
 $3,500 for those between 50 and 60
 $4,000 for those over 60

On the surface, the tax credits for the oldest Americans seem the most
generous. People in their 60s, for example, get twice as much help as those in
their 20s.

But under the Republican plan, insurers would be allowed to charge the oldest
Americans five times as much as the youngest Americans. Their financial help
would not scale nearly as much as their premiums would.

“You’re both jacking up the prices and giving people less of a subsidy, which
is a damaging combination,” says David Certner, legislative policy director for
the AARP, which lobbies on behalf of Americans over 55.

This new tax credit structure could also hurt to many low-income Americans,
whose subsidies would fall substantially. The Kaiser Family Foundation
estimates that that these new tax credits would be anywhere between 31 and
82 percent lower for a 60-year-old who earns $20,000, depending on where
that 60-year-old lives.

Higher-earning Americans, however, could see their benefits increase

significantly. People who earned $48,280 or more under Obamacare got no
help — but now anyone under the $75,000 threshold gets the biggest tax
Still, this is a big difference from previous replacement plans, which had no
income cap on who could receive financial help.

AHCA kills a new tax on employer-sponsored coverage — but keeps

Obamacare taxes around for a year

Most drafts of the AHCA capped the tax exclusion for employer-sponsored
coverage, meaning that costly health plans would be subject to income taxes.

The health insurance tax break is the biggest in the federal budget; the
government loses out on $260 billion annually by not taxing health benefits.
And economists across the political spectrum agree that Congress should
eliminate or at least reduce this tax break, which currently gives those with
jobs a huge discount on their coverage — and an incentive to buy more
coverage than they actually need.

Original drafts of the Republican plan would have taxed any employer-
sponsored coverage above the 90th percentile of current premiums. But this
provision got significant blowback from employers, who knew it would raise
the cost of health insurance significantly — and were ready to frame it as a tax
hike on the 158 millions who get coverage at work.

The Republicans still need a way to pay for the tax credits and Medicaid
expansion in their bill. So instead of the cap on the tax exclusion, they now will
keep Obamacare’s taxes in place through January 1, 2018. This includes
taxes on everything from insurers and hospitals to taxes on tanning salons —
Obamacare’s so-called “Snooki tax.”

Correction: an earlier version of the article misstated what would happen to the
essential health benefits package under the AHCA. It would remain intact

Potential Repeal & Replace of ACA and GOP Cost Sharing Reductions (CSR) lawsuit represent additional downside to Medicaid
MCOs. MOH and CNC have highest earnings exposure to Medicaid expansion in our coverage while UNH, ANTM, and WCG have
modest earnings exposure. ANTM with its diversified platform across the leading Individual and Medicaid books of business will be
better able to withstand the uncertainty on future coverage expansion, in our view.

"Repeal and Replace" is looking poised to drive a partial claw-back of the subsidies in Medicaid expansion to Block grants or per
capita spending caps for Medicaid, which will reduce but not completely reverse the top-line and earnings tailwind enjoyed by these