Paul Ryan introduced the GOP’s proposed replacement for the Affordable Care Act. | Courtesy of U.S. Rep. Paul Ryan

Health care industry experts told Insider that the GOP’s proposal to replace the Affordable Care Act could leave millions more uninsured while doing little to rein in costs.

The Congressional Budget Office said Monday that the plan over the next decade would leave 24 million more Americans uninsured than under the current plan, but it also would reduce the federal deficit by $337 billion during that span.

Major parts of the GOP proposal, called the American Health Care Act, include:

  • Eliminating the expansion of Medicaid, the government health insurance program for the poor. The expansion in Kentucky has added provided Medicaid to an additional 400,000 people.
  • Federal subsidies people get when they buy insurance through the health care exchanges would be replaced with tax credits. In Jefferson County, most people would see greater assistance under the new GOP plan than they do under the ACA, according to an analysis by the Kaiser Family Foundation. For example, a 40-year old who earns $40,000 annually gets no subsidy under the ACA, but would get a $3,000 tax credit under the new plan. A 60-year-old with the same income would get a tax credit of $4,000 under the new plan, compared to $2,800 under the old.
  • Allowing people to purchase health insurance across state lines.
  • Doubling the contribution limit for health savings accounts.

Matt Schwartz

Matt Schwartz, CEO of Louisville-based Schwartz Insurance Group, said that the ACA failed to lower costs and must be altered because it “created burdensome compliance issues for employers.”

However, he said, “Any fix to health insurance is complicated because there are always winners and losers.”

The AHCA offers some improvements, such as reduced regulations, and the proposal’s risk pools would help stabilize the individual insurance market, Schwartz said. But other parts of the proposal, such as allowing people to sell across state lines and increasing HSA contributions sound great but will have little impact, he said.

Insurers today can already compete anywhere they want, Schwartz said, but many don’t, simply because they don’t have a network of health providers in all areas. Humana, for example, does not compete in Indianapolis, about a two-hour drive from its headquarters, he said.

Schwartz said that health savings accounts, or HSAs, which allow people to save pre-tax money for medical expenditures, help people who can afford to put money in them — but many Americans can’t.

“A majority of Americans aren’t funding the HSAs because they don’t have the money,” he said.

More people uninsured

Other health care organizations said that they worry American Health Care Act would reduce the number of people who have health insurance.

The Kentucky Center for Economic Policy said the proposal would eliminate health insurance for millions of Americans and harm especially Kentucky, which “has been the nation’s biggest winner from the Affordable Care Act.”

The American Hospital Association said in a letter to the U.S. House of Representatives that the proposal would increase the number of uninsured Americans and makes cuts in programs such as Medicaid that serve “our most vulnerable populations.”

Passport Health told Insider via email that it shares concerns raised by the American Hospital Association and American Medical Association, but said it was “generally supportive of efforts to improve Medicaid while maintaining access to affordable health care.”

KentuckyOne Health could not be reached. Humana referred questions to  America’s Health Insurance Plans, a trade association for health insurers.

AHIP spokeswoman Kristine Grow told Insider in an email that the GOP’s proposal “contains many essential provisions that will help stabilize the individual market in 2018, as well as during a transition to a new market.

“We look forward to working with Congress to improve on this approach to ensure that consumers, particularly those with low incomes, have access to a range of affordable coverage options,” Grow said.

In a letter to high-ranking members of Congress, AHIP wrote that it appreciates that the the proposal’s authors recognized that “new policies are needed immediately to promote continuous coverage; this is essential for the viability of the individual market.”

U.S. Sen. Rand Paul, R-Ky., does not like the GOP proposal.

Health insurance industry worried about impact on employer plans

Two large industry organizations worry about the GOP proposal’s impact on insurance plans that Americans get through their employers. However, a GOP aide told Insider that it’s highly unlikely that the ACHA would affect employer plans in any significant way.

Griffin Meredith

Griffin Meredith, president of the Kentucky chapter of the National Association of Health Underwriters, recently traveled to Washington, D.C., and said lawmakers there were discussing the elimination of part or all of the so-called employer exclusion, which allows employers and employees to pay for their health insurance plans with pre-tax dollars. That exclusion provides significant savings for the roughly 175 million Americans — and their employers — who get health insurance benefits through work.

For example, an individual who earns $40,000 a year and pays $2,000 annually on health insurance pays federal income taxes only on $38,000 of income. Without the employer exclusion, that individual also would have to pay taxes on the $2,000, which would raise his tax bill by around $500. Employers who bear part of the health care costs also would have to pay higher taxes.

Meredith said that eliminating that tax break, or reducing it, makes little sense because it undermines the employer-sponsored health insurance market, which works fairly well — and does nothing to fix the individual market, which does not work well.

House Speaker Paul Ryan and Kevin Brady, chairman of the House Ways and Means Committee, could not be reached to say whether they would support a proposal that includes the elimination of all or part of the employer exclusion.

However, a GOP aide told Insider on Monday that while the House discussed making changes to the employer exclusion, the current bill does not affect that provision.

“I don’t foresee a situation where that is going to happen,” she said.

The story was updated to provide additional comments from Schwartz.