American Health Care Act (AHCA) Quiz

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Question

Correct Response

Under the AHCA, the individual mandate tax penalty is repealed effective as of what date?

The bill would repeal the individual mandate retroactively to tax years beginning in 2016.

True or false, under the AHCA, anyone with a pre-existing condition would be charged a higher premium if they buy insurance on their own?

Insurers would only be allowed to charge higher premiums to people with pre-existing conditions in states that receive a community rating waiver, and then only for people buying individual health insurance who have had a break in coverage.

In states that receive a community rating waiver, insurers would be permitted to apply health status rating to people buying individual health insurance if, during the preceding 12-month period, they had a break in coverage of at least 63 consecutive days. Under state waivers, the health status rating would be charged instead of the late enrollment penalty provided under the bill. The bill does not limit the amount of health status rating. Once an individual had been continuously covered for 12 months, they would again be eligible for community rated premiums in the individual health insurance market. To apply for this waiver, states could establish high-risk pools to offer an alternative source of coverage to individuals who are rated up; but they could also participate in reinsurance programs, which would subsidize insurers directly and lower costs for people who could afford coverage.

How would current law premium tax credits for individual health insurance be changed under the AHCA?

During 2018-2019, current tax credits would be modified to increase amounts for younger people, and beginning in 2020, existing tax credits would be repealed and replaced with age-based ones.

ACA tax credits would continue in 2018 and 2019 with modifications so that younger people generally would see tax credit amounts increase while older people would have tax credit amounts reduced. After that, the ACA tax credits – which are based on income, age, geography, and the cost of health insurance – would end and new flat tax credits – based on age – would replace them.

Under the Affordable Care Act, insurers offer marketplace plans with reduced cost sharing (e.g., lower deductibles and copays) to people with income up to 250% FPL. How would the AHCA change these cost sharing reductions for individual health insurance?

The AHCA repeals the cost sharing reductions as of January 1, 2020.

Low-income people who buy individual policies after January 1, 2020 would likely see substantial increases in their health plan deductibles. States could use money from the Patient and State Stabilization Fund to offset some out-of-pocket costs for consumers.

True or false, the AHCA guarantees coverage of the ten essential health benefits established by the ACA for all individual and small group market health insurance policies.

Beginning in 2020, the AHCA permits states to waive the ten essential health benefits. Waiver states could specify a different benefit standard for insurance policies offered in the individual or small group markets.

According to the Congressional Budget Office (CBO), under which measure would more young adults (19-29) be uninsured – the ACA or the AHCA?

CBO estimates the uninsured rate for all ages, including young adults, would increase substantially under the AHCA relative to current law.

CBO estimates that for low-income young adults (income below 200% of poverty), the uninsured rate in 2026 would increase from 17.6% under current law to 33.9% under the AHCA. And for young adults with income over 200% poverty, the uninsured rate in 2026 would increase from 8.7% under current law to 15.5% under the AHCA.

The AHCA changes coverage provided to low-income adults through the ACA’s expansion of the Medicaid program by:

While the AHCA retains the state option to expand Medicaid eligibility to adults up to 138% of poverty, it ends enhanced federal matching funding that finances this coverage. As a result of this and other changes to Medicaid, CBO estimates 14 million fewer people will be covered by Medicaid in 2026.

Thirty-two states have expanded eligibility so far, providing new coverage to about 11 million adults, and under the ACA, this expansion is financed primarily with federal funding. Beginning in 2020, for states that had adopted the expansion as of March 1, 2017, the AHCA ends the enhanced federal matching funds for this coverage. Expansion enrollees covered as of December 31, 2019 who stay enrolled without a break in coverage would maintain enhanced matching dollars; however, CBO estimates that fewer than one-third of this group would be enrolled two years later. Eight states have laws in place that would undo the expansion if there is a reduction in federal funding.

True or false, the AHCA provides less Medicaid funding to states to support coverage for children, poor seniors and people with disabilities.

The CBO estimates that states would receive 24% less in federal Medicaid funding compared to current law in 2026.

Traditionally, Medicaid costs have been shared by states and the federal government, with the federal government matching state spending with no pre-set limit. However, starting in 2020, the bill would cap federal Medicaid matching funds for five categories of Medicaid enrollees, including for seniors, people with disabilities, children, expansion adults, and other adults. Growth in federal funding would be set using an inflation factor per enrollee in each Medicaid eligibility category which is expected to be lower than growth projected under current law. In response to capped federal funding, states could find ways to limit Medicaid or find ways to increase state Medicaid funding (by raising taxes or cutting other state spending). The bill also creates an option for states to elect a Medicaid block grant for a period of ten fiscal years instead of per capita cap financing for children and certain adults or just certain adults. Block grants and per capita caps that increase based on uniform growth rates do not account for wide variation in cost growth across states or costs above the cap related to more expensive enrollees, high cost drugs or public health issues such as the opioid crisis or HIV/AIDS.

True or false, the AHCA does not make any changes affecting Medicare, the federal insurance program for seniors and some people with disabilities?

The AHCA would retain virtually all Medicare provisions that were included in the ACA, but repeal the 0.9 percent Medicare payroll surtax on high-income earners.

Repealing this surtax would reduce revenue to the Medicare Hospital Insurance (Part A) trust fund by $117 billion between 2017 and 2026, according to the Joint Committee on Taxation, which would move the projected insolvency date of the Part A Trust Fund from 2028 to 2025, based on estimates by Medicare’s actuaries. The AHCA would retain the benefit improvements (no-cost preventive services and closing the Part D coverage gap) and the Medicare saving provisions, including reductions in Medicare payments to payments to health care providers and Medicare Advantage plans. It would also retain the Independent Payment Advisory Board, and the Center for Medicare and Medicaid Innovation.

The AHCA cuts federal tax revenue by $992 billion over 10 years. To achieve overall savings, the bill reduces federal health spending by $1.11 trillion over 10 years. Over 70% of the federal spending cuts are achieved by which of the following?

The bulk of federal spending reductions in the AHCA come from converting federal Medicaid payments to a block grant or per capita cap and phasing out enhanced funding for the Medicaid expansion. These changes would cut $834 billion from the Medicaid program over ten years.

Other sources of federal spending reductions over the ten-year budget window include:

$192 billion from replacing current tax credits (based on income, age, geography, and the cost of health plans) with flat tax credits based on age;
$98 billion from repeal of cost sharing subsidies;
$9 billion from rescission of Federal Prevention and Public Health Fund balances;
$6 billion from repeal of the small employer tax credits.

Some of the federal health spending cuts would be offset by new spending, including a new Patient and State Stability grant fund program.