Nice summary from Ways and Means on proposed changes to ACA released today...

[MichaelB]

Anyone have a link?

The bill https://www.dropbox.com/s/4f82iy7d92u0c3a/AmericanHealthCareAct.pdf?dl=0

 

[ERD50]

The bill https://www.dropbox.com/s/4f82iy7d92u0c3a/AmericanHealthCareAct.pdf?dl=0

Yes, thanks, I had looked just before you re-posted the link and I found some stuff on page 63 I think it was (search "30 per", they didn't use the '%' sign), but I can't get through the "legalese" to understand what it says.

Question - in that post you said "This is not a bill", but then you also said "here's a copy of the bill". I guess I'm confused on many fronts!

-ERD50

 

[MichaelB]

Yes, thanks, I had looked just before you re-posted the link and I found some stuff on page 63 I think it was (search "30 per", they didn't use the '%' sign), but I can't get through the "legalese" to understand what it says.

Question - in that post you said "This is not a bill", but then you also said "here's a copy of the bill". I guess I'm confused on many fronts!

-ERD50

Instead of editing my post, I added the line. At first I thought this measure would lead to bills, but then I found this bill was already submitted. So, to clarify, this is a bill.

 

[MBSC]

Did I read it correctly that the current ACA subsidies will stay in effect until 2020?

Yes, but the formula for determining individual responsibility is modified during the transition period. The 2018 individual responsibility is capped at 11.5% MAGI for those over age 59 (table on PDF page 78 of the bill). It was 9.66% for 2016 and is 9.69% in 2017.

From the summary:

SECTION_02: ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT
Lastly, this section revises the schedule under which an individual’s or family’s share of premiums is determined by adjusting for household income and the age of the individual or family members.

 

[Ian S]

But isn't that happening now, because the 'penalties' are so light?-ERD50

I think the difference here is that currently you can't just go out at any time and get health insurance - only during open enrollment and other certain narrow situations. With this new plan, it looks like you can go at any time and get insurance but you just have to pay 30% more in premiums for a year. I think that will lead far more younger and/or healthier folks to drop out and only opt back in if they become seriously ill. The result will be higher premiums for the older folks who tend to have more health problems which due to the 5:1 ratio will lead to premiums for younger folks rising too. Leading more younger folks to drop out. Vicious circle situation probably leading to the so-called death spiral in the individual market.

 

[photoguy]

How would this compare to the ACA subsidies?

Currently in the 40-49 age group.

If I interpret this correctly, right now the subsidies would be higher for us under the new plan than under ACA. Of course this depends on a lot of factors such as the cost of the second lowest silver plan. I recently moved (to San Diego) and experienced a premium jump because the gap between the second lowest plan was larger. I think at my previous address we might come out slightly worse (would have to double check to be sure).

However it's not clear how the relative benefits would change as we age. There's only a max of 2:1 difference in the tax credit by age comparing youngest to highest in the new plan. However under ACA premiums can vary by a 3:1 ratio with age. I don't know what the max ratio is under the new plan -- I think daylatedollarshort mentioned 5:1 so if that becomes true it the new plan would become substantially worse as we get older.

Right now, any income we bring in is subject to an additional ~10% tax for ACA. So there is strong incentive to manage earnings. This 10% tax penalty would be gone in the new proposal and that is nice.

ACA subsidies are also limited to 4x FPL. For a couple that is about 65k right now. In the new plan you could get subsidies until 150k. So I could fully take advantage of the 0% capital gains an dividend brackets.

Finally it's not clear what is happening with cost sharing plans and max out of pocket limits. Right now these can be very advantageous IF you stay under 200% of FPL.




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[Carpediem]

And this reads that a married couple, over age 60, with less than $150K income will get $8,000 per year tax credit:

"This section creates an advanceable, refundable tax credit for the purchase of state-approved, major medical health insurance and unsubsidized COBRA coverage. To be eligible, generally, an individual must not have access to government health insurance programs or an offer from any employer; and be a citizen, national or qualified alien of the United States, and not incarcerated. The credits are adjusted by age:
• Under age 30: $2,000
• Between 30 and 39: $2,500
• Between 40 and 49: $3,000
• Between 50 and 59: $3,500
• Over age 60: $4,000
The credits are additive for a family and capped at $14,000. The credits grow over time by CPI+1. The credits are available in full to those making $75,000 per year ($150,000 joint filers)."

Is the above saying I would be able to get some subsidy for COBRA coverage?

 

[skyvue]

Depending on income, ACA subsidies are orders of magnitude higher.

For FIRE people who have a lot of "wealth" but very little "income", do they qualify for current ACA subsidies? For instance, you could feasibly have a couple million in assets, but only $10-15K in "income" for a given year.

 

[MichaelB]

Sorry for the confusion. There are actually 2 bills.

Ways and Means summary (here) and bill (here)
House Energy and Commerce summary (here) and bill (here)

They appear to address difference components of the reform initiative.

 

[ERD50]

Instead of editing my post, I added the line. At first I thought this measure would lead to bills, but then I found this bill was already submitted. So, to clarify, this is a bill.

Thanks for the clarification. I was also thinking it was still a 'proposed' bill. But of course, if it does get through the House, there will almost certainly be changes proposed by the Senate, if they can get a vote to pass, and then back to the House (I think I have that right?).

Quite a long path I would think, and likely many changes along the way.


edit: ooops, cross posted with your last post with the additional bill. Things are moving too fast for me, maybe I should tune out for a few days to let the dust settle! But thanks for the update.

-ERD50

 

[exnavynuke]

But isn't that happening now, because the 'penalties' are so light?

I don't know if this 30% approach is better or worse than the current penalty process, I'm not sure if anyone can know, and maybe even the CBO report won't tell us - that 10 year outlook doesn't capture longer term effects, which aren't even that long term when some provisions are phased in over years to begin with.

And is the 30% surcharge for one year only? That's what people say in this thread, but that isn't clear to me one way or the other in what I've read so far. Anyone have a link?


-ERD50

The amount determined under this paragraph for an applicable policyholder enrolling in health insurance coverage described in paragraph (1) for a plan year, with respect to each month during the enforcement period applicable to enrollments for such plan year, is the amount that is equal to 30 percent of the monthly premium rate otherwise applicable to such applicable policyholder for such coverage during such month.

It says for 1 year currently. I have not been able to discover if the "premium cap" that existed in the ACA is carried forward so far but it doesn't look like it unless it's a "didn't strike" type of thing. Under ACA the most expensive premium can only be a multiple of the cheapest. Without that provision, massive premiums for those who use/need insurance could be back on the table for insurance companies if the state doesn't say otherwise (5:1 is default, up from 3:1, but it also says "or otherwise determined by the state" language allowing for that to change at a state level it seems).

 

[daylatedollarshort]

However it's not clear how the relative benefits would change as we age. There's only a max of 2:1 difference in the tax credit by age comparing youngest to highest in the new plan. However under ACA premiums can vary by a 3:1 ratio with age. I don't know what the max ratio is under the new plan -- I think daylatedollarshort mentioned 5:1 so if that becomes true it the new plan would become substantially worse as we get older.

It is 5 to 1 or set by the state per the New York Times summary of proposed changes here:

https://www.nytimes.com/interactive...cs/republican-obamacare-replacement.html?_r=0

So our premiums would go from around $1,700 a month to $2,830 or $33,960 a year, less $8K in subsidies for the two of us, plus deductibles and co-pays.

We had a $50K medical expense year pre-ACA on our COBRA conversion policy. I guess those days (or even higher costs) might be back again. Or maybe California will implement a single payer program:

California to weigh single payer, universal healthcare plan
http://www.mercurynews.com/2017/02/...oduce-medicare-for-all-health-plan-on-friday/

 

[MichaelB]

Let's stay focused on the specifics of these bills and please not get into the politics of this or speculate on further / other health care initiatives.

 

[GTFan]

Depending on income, ACA subsidies are orders of magnitude higher.

Not as much as you would think for us (53 and 55) - we get about $11k a year now, would get $7k in refundable tax credits under new plan.

But the other question is, do the cost-sharing reductions go away? That makes for a much worse plan choice since CSR'd Silver plans are way better than high-deductible Bronzes today.

 

[MRG]

For FIRE people who have a lot of "wealth" but very little "income", do they qualify for current ACA subsidies? For instance, you could feasibly have a couple million in assets, but only $10-15K in "income" for a given year.

Sure there's currently no means testing. Some folks do legally keep income low to collect subsidies.

 

[jim584672]

Finally it's not clear what is happening with cost sharing plans and max out of pocket limits. Right now these can be very advantageous IF you stay under 200% of FPL.

Silver CSRs are gone:

Subtitle D—Patient Relief and Health Insurance Market Stability
SEC. 131. REPEAL OF COST-SHARING SUBSIDY.
(a) IN GENERAL .—Section 1402 of the Patient Protection and Affordable Care Act is repealed.
(b) EFFECTIVE DATE .—The repeal made by sub section (a) shall apply to cost-sharing reductions (and payments to issuers for such reductions) for plan years beginning after December 31, 2019.

 

[GTFan]

We would lose about $10K in subsidies. And with a pricing band change of 5 to 1 instead of 3 to 1, our premiums would increase over $13K a year.

This is the real problem - premiums will skyrocket and obliterate the $7-8k in credits that folks here will get. And it can be way more than 5:1 given that states can decide whatever they want (e.g. eliminate ratios altogether).

Assuming there's even a market left when the 30% surcharge for new insurance means that anyone healthy will simply not carry insurance until they need it. This is a recipe for a death spiral.

 

[photoguy]

@DayLateDollarShort -- thanks for the NYTime link.

It says cost sharing reductions are gone under the new plan. If that's the case, that seems like a huge reduction in benefits for low-medium income families. Currently a family can be on the hook for $13k maximum OOP per year but could much lower based on your income. I don't see a family making 40k able to afford that. Even now I think people feel that the ACA max OOP is too high.

 

[GTFan]

Yep, removing CSRs is a huge blow to lower-income folks under the ACA today. Going to be a lot of pain debating that one given that deductibles are one of the biggest issues for many even with CSRs.

 

[daylatedollarshort]

@DayLateDollarShort -- thanks for the NYTime link.

It says cost sharing reductions are gone under the new plan. If that's the case, that seems like a huge reduction in benefits for low-medium income families. Currently a family can be on the hook for $13k maximum OOP per year but could much lower based on your income. I don't see a family making 40k able to afford that. Even now I think people feel that the ACA max OOP is too high.

With out of network, which can sometimes be hard to avoid even at in network hospitals, our annual family out of pocket max with our current Bronze plan is over $30K.

 

[GTFan]

Our BCBS HMO plan has unlimited OOP liability for out of network. I think the only other option we had this year, Kaiser, was the same.

 

[ERD50]

.... Currently a family can be on the hook for $13k maximum OOP per year but could much lower based on your income. I don't see a family making 40k able to afford that. Even now I think people feel that the ACA max OOP is too high.

Yes, I had been hoping for high deductible plans, as that normally makes sense for someone who can afford the smaller hits. But $13K OOP, plus the premiums, is quite a hit even for someone of means, especially if it was for an ongoing, maybe lifelong condition.

...
Assuming there's even a market left when the 30% surcharge for new insurance means that anyone healthy will simply not carry insurance until they need it. This is a recipe for a death spiral.

I dunno. Maybe that will be a death spiral, but is it really better/worse than the current plan? I don't think we know enough to say that. As I understand it, many healthy people aren't buying insurance now, and the penalties are low enough that they aren't having that much motivational effect.

Can we really say the 30% 'penalty' will provide less offset than the current 'penalties'? Where's your math for that?

-ERD50

 

[Ian S]

The only reason the insurance companies accepted the ACA's provision that prevented them from excluding folks based on pre-existing conditions was the individual mandate. Even then they wanted the penalty to be higher. Still, under ACA, they wouldn't have been required to take someone with a pre-existing condition outside of the narrow enrollment periods. In the new plan, the individual mandate is gone but exclusion based on pre-existing conditions is still banned and there appears to be no enrollment period limitation. I don't see how the insurance companies can accept that. I think they will cut their losses and run sooner rather than later. My sympathies to those who are trying to figure out if they can ER with such huge uncertainties in healthcare!

 

[woodguy00]

I'm not seeing anything in either bill that refers to purchasing policies across state lines. Am I missing it or is that something that would need to be handled in completely separate bills?

 

[scrabbler1]

The only reason the insurance companies accepted the ACA's provision that prevented them from excluding folks based on pre-existing conditions was the individual mandate. Even then they wanted the penalty to be higher. Still, under ACA, they wouldn't have been required to take someone with a pre-existing condition outside of the narrow enrollment periods. In the new plan, the individual mandate is gone but exclusion based on pre-existing conditions is still banned and there appears to be no enrollment period limitation. I don't see how the insurance companies can accept that. I think they will cut their losses and run sooner rather than later. My sympathies to those who are trying to figure out if they can ER with such huge uncertainties in healthcare!

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