The process of repealing and replacing the Affordable Care Act, better known as Obamacare, has begun in earnest.
House Republican leaders unveiled their plans on Monday night with the eerily similar, yet more patriotically named, American Health Care Act.
The plan is designed to roll back much of Obamacare over the next three years. But how much, and in what way, is the subject of a lot of debate at this stage.
The process is just getting going, too. There will no doubt be a lot of changes/compromises to the bill before it is ready — and before it’s capable of getting enough Republican votes — to pass with a majority in the Senate.
A majority here is all that’s needed, as the Senate will almost certainly go into a process called reconciliation to pass the bill. This just means that, instead of the 60 votes needed to pass legislation, the Senate will only require a majority vote to get the bill passed.
So, what’s the deal with the new plan, and what are its major alterations from Obamacare?
The way I read it, here are the biggest changes proposed by the American Health Care Act:
The bill would immediately end the Obamacare mandate that individuals have insurance coverage. The plan also ends the mandate that requires businesses of a certain size to offer healthcare coverage to their employees. However, the new plan allows insurance companies to impose a 30% price increase on people who go uninsured for more than two months, and then buy coverage.
The new law proposes a refundable tax credit to help individuals buy insurance. The tax credits phase out as income levels increase. People under 30 would be eligible for a credit of $2,000 per year. That sum increases to $4,000 for those over 60. These credits replace the existing subsidy system.
The size of a tax credit would grow with the size of a family, but the credits get capped at $14,000. Higher earners get less as their household income grows. For individuals, the credits begin to go down after $75,000 annually. For families, the decline begins at households making more than $150,000.
The plan increases the limits on healthcare savings accounts that can be coupled with high-deductible insurance plans. The new limits are $6,550 for an individual, and $13,100 for a family.
The bill tamps down the Obamacare expansion of Medicaid. The proposed new law changes the current system to a “per-capita system,” where states are given a set amount of money for the number of people in various categories (disabled, elderly, childless adults, pregnant mothers).
The proposal allows parents to keep their children on their health plans until age 26.
The plan gives states a $100 billion fund over a decade to help lower-income people afford insurance, and to help stabilize state insurance markets.
Although there are many other changes to the plan, these are the biggest, as I see it.
As for the cost associated with the American Health Care Act, well, that’s not certain yet. The Congressional Budget Office has yet to score the bill.
That means there is no non-partisan estimate yet on the cost front. Nor on how many people will gain or lose insurance coverage due to the new plan.
Of course, keep in mind that this is the first step in the process. There are likely to be significant changes to the bill before it gets voted on.
Still, the main objection from some circles, and from my viewpoint as well, is that this plan is a sort of “Obamacare Light.”
That’s actually the phrase used by Senator Rand Paul (R-Ky.), who offered up the following comments on the plan in an interview with Fox News:
“This is Obamacare light. It will not pass. Conservatives are not going to take it.”
Paul also said that the new law would “do nothing” to bring healthcare costs down, or to restrict the steady rise of premiums.
|Healthcare stocks, as represented by the Health Care Select Sector SPDR (XLV), fell 0.7% today.|
Taking a page out of President Trump’s playbook, Sen. Paul also took to Twitter (TWTR) to say that:
“We should be stopping mandates, taxes and entitlements, not keeping them.”
In the short time since the initial House plan has been released, there’s been a lot of comments from conservative Republicans and liberal Democrats in Congress about what’s wrong with this bill.
Unlike its predecessor, where we had to pass the bill so that we could find out what was in it, the House didn’t make that mistake this time.
What do you think about the American Health Care Act? Is it a step in the right direction, or is it just more big government, “Obamacare light”? I want to know what you think, so let me know by leaving me a comment on our website or by sending me an e-mail.
The markets declined for a second day in a row. Energy (XLE, -0.9%) and healthcare (XLV, -0.7%) led the markets lower, and the Dow finished the day just below the 21,000 mark (down 30 points, or -0.1%).
• Gold fell to a four-week low ($1,216, -0.8%) as markets continued to contemplate the growing odds of a Fed rate hike next week. (Those odds are now over 80%.)
• WikiLeaks allegedly hacked the CIA. It says it has access to the Central Intelligence Agency’s own hacking tools, and that it has proof that the government body can spy on people through their TVs, smartphones and cars. (We warned you years ago that your smart devices may be spying on you.)
• More people set to watch YouTube than TV: Worldwide, users are now watching more than 1 billion hours of online video each day (vs. 1.2 billion for TV- and DVR-watchers). Parent company Alphabet (GOOGL) credits artificial intelligence that recommends videos to viewers. And with YouTube TV set to debut soon, look for that number to tip further into YouTube’s favor.
Good luck and happy investing,
Uncommon Wisdom Daily