A major health care overhaul introduced in Congress would lower health insurance premiums by thousands of dollars per year for more than 13 million people and extend coverage to millions more, according to an analysis by a non-partisan research and policy group.
The bill would likely cost at least several hundred billion dollars over ten years, but the those costs could be offset by a range of initiatives, including rolling back a portion of the $1.4 trillion Trump tax cut.
The 2017 tax bill cut $314 billion over ten years from health programs by repealing the ACA’s individual mandate penalty. The penalty was imposed to prevent younger, healthy individuals from gaming the system by only enrolling for insurance after they become sick.
Undoing tax cuts worth that amount could likely cover much of the cost of the new proposal’s affordability improvements and coverage expansions, according to the Center on Budget and Policy Priorities analysis.
Creating a public option would also put downward pressure on ACA individual market prices. That would reduce the amount of federal premium tax credits.
A cornerstone of the legislation, introduced by Reps. Frank Pallone, Richard Neal and Bobby Scott, would limit health insurance costs to no more than 8.5 percent of income for families earning up to $100,000 a year.
It would also strengthen protections for people with pre-existing conditions and reverse Trump Administration actions that have made it harder for people to learn about and enroll in coverage through the Affordable Care Act (ACA), also known as Obamacare.
The measure would essentially expand and strengthen insurance offered through the act’s health insurance exchanges. But it would stop short of a government-funded health care system on the order of Medicare or Medicaid.
People with incomes below 400 percent of the poverty line are already eligible for premium tax credits that help them afford marketplace coverage. The new bill would increase premium tax credits and reduce premiums even more,
Under the measure, a family of four making $50,000 would pay $165 rather than $271 per month for benchmark coverage (4.0 instead of 6.5 percent of income).
A family of four making $75,000 would see their premiums fall by $178 per month. A typical family would be able to purchase a gold plan (for which deductibles average about $1,500) for about $550 per month (less than 9 percent of income).
The bill would eliminate the income cap on premium tax credits. That means that people with incomes over 400 percent of the federal poverty line (about $50,000 for a single person, about $100,000 for a family of four) would receive financial assistance if benchmark premiums exceed 8.5 percent of their incomes.
This change would be especially important to middle-income people, older people, and others with especially high premium burdens, according to the analysis.
The bill would cut premiums almost in half, by $750 per month, for a typical family of four making $110,000. Instead of paying $1,529 per month in premiums for benchmark coverage, or 17 percent of their income, the family would pay $779, or 8.5 percent of their income, with the premium tax credit making up the difference.
The bill would cut premiums more than in half, by $662 per month, for a typical 60-year-old making $50,000. Instead of paying $1,016 per month in premiums for benchmark coverage, or 24 percent of income, the consumer would pay $354, or 8.5 percent of income.
Premium tax credits under the bill would automatically phase out at higher income levels, because premiums are generally less than 8.5 percent of income at those levels.
The bill would allow families whose out-of-pocket premiums for employer-sponsored coverage exceed 9.86 percent of income to instead purchase individual market coverage with financial assistance.
Currently, people with offers of employer coverage are ineligible for premium tax credits if the premium they would pay for self-only coverage is less than 9.86 percent of income.
The bill would base affordability determinations for families on the amount they would pay for family coverage, fixing the so-called “family glitch” in the current law. Millions of people would gain coverage as a result, the analysis said.
The bill would also make lower-cost coverage available to all 12 million of the marketplace-eligible uninsured. About 40 percent of those who remain uninsured despite coverage gains under the ACA.
Some 2.7 million people are uninsured because they are currently ineligible for marketplace subsidies due to an offer of employer coverage.
Notably, under the bill, premium obligations for low- and moderate-income consumers would be reduced to levels more similar to what such consumers already pay in Massachusetts, a state that offers substantial supplemental assistance on top of the ACA’s subsidies.
Massachusetts has the lowest non-elderly uninsured rate in the nation and the lowest uninsured rate among people with incomes between 138 and 400 percent of the poverty line–5.1 percent compared to a national average of 12.6 percent.
The bill would further reduce uninsured rates by reversing Trump Administration actions that have made it harder for people to learn about and enroll in coverage.
The Trump Administration has cut funding for advertising and outreach that lets consumers know about their coverage options by 90 percent. It has slso cut by more than 80 percent funding for in-person assistance that helps consumers enroll.
Reversing these cuts would increase coverage by up to 1 million people, according to experts’ estimates, the analysis states.
The measure would reverse the Administration’s expansion of short-term health plans.
These plans are exempt from the ACA’s protections. They can and do deny coverage or charge higher premiums based on health status, exclude key benefits, and impose annual limits.
It would reverse the Administration’s expansion of association health plans. These plans are also exempt from many ACA protections.
That lets them structure benefits and premiums to attract healthier-than-average firms and individuals, increasing premiums for people with pre-existing conditions who continue to purchase ACA coverage in the individual or small group markets.
It would revoke Administration guidance encouraging states to seek waivers directly and indirectly undermining pre-existing conditions protections.
It would undo Administration changes that weaken standards for what individual market plans have to cover.