Health and Science

30 million Americans could be hit by health insurance penalty under GOP Obamacare replacement

Republicans push forward with health care bill

The leading Republican plan to replace Obamacare could end up with many more people being penalized — and for more money — for failing to have health insurance than are currently fined under the current system.

A new analysis finds that 30 million Americans are at risk of the financial penalty for failing to maintain continuous health insurance coverage that is contained within the bill, dubbed the American Health Care Act.

The Republican plan would require anyone who has a lapse in their coverage of longer than 63 days in the prior year to pay their insurer a penalty equal to 30 percent of the premium of the individual or small group health plan they are purchasing.

The Commonwealth Fund, which produced the analysis, said there were 30 million working-age adults who reported having a gap in insurance coverage that was longer than three months.

"Excluding people who never had insurance, 21 million adults might have been subject to the penalty," wrote the Commonwealth Fund's Sara Collins and Munira Gunja.

The GOP proposal to penalize uninsured people when they sign up after a coverage gap is different than the way penalties are applied under Obamacare, also known as the Affordable Care Act.

Obamacare imposes a tax penalty on people who fail to have health coverage of some kind unless they qualify for an exemption. That penalty for 2016 — which is due with the filing of tax returns this year — was the higher of $695, or 2 percent of household income.

For the 2015 tax year, 6.1 million income tax filers paid an Obamacare penalty, with the average fine being $452. Another 12 million people filed forms claiming exemptions from the mandate to have insurance.

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The Commonwealth Fund analysis notes that the penalty for uninsured people who sign up for coverage will be higher for many Americans than they would face under Obamacare for remaining without coverage.

And the penalties under the GOP proposal would hit older people harder than they would younger people.

"For example, a 30-year-old with a gap in coverage of longer than 63 days in the past 12 months would face a surcharge of $84 per month for the next 12 months, for a total of $1,007," a report on the analysis said.

"In contrast, a 50-year-old with a gap in coverage of the same length would be charged $96 more than a younger person per month, or $1,154 more over 12 months, for a total of $2,161."

The report also noted, "People who live in rural and other areas of the country where health care costs and premiums are higher also would face higher premium surcharges if they had a gap in coverage."

And, "Because the House bill's surcharges are based on people's premium levels and are levied for 12 months regardless of the length of time someone had a gap in coverage, they will likely be more punitive than the ACA's individual mandate penalties for people with incomes under $100,000 a year," the report said.

People with moderate to low incomes are more likely to experience higher-than-Obamacare penalties under the Republican proposal than are people with higher incomes, the Commonwealth Fund noted.

A separate analysis by Avalere Health on Wednesday concluded older people and those with lower incomes would get hit the hardest by the penalties for not having insurance under the proposed replacement plan.

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