Let’s continue the analysis of AHCA 2.0 among so many other Distractions in Washington DC this past week.

Since last week’s post the airwaves have been filled with overload of information about President Trump letting FBI Director Comey go. I don’t need to add to that because frankly you probably are past the saturation point. The President will appoint a replacement, the Senate will be consumed with doomsday cries by Democrats but a new Director will be appointed. My guess is President Trump will announce the replacement by Memorial Day.

But, the Senate has other work to do and its modifications to AHCA 2.0 will be hugely important and scrutinized. In the meantime let’s look at some more of the important provisions in the AHCA 2.0 and see what we like.
We’re trying a little “color” to highlight the analysis. Let me know if you like it!
Here’s this week’s six:

Refundable tax credits – This is a big one because it expands current “subsidy processes” so to be available for members off-exchange although I keep wanting to call this provision the “Pre-fundable” tax credits.  Basically, for those that qualify for subsidy, it makes premium payments directly to the insurer. But maybe the best feature is that a qualified member does not need to be in an “exchange” to receive the assistance. You read correctly. As long as the health plan is qualified (no coverage for abortion, et al) then a qualified member can benefit from the subsidies from the AHCA. It renders the remaining state exchanges obsolete, wouldn’t you say?
But, it appears to apply only to individual plans. My hope is that if one spouse or single parent is covered by an employer plan why can’t that member qualify for this credit for his/her dependents? Without including the dependents it may encourage employers to reduce or eliminate in cost sharing the employer provides.
Tax deductibility – I hate to keep saying it but this provision is also a big deal! It allows people on individual plans to deduct the cost of the premium they pay from their Federal income tax return. Again, a plan must be qualified and there is a monthly limit but this is a tax benefit that we have been wanting for years.
Also again, it is unclear if the tax deductibility applies to an employee’s contribution to the premium they pay on their employer’s paid plan. (I can see how this could lead to employers lowering the percentage of premium they pay so let’s watch this one.)
5:1 pricing – You’ve read our opinion on this before but what people are saying in the press is a little misleading. Opponents declare that this will increase premiums on the older members ages 50-64 years old. I think the jury is still out on this because I believe  insurers were forced to increase the rates on 50-64 year olds under the ACA just to be cautious. And of course the ACA’s 3:1 ratio certainly increased cost for 20-49 year old Americans which affected enrollment numbers. Let’s watch this one because if the premiums for the 20-49 year olds are reduced, to where they could be, it may increase enrollment of healthy folks and allow the insurers to back off the 50-64 year old brackets.
Medicare Expansion –
States already in the expanded Medicare programs get to maintain them through Dec 31st 1919. That’s two years in which the healthy working age folks can be weaned off Medicare and into the appropriate plans provided by insurers under the AHCA 2.0. If a member qualifies for the “pre-fundable” tax credit mentioned above then the outcome for these members will be far better than the very limited Medicare/Medicaid?Medical plan they have now.
We will hear great wailling and gnashing of teeth from opponents as they promise that we’ll see citizens (and non-citizens) suffering and dying in the streets because our citizens could not get access to healthcare. But, we believe that private plans offered by insurers with access to Pre-fundable tax credits will be better for these members. 
Health Ins Tax – Most citizens don’t even know what this one is, I’m sure. It’s a tax levied against insurers based on a percentage of premium. It was passed straight to premium (plus some) which provided no benefit to members or insurers. It was solely devised as a source of revenue for the government.
We must watch this one because it is impossible to honestly view the calculation that would result in a reduction in premium due to the absence of this tax. There was an amendment submitted to AHCA 2.0 that required insurers to show the exact “dollar for dollar” amount that premiums are reduced by this tax elimination. But, I have not found anything in the text of H.R.1628, the AHCA 2.0 bill, to verify its inclusion.

HSA limits –
Admittedly this provision may not cause a lot of enthusiasm but it is a big improvement. It allows members who want to use an HSA  and are covered by an HSA compatible plan to contribute pre-tax HSA dollars up to the out-of-pocket limit on their plan. HSA limits started out at $2450 and have been increased over the years past $2950 so being able to contribute up to any OOP limit gives members a chance to store up money for later years when they are more likely to consume more healthcare dollars.

Next week we will address FSAs, HRAs, state waivers and more. That is unless we see Washington actually implode over the hubbub concerning the termination of Director Comey. Let’s hope Congress can do its work as we elected it to do and work on the issues facing our nation.

Until then keep sending me your thoughts. We’ll stay on it together.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
 

 

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