Part 1 of a 2-part series on the impact on North Carolina of repealing the Affordable Care Act.
For all its faults, real and purported, the Affordable Care Act (ACA) has provided health coverage to 20 million people, reducing the percentage of people without health insurance coverage nationwide from 16 percent in 2010 to a historic low of 8.6 percent in 2016. Congress is currently debating the American Health Care Act (AHCA) as a replacement to the ACA. According to the estimate of the non-partisan Congressional Budget Office, 24 million fewer people would have health insurance coverage by 2024 under this new plan. Older adults and lower-income people are the most likely to lose coverage. But, in addition to those who lose coverage, millions more will end up in expensive plans that provide worse coverage than what they have today. North Carolinians stand to lose more than most of the rest of the country.
Under the ACA, approximately 500,000 North Carolinians have qualified for help with paying their health insurance premiums through a premium tax credit. The current premium tax credit is based both on a person’s income and the cost of insurance premiums, with poorer people getting greater subsidies. In contrast, premium tax credits under the AHCA would be based almost entirely on age. The proposed tax credit will not vary by the actual cost of the insurance premium. This is of critical importance to our state, as North Carolina is one of the most expensive health insurance markets in the country. An analysis by the Center on Budget and Policy Priorities showed that North Carolinians were likely to lose, on average, $5,360 in premium tax credits per year, the second highest loss of premium tax credits in the country. Because our insurance costs are so much higher than most other states, the new proposed tax credit is not enough to pay for the cost of even the lowest cost health insurance plans in North Carolina. For example, the cheapest health insurance for a 30 year old in Wake County would be about $4,100/year, and that’s with a $6,400 annual deductible. But the premium tax credit would only be $2,500. Purchasing a better policy, with more comprehensive coverage, will cost a lot more.
Further, this policy will hit older adults worse than others. The AHCA allows insurers to charge older adults five times what younger adults are charged for the same policy, but the tax credits only double (e.g., $2,000 for 21 year olds, up to $4,000 for 60 year olds). Acknowledging this concern, the bill is likely to be modified to create an $85 billion fund for tax credits targeted to those aged 50-64. The form of this assistance is not yet known, but if it builds upon the current structure, it will not take geographic variation in premiums into account and North Carolinians will continue to be disadvantaged.
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In addition to premium tax credits, under the ACA people with lower incomes also receive help paying their deductible, coinsurance and copayments. More than 350,000 North Carolinians currently receive these cost sharing subsidies, which help people who have insurance to actually afford care. They are eliminated under the AHCA.
So, what will this bill do? It will lead to more uninsured, particularly among lower income individuals. North Carolina will likely see a larger increase in the uninsured than will other parts of the country. The AHCA will also lead to less adequate coverage for most people who buy health insurance coverage on their own. And the problem will get worse over time, since the increase in premium tax credits is not tied to the actual costs of health insurance premiums. While AHCA does keep some consumer protections found in the ACA, these protections are only worthwhile if an individual can afford to purchase insurance.
Making sure that people can afford to buy health insurance coverage is important to all of us. Uninsured and underinsured people still get sick and seek care. But, they often wait until they are really sick before seeking care because they can’t afford the costs. As a result, they are more likely to end up in the hospital for expensive care that could have been avoided. When they do, those of us with adequate insurance ultimately pay, whether it’s through higher premiums that result from costs being shifted, or loss of access when facilities are forced to close from too-much bad debt. And people who are sick miss work and school, leading to lower productivity and worse school outcomes. We all benefit when our fellow North Carolinians are insured and can get the care they need.
Pam Silberman is a professor and Rebecca Slifkin is an associate professor at the UNC Gillings School of Global Public Health.