The ACA Replacement Plan is Coming to America

The day we’ve been waiting for since November 9 has arrived. Congressional Republicans released their bill, dubbed the American Health Care Act (AHCA), to replace former President Barack Obama’s signature achievement, the Affordable Care Act (ACA).

I should be thinking about wonky health policy, but I can’t stop thinking about Coming to America, a 1988 movie starring Eddie Murphy.

In one scene, restaurant owner Cleo McDowell is trying to explain why his burger joint isn’t a rip-off of a well-known national chain.

“See, they're McDonald's . . . I'm McDowell's,” he says. “They got the Golden Arches, mine is the Golden Arcs. They got the Big Mac, I got the Big Mick. We both got two all-beef patties, special sauce, lettuce, cheese, pickles and onions, but they use sesame seed buns. My buns have no seeds.”

To conservative critics, the AHCA is the Big Mick of health policy.

  • The ACA has tax subsidies to help people buy coverage. The AHCA has tax credits.
  • The ACA has the individual mandate, enforced with a tax penalty. The AHCA has a requirement to maintain insurance coverage, enforced by a 30 percent surcharge for people who don’t stay covered when they finally want to purchase insurance.
  • The ACA expanded Medicaid. The AHCA keeps the Medicaid expansion, at least until 2020.
  • They both allow young adults up to age 26 to stay on their parents’ policies, and they both forbid insurance companies from discriminating based on their customers’ pre-existing health conditions.
  • The AHCA maintains the ACA’s minimum essential health benefits, although the reason is likely because repealing them could not be done through the fast-track reconciliation process Republicans have in mind.

However, the differences between the ACA and the AHCA are a lot bigger than a sesame seed. Analysts, including all of us at CHI, will have a lot more to say in the coming weeks. But for today, here are the highlights for Colorado:

  • Medicaid funding would be converted to a per-capita cap, so Colorado could expect less federal funding over the years.
  • The AHCA keeps the ACA’s Medicaid expansion at least until 2020 – a crucial point for the more than 400,000 Coloradans covered through the ACA expansion. After that, people in the expansion who did not maintain continuous eligibility for Medicaid would lose their coverage.
  • Various provisions would make it harder for people to qualify for Medicaid and stay on the program.
  • The tax credits that help people afford coverage would be based on age (with a cap for higher-income earners), rather than income and the price of insurance policies. In Colorado, this would shift tax benefits from the high-cost rural areas to the Front Range, where insurance is not as expensive, according to an analysis the Kaiser Family Foundation released yesterday.
  • The AHCA scraps the ACA’s system of classifying insurance policies as Platinum, Gold, Silver or Bronze.
  • Insurers would be able to charge their oldest customers five times as much as their youngest customers under the AHCA. The ACA used a three-to-one ratio.
  • Planned Parenthood would lose its federal funding for one year.
  • The AHCA repeals the Prevention and Public Health Fund, which supports a range of public health services in Colorado from diabetes and other chronic disease prevention activities to childhood immunizations.

The AHCA has a new idea that could help Colorado: a $15 billion annual state innovation fund. States could apply for grants to run high-risk pools, provide larger insurance subsidies or help insurance companies cover their high-cost customers. A grant like this could help Western Slope legislators and Lt. Gov. Donna Lynne pay for their plan to extend insurance subsidies to some higher-income residents of high-cost areas.

The politics of passing the AHCA will be tricky for House Republican leaders.

Colorado Republican Sen. Cory Gardner joined three other Republicans in a letter saying they could not support an earlier draft of the AHCA that rolled back Medicaid expansion. The letter was released just hours before the new AHCA draft, and it’s not clear whether Gardner will support the revised version.

The Congressional Budget Office has not provided an analysis yet, but every indication we have seen is the AHCA would lead to a drop in the number of people who have health insurance.

CHI will be working on its own analysis, as well. We soon will release a projection on how the AHCA’s Medicaid reforms would work. And we’re looking at high-risk pools and health savings accounts, as well.

So call it a Big Mac or a Big Mick or something else. Whatever it is, it’s a big deal.

Want to learn more?

Examine the ACA's effects in Colorado in CHI's latest report.

Joe is Manager of Public Policy Outreach at CHI.