The American Health Care Act: What’s in it for you

(CBS MONEYWATCH) Now that health care experts and consumer advocates have had a chance to review a plan by Republican lawmakers to replace Obamacare, answers to burning questions — especially from health care exchange members — are starting to take shape.

The proposed changes in the bill, called the American Health Care Act, are by no means final. House Republicans are expecting the Ways and Means and Energy and Commerce committees to take up the legislation this week and move the bill to the full house by early next month. But Republicans have launched the bill with no information from the Congressional Budget Office, which analyses legislation on behalf of lawmakers.

As a result, Congress and health care experts are having trouble estimating how much the changes will cost and what effect the changes may have on the number of Americans covered. In short, however, the bill eliminates tax penalties for the uninsured and replaces income-based government subsidies with refundable tax credits based on age. It also makes several changes to the ACA Medicaid expansion program.

Here’s a closer look at what the new legislation may mean for health care consumers.

If you have a pre-existing medical condition

Under the House plan, insurers would not be able to deny coverage based on preexisting conditions, and they must charge the same premium as they charge those patients without preexisting conditions. What’s more, like the ACA, the bill calls for no lifetime or annual limits on coverage.

What is new

The bill requires insurers to charge a 30 percent increase in premiums for consumers who allow their health care coverage to lapse. While this applies to all consumers, it could end up affecting more consumers who sign up for insurance once they have an accident or are diagnosed with an illness.

If you opt for no coverage

Tax penalties for consumers who refuse to buy health insurance — the individual mandate, as it is known under the Affordable Care Act (ACA) — would disappear. Again, if you let your previous insurance policy lapse, you would be subject to the 30 percent surcharge for premiums when and if you decide to buy more coverage.

If you buy coverage in the individual market

Many of the standards that were mandated by the ACA, including those concerning maternity and preventive care, remain intact under the House bill. However, the measure eliminates the federal premium subsidies for low- and middle-income people, making insurance for many consumers more expensive. The bill would also eliminate the ACA subsidies for out-of-pocket expenses currently available to some people.

In place of the subsidies, the House bill provides for refundable tax credits ranging from $2,000 for people below age 30 and $4,000 for people over age 60, with an annual limit of $14,000. The bill also expands the types of coverage eligible for tax credits, which may translate into people using credits to pay for catastrophic or limited care plans. Tax credits would not be available for individuals with $75,000 or more in annual income and married couples with annual income above $150,000.

According to data from the Kaiser Family Foundation, a man in his 60s would qualify for more than $6,000 in ACA subsidies, compared to the $4,000 in refundable tax credits. And while the ACA limited the amount insurers could charge older customers to three times what they charge younger participants, the House bill allows insurers to charge five times that amount.

If you are part of Medicaid or the Medicaid expansion program

U.S. states that opted for Medicaid expansion under the ACA can stick with the expansion until 2020. People who are enrolled at that time would continue to get coverage. New enrollees would not be accepted, and people who move out of the coverage, because of an employment opportunity or other reason, would not be able to return to expanded coverage.

In addition, the House bill calls for Medicaid funding to move to a per capita basis, instead of the current system of matching state Medicaid expenditures with federal funding one for one. The per capita formula “sets up payments based on average costs for children, adults, seniors and people with disabilities using 2016 medical costs and trending forward using the medical consumer price index,” explained Michael Miller, strategic policy director at Community Catalyst, a health care advocacy group.

Health advocates worry this formula is flawed and could seriously reduce the number of people who receive Medicaid coverage.

If you’re covered by your employer

Some large employers would no longer be required to offer health insurance under the House bill. It’s unclear what ramifications this would have in the employer-based market and how many people could lose coverage. In addition, the so-called Cadillac Tax may be alive and well under the House bill, at least for the short term. In 2020, the ACA was set to impose a 40 percent excise tax on employer plans that cost more than $10,200 for individuals and $27,500 for families. The House bill would delay this tax until 2025.

If you are eligible for a Health Savings Account: The amount you can save in these accounts would increase in 2018 to $6,550 for an individual and $13,100 for a family.

If you win the lottery

We’re not being facetious. A good number of pages of the House bill are devoted to denying Medicaid payments to lottery winners. That make some sense, but may not be health care consumers’ top priority.

The Associated Press contributed to this report.