The American Health Care Act, passed by the House this month, would provide age-related tax credits that would be "insufficient" for low-income patients, people in high premium markets and those near the age of 65, according to a new report from the Urban Institute.
The GOP-backed healthcare overhaul replaces the income- and premium-related tax credits under the Affordable Care Act with tax credits that vary by age, and in some instances, those tax credits would be higher. High-income individuals, and younger adults living in areas with low premiums, would receive a larger tax credit under the AHCA, for example.
But lower-income, older adults receive higher tax credits under the ACA, according to the Urban Institute, regardless of whether they live in high- or low-premium geographic areas.
The reason comes down to the design of the tax credits themselves. The ACA's credits increase when needed -- they're higher for low-income people, older adults and for people living in high-premium markets. Plus, the ACA's cost-sharing assistance provides additional financial protection for low-earning enrollees, whereas the AHCA offers no such assistance.
High-premium markets are generally due to limited competition from either insurers or providers, and nothing in the AHCA would change that dynamic, the report found. That means the premium differences based on geography would remain.
Further, the reduced regulation of insurance plan standards under the AHCA would lead to different plans being offered by insurers. Benefits can expected to be narrower, and cost sharing requirements greater, said Urban Institute. Such changes could lead to lower premiums assuming the risk pool doesn't worsen, but the trade-off would be higher out-of-pocket requirements, as well as the exclusion of certain services altogether, meaning people would need to pay for them fully when needed. In all, the differences in financial assistance in the AHCA could lead to greater financial burdens for those with health problems.
Broken down by age and income, the report showed that younger people would receive larger premium tax credits under the AHCA, and older adults -- those near the age of 64 -- would receive lower tax credits. Lower-income people tend to be eligible for larger tax credits under the ACA, while higher-income individuals tend to receive larger credits under the AHCA. The AHCA credits are also more beneficial to those living in low-premium markets, while those with high premiums would be better off under the ACA.
While the AHCA could be revised or even scrapped in the Senate, even a highly revised version may include age-related tax credits because they're administratively simple, according to the report.