So Paul Ryan has finally made his Obamacare replacement public. It is not too far off from what I expected. It leaves a bit more of the ACA insurance regulations in place, but still carves out much of the existing law in ways that enables ‘adverse selection’, setting the stage for massive rate increases and lost insurance for millions of people. The big winners will be people making more than $250,000 per year… they get a tax cut. Losers will be anyone currently getting any sort of premium subsidy on the ACA exchange as well as those of us who lose insurance as companies exit the market. It also takes an ax to Medicaid, though it delays the pain a couple of years. It is not as bad a full repeal, but it will definitely make things worse than just leaving the ACA in place.
As with Obamacare, this mostly effects people who buy there insurance on the individual market instead of getting through their employer. If you are in the 50 to 64 age demographic, expect your premiums to go up sharply. The bill raises the cap on what insurers can charge that group, increasing it from a 3:1 to a 5:1 ratio. Also, if you currently receive a premium subsidy, that is going away. The Subsidy has been replaced with a flat tax credit that does not scale with income, so most people will receive much less, and they will receive it as a tax refund rather than direct premium support. In related news, the yearly penalty for failing to buy insurance has been replaced with a 30% surcharge on the first year of premiums when you buy insurance after going without. That makes things easier on people who decide to go without insurance, but like the lack of subsidies, it will skew the risk pool toward unhealthy people and cause rates to shoot up.
You can think of Obamacare as three leg stool: 1) Regulations forcing insurance companies to cover everyone who asks. 2) Subsidies to help people afford insurance… what I call ‘the carrot’. 3) Penalties to discourage people from going without insurance… ‘the stick’. Without all three, the insurance market collapses. The Ryan plan basically kicks out one of those legs and saws off part of another. If you are young, healthy, and have a high income, you MIGHT be no worse off under this plan… but even then your rates could go up because of the whole ‘adverse selection’ problem of healthy people failing to buy insurance and insurance companies exiting the market.
Needless to say, I’ll be calling my representatives (both in the House and Senate) to voice my opposition. I recommend everyone else do the same. President Trump has already voiced his support for this mess, so we need to stop it before it makes it out of Congress.
Find your representatives via whoismyrepresentative.com.