The Republican Congress’ plans to repeal and replace the Affordable Care Act (ACA) have started to come into focus following the release of a policy brief and the leak of draft legislative language. Their proposal would eliminate the ACA’s premium tax credits and replace them with flat tax credits, which would operate like a voucher, for people buying their own insurance. These changes are important for people in our state, as 499,178 North Carolinians enrolled in a plan with financial help from the ACA’s premium tax credits in 2016.
While the GOP tax credit proposal is similar in a few ways to the ACA’s premium tax credit, it differs significantly in how it determines how much financial help an individual can receive. The dollar-amount of the GOP tax credit is adjusted for age, but it is not adjusted for crucial factors, meaning it will fall short of helping the people who need it most.
- There is no income test for tax credit eligibility, nor does the size of the tax credit adjust for people with lower incomes. Under this proposal, Art Pope could get a larger tax credit than a 30-year-old teacher.
- Second, the tax credit does not adjust for the costs of plans available to the consumer.
As a result, North Carolinians who are older, have low-to-moderate incomes, and have high health care needs would face unaffordable costs under the GOP proposal.
For a Greensboro family of four—two 35-year-old parents with two young children—that earns $65,000 annually, premium costs for a Silver plan would jump by 73 percent. In order to afford a decent health care plan, this middle-income family would have to pay roughly 15% of their income toward premiums alone.
Young people with much lower incomes would also see higher costs. A 33-year-old single mother of two children who makes $26,000 a year in Orange County would see her premium increase by a whopping 490 percent.
Most striking is how the GOP proposal would abandon the federal commitment to health care affordability for older adults, especially those with lower incomes. For a Gastonia couple aged 60 and 57 years old making $28,000 annually, their Silver plan premium would skyrocket by 1,284 percent, leaving them responsible for a premium that consumes more than 70 percent of their income.
Congress is still debating on how to proceed with health care reform, so this proposal may change. For North Carolina families, it’s clear—if Congress wants to repeal and replace the Affordable Care Act, they have to do better than this.
For more background on and analysis of the GOP’s latest health care proposal, check out the Health Advocacy Project’s latest brief, Higher Prices for North Carolina Families under GOP Health Care Affordability Plan.