Health and Science

Getting less help on health care: GOP replacement plans could mean big cuts in aid for Obamacare customers

Andrew Harrer | Bloomberg | Getty Images

Freedom from Obamacare could mean much bigger health-care bills for many consumers.

New analyses released Wednesday find that Republican replacement plans for Obamacare would sharply cut financial aid given to many customers of individual health plans, leaving them facing bigger costs in premiums and health services.

Those findings could fuel opposition to the GOP's attack on Obamacare efforts by raising concerns that fewer people will have coverage because they won't be able or willing to spend the money.

A Kaiser Family Foundation report finds that by 2020, one GOP proposal being considered in the House would give Obamacare customers an average tax credit at least 36 percent less than what they would get if Obamacare continued in its current form.

And if Republicans passed a plan that previously was proposed in Congress by now-Health and Human Services Department Secretary Tom Price, consumers would get an average tax credit that's 51 percent less than what it would be under Obamacare, the study found.

Price's plan would actually give tax credits to people who make more than 400 percent of the federal poverty level. Those higher-income Americans — who comprise nearly 20 percent of customers of Obamacare exchanges — currently do not get any financial aid to buy Obamacare plans.

But most Obamacare customers qualify for tax credits that lower the retail price of their heath plans' monthly premiums. Those tax credits are currently tied to a person's income: The less a person makes, the bigger the subsidy for their individual health plan.

Under the two Republican proposals evaluated by Kaiser, the tax credits would be tied to a customer's age, with younger customers getting less of a subsidy and older customers getting more.

The effect of that shift is seen in Kaiser's report, which notes that the average expected tax credit for Obamacare customers by 2020 would be $4,615.

But Kaiser estimated that current enrollees would get average tax credits of just $2,957 under a House draft being discussed by Republicans.

And under Price's bill, the average tax credit would be just $2,256.

Kaiser also ran the numbers for a typical 40-year-old making $20,000 per year. That person "would be eligible for $4,143 in premium tax credits" in 2020 if Obamacare continued in its present form, the report said.

But "under the House Discussion Draft or Price bill, this person would be eligible [for] $3,000 or $2,250, respectively," the report said.

In percentage terms, Kaiser noted, Obamacare's subsidies would cover 81 percent of the customer's $5,101 annual premiums.

But the House Discussion Draft tax credits would cover 59 percent of those annual premiums, and the Price plan would cover just 44 percent.

The other study released Wednesday, by the Urban Institute, looked at Price's plan and at what kind of coverage customers could buy using only tax credits granted them.

It concluded that most of those customers would find it impossible to buy insurance that is as generous as Obamacare plans currently are when it comes to covering health costs.

The Urban Institute found that few customers relying only on the tax credits to buy coverage would be able to afford an individual plan that has a similar actuarial value to Obamacare plans. Actuarial value refers to what share of health-care costs are paid by the insurance plan, compared with the share paid out of pocket by customers.

Only adults age 18 to 20 would be able to buy plans with a 70 percent actuarial value — the value that Obamacare tax credits are pegged to — under Price's proposal, according to the analysis. Such a plan would require customers to pay 30 percent of their health costs out of pocket.

But after age 20, the actuarial value the plans that could be paid for just with the tax credits would drop, the report found.

A plan that all adults ages 18 to 64 could pay for by using no more than the tax credits granted under Price's proposal would have just a 25 percent actuarial value, the analysis found.

In other words, customers would be on the hook, on average, for 75 percent of their health expenses, with the plan picking up the rest of the costs.

In dollar terms, that could translate into a plan with a $25,000 deductible for a single person, and a $50,000 deductible for a family, the report noted.

For a plan with a 34 percent actuarial value, only adults ages 18 to 60 would be able to afford the plan if they relied solely on the tax credits available from Price's proposal, the Urban Institute said. Such a plan would have deductibles of $15,000 for a single person and $30,000 for a family.