Last week, the House of Representatives passed the American Health Care Act law, the Republican plan to replace the Affordable Care Act. This came after several changes to the AHCA, including to the policy on coverage for people with pre-existing conditions.
The update would allow insurance companies to charge sicker consumers more and healthier consumers less. The bill would offset the cost of sicker people with special funding -- $8 billion over five years. But what exactly this change would mean for individual consumers largely depends on which state they live in.
Under the American Health Care Act, people would not be penalized for not having health insurance, initially. They would only encounter financial penalty when signing up for insurance after more than 63 days of being without it. By most accounts, this means healthier people are less likely to sign up for insurance.
“That’s one of the big concerns with this Republican health plan, is that you have a combination of ‘you’re not required to buy health insurance when you’re healthy, but you’re allowed to buy it when you get sick,’” says Bill Hammond, director of health policy at the Empire Center. And that, he says, could have unique implications in New York.
Since the 1990s, New York has had laws in place that require insurance companies to sell plans to anyone who wants them, at the same price -- no matter who they are or what they have going on health wise. But that meant plans got expensive, Hammond says.
“And the higher the premiums got, the fewer healthy people were willing to pay – and that’s what’s called a death spiral. New York had a bonafied death spiral,” says Hammond.
New Yorkers would still be eligible for federal tax subsidies – which didn’t exist before the Affordable Care Act. But because the tax subsidies outlined in the AHCA are based on age, not need, younger New Yorkers may have trouble affording premiums in New York.
“If the personal mandate goes away, that threatens to push us back toward a death spiral," Hammond says.
The AHCA will now go to the Senate for consideration.