7 takeaways from the GOP health care plan to replace Obamacare

Walking a fine line between the free market and a safety net, Republicans on March 6 released their legislative plan to replace Obamacare — more formally known as the Affordable Care Act — without throwing millions of people off their health insurance coverage.

It’s too soon to tell how much the plan will cost or if people currently covered will retain their coverage, and at what cost. That information will come later, after the nonpartisan Congressional Budget Office finishes analyzing the plan.

But we can draw a few initial conclusions about the plan, which the Republicans are calling the American Health Care Act, or AHCA.

The requirement to buy insurance goes away. People will no longer be fined on their tax returns if they lack insurance under the plan. Large companies will no longer have to pay penalties for not offering insurance.

There are still tax credits for people to buy insurance. The plan includes an “advanceable” tax credit, based on age and families size, which people can use to buy insurance. Whether it’s as bigger or smaller than Obamacare will depend on specific circumstances. The plan’s advocates say the credit will be between $2,000 and $14,000 a year “for low- and middle-income individuals and families who don’t receive insurance through work or a government program.”

Insurers still have to cover pre-existing conditions, but they will be able to charge more for people who are recently uninsured. The plan allows insurance companies to charge higher rates if a person has a significant lapse in coverage. Higher rates will be charged if a person was uninsured for 63 continuous days during the previous 12 months.

Move toward allowing different types of policies, such as catastrophic policies. The Obama administration required insurance companies to cover basic care without exclusions; they called it “essential health benefits.” Those rules stay in place for now for private insurance. But the GOP plan ends essential benefits for some in Medicaid, and Republicans have said they intend to encourage more limited policies and policies that kick in only in cases of major illness or injury.

Adult children and college students can stay on their parents’ plans. As under Obamacare, children will be able to stay on their parents’ health insurance until they turn 26.

Medicaid will eventually be reduced, but it might expand first. The Medicaid expansion remains at first but new enrollment freezes in 2020. Other limitations will also be applied to the program.

The taxes from the 2010 health care law will be repealed. That includes taxes on prescription drugs, over-the-counter medications, health-insurance premiums and medical devices. As for how the plan will be paid for, an explanation on the House GOP website says, “We are still discussing details, but we are committed to repealing Obamacare and replacing it with fiscally responsible policies that restore the free market and protect taxpayers.”

Correction: Tax credits under the GOP plan will be $2,000 to $14,000 per year; this story originally specified a different time period. We also clarified that essential benefits stay in place for private insurance.