Guest Blog by Joseph McDonagh
As an insurance agent, I reviewed the latest Republican health care bills for their impact on my clients who buy health insurance through Access Health CT, the state’s health insurance exchange. I compared these new bills with the Affordable Care Act (ACA aka Obamacare) – which the GOP bills aim to “repeal and replace”
What can we expect from the House’s American Health Care Act of 2017, or the Senate’s Better Care Reconciliation Act of 2017? Much commentary regarding the Senate bill has compared it to the House bill, which isn’t helpful.
Here are my key concerns:
Under the ACA, when you buy insurance through an exchange, you may be eligible for assistance in paying your premium. These subsidies are called an “Advanced Premium Tax Credit.” Tax credits are offered to anyone whose Adjusted Gross Income (AGI) is between 138% to 400% of the Federal Poverty Level. (If you have an AGI below 138% you are eligible for Medicaid).
If you are eligible for tax credits, the goal is to ensure that the Silver Standard plan won’t cost you more than 9.5% of your AGI. (All plans are metal-coded, the best being Platinum, then Gold, Silver and Bronze.)
The proposed Senate bill eliminates the terms Silver and Bronze (making it harder to compare options). The standard for tax credits would become “58% of the full actuarial benefit,” a phrase guaranteed to make your eyes glaze over.
What does that mean? Well, that is the low end of what is currently a Bronze plan (58-62%).
So, the Senate bill would raise deductibles and maximum out-of-pocket expenses for anyone entitled to a tax credit, because the tax credits would adjust a much, much less generous plan’s premium.
How much? The Silver Standard Plan in Connecticut has a $4,000 annual deductible; the Bronze plan’s deductible is $6,000, and the deductible would be applied to many more health care services than the Silver plan.
But there’s another catch.
Instead of a standard of 9.5% of AGI as the maximum cost for health insurance, the Senate bill would establish a standard that changes based on age, dramatically harming older insured consumers.
The maximum cost for those 60 and older could reach 16.2% of income, meaning that the tax credit will be much lower, and would be applied to a much less generous policy. Silver Standard plans are roughly 50% more expensive than the Bronze Standard plans.
Here’s another important change.
The maximum income to receive tax credits would drop from 400% of Federal Poverty Level to 350%. That means that a married couple’s maximum income to receive tax credits, drops from $64,080 to $56,070.
The Senate bill is bad deal for people 60-64 year old.
This year, my clients who are 61 and 60 years old, and whose income is under $57,000, can buy a Silver Standard plan for which they pay $460 per month. Next year, they would pay $770 per month for a Bronze Standard plan (with a deductible 50% higher). To get that same Silver Standard plan, their premium would increase to $1,310 per month.
There is no doubt that this represents a very bad deal for many of my clients who are already struggling to make ends meet.