Key Components Of The Proposed American Health Care Act (Video)

self Michael Lampert, Ropes & Gray health care partner, analyzes key changes proposed by the American Health Care Act.

Transcript: In the 2012 election, we heard that the Affordable Care Act would be repealed. In the 2016 election, we heard the Affordable Care Act would be repealed. We didn't hear the specifics, and certainly didn't hear specifics in the 2016 election however, the bill just came out—the first bill just came out that would repeal it.

One of the changes, of course, is the elimination of the individual and the employer mandates. The effect of that change will be to cause healthy, younger individuals not to secure care. Those mandates and the tax penalties that came along with them under the proposed legislation are replaced with an authorization for insurers to charge a thirty percent surcharge on premiums for those who reenter the insurance market after having taken a sabbatical from it. Now the effect of that though is that the incentive will be that once one exits the insurance market, to stay out. Continuing insurance penalties provided an incentive for people to stay in the commercial market, to keep healthy people, young people in the insurance market paying premiums that help to bring down aggregate costs, in particular, costs paid by those older, sicker. By eliminating the mandate and by replacing it with something that as a penalty for reentry, will keep people from reentering, aggregate premiums on those who participate in the market will increase and that will decrease enrollment.

The second element in that category is the elimination of the tax subsidies, the income-based tax subsidies in order for people to be able to buy insurance—replacement with tax credits, which are less effective than those at the lower-ends.

Another component is an increase in the premium differentials that are permitted between the young, healthy and the old and sick. It used to be three to onethe proposal suggests five to one, meaning that older, sicker people could pay premiums that are five times as much as the younger, healthier. And the increase in premium differentials is something that ultimately, of course, is required by the projected reductions in enrollment. If there are fewer people who are enrolled because there isn't an individual mandate and because they don't have the tax credits to help them enroll, what that means is there are going to be fewer people who are younger and healthier with insurance whose premiums will help...