A look at `Republicancare,' who it helps, and who it hurts

With the release of the American Health Care Act, or "Republicancare," the debate is on: Will this Republican repeal and replacement of Obamacare help or hurt?  Since there are winners and losers in this bill, understanding the major changes and determining who would benefit and who would be hurt are Step One in the process of judging whether this proposal should become law.

The nonpartisan Congressional Budget Office, an agency of the Republican-controlled Congress, did the most detailed analysis of the Republicancare proposal  (https://www.cbo.gov/publication/52486).

The headline-grabbing CBO number was that when Republicancare was compared to Obamacare, within one year 14 million fewer people would have health insurance, and by 2026, 24 million fewer people would have coverage.

There were other key results, too. Largely by limiting health-care subsidies, the effort would reduce the federal budget deficit by $337 billion over 10 years. But smaller subsidies and changes to subsidy calculations created huge differences across age and income groups. Under Republicancare, the young would do well, but the old and poor would suffer soaring costs. And it is a lot better to reside in a low-cost region than a high-cost one.

Critically, the analysis concludes that the health-care market would be stable under either Republicancare or Obamacare.

Here are some key changes and the winners and losers:

Under Obamacare, there is no subsidy cap.  Under Republicancare, limits would range from $2,000 for those in their 20s to $4,000 for those 60 and older. Insurers could charge older policyholders five times what they charge younger people, rather than the current three times limit. Income limits would no longer be linked to poverty levels or family size.

Winners and losers: Government costs would be reduced because of the payments limits. The changes in income limits would allow some higher-income families that were ineligible for subsidies under Obamacare to receive them. While, on average, premiums would ultimately decline to below Obamacare-projected levels, not everyone would experience a drop; that would depend upon age and location.  In general, if you are young, you would come out ahead.  As your age increases, especially for poorer individuals, the fixed subsidy and higher allowable premiums would create significantly greater costs.

Using a Kaiser Family Foundation map, in Bucks County, where I live, a person 60 years old earning $20,000 would suffer a 66 percent reduction in the subsidy, while a person 27 years old earning $40,000 would see a 161 percent increase.  (For your county, see kff.org/graphics/health-reform)

The personal mandate required everyone to buy insurance or pay a penalty. This was done because the cost of uninsured health care is significant and borne by everyone, and requiring everyone to have insurance spreads the risk and lowers average costs. Instead, Republicancare would require those who go without coverage for two months to pay a 30 percent premium when buying insurance.

Winners and losers: Those who don't like mandates support the repeal. Those who cannot or do not want health insurance would also benefit, unless their health is harmed. Everyone else would lose to the extent that unreimbursed health-care expenses rise.

Obamacare targeted lower-income households and provided expanded, almost unlimited Medicaid payments to states to provide that coverage. Under Republicancare, states would have a fixed, per-person amount to pay for Medicaid expenses.  A subsidy would be added starting in 2020.

Winners and losers:  Thirty-one states and the District of Columbia, including Pennsylvania, New Jersey, and Delaware, opted into this program.  Those states would likely see a major reduction in Medicaid funding.  The CBO estimates that Medicaid payments would decline $880 billion over 10 years.

The taxes and penalties added to make Obamacare budget-neutral are eliminated. Individuals earning greater than $250,000 paid a Medicaid tax premium, and insurers and medical-device makers also paid additional taxes. Individuals not covered by insurance had to pay a penalty.

Winners and losers:  Winners are high-income families, makers of medical devices, insurers, and those opting out of coverage.  The treasury would lose about $592 billion in revenue from these changes.

Obamacare changed the health-care insurance marketplace, and, not surprisingly, problems arose.  But the market did not collapse, and as the CBO noted, it will be stable whether there is Obamacare or Republicancare.  What is clear is that replacing Obamacare with Republicancare would greatly reduce the number insured, increase insurance costs for many individuals, raise unreimbursed costs for health-care providers, reduce health-care demand, and reduce the federal budget deficit.

So, which do you think is better?

jnaroff@phillynews.com