Republicans in the U.S. House on Monday released their plan to replace former President Obama’s signature health care law. The new plan would phase out the Affordable Care Act’s expansion of Medicaid. The House proposal offers tax credits to help people buy insurance if they don’t get it through their jobs. But those tax credits are far less generous to Alaskans than the subsidies in existing law.
Under the Affordable Care Act, a middle-income Alaskan who buys a policy on healthcare.gov gets more of a subsidy than someone of the same age, with the same income who lives in say, Reno, Nevada, where insurance is cheaper.
“People in Alaska get pretty big tax credits under the Affordable Care Act, and that’s for a couple of reasons,” Cynthia Cox said. Cox conducts economic and policy research at the Kaiser Family Foundation. “First of all, the tax credits are tied to how much premiums cost in a given area, and Alaska just happens to have very high health insurance premiums compared to the rest of the country.”
The other factor in how tax credits are calculated under the Affordable Care Act is income relative to the poverty line, which is set higher in Alaska. In all, some 18,000 Alaskans bought policies through healthcare.gov last year. Most of them received subsidies, totaling nearly $146 million in tax credits. The ACA credits are often described as “subsidies.” Same thing, Cox said.
“What most people think of as the financial help that people are getting when they shop on healthcare.gov, those are actually tax credits, under the Affordable Care Act,” Cox said. “And so the House Republican plan would also use tax credits, but they would calculate those tax credits in a different way.”
Under the Republican proposal, the amount of tax credit would be the same in all parts of the country, though they would vary by age.
So, consider the tax credits for a 60-year-old man in Fairbanks who earns $50,000 a year. He’s eligible for about $20,000 in tax credits now. That covers about 80% of the premium for a silver-level Affordable Care Act plan. Under the House Republican plan, his tax credits would drop to $4,000 a year.
And a 60-year-old in low-cost Reno, Nevada? He’d also receive $4,000 a year in tax credits under the Republican plan. Younger people would get less. Under the Affordable Care Act, the average tax credit for an eligible Alaskan is $9,000 per year.
Tax credits, though, aren’t the whole story. Under the Affordable Care Act, the individual mandate requires people to buy substantial coverage, and those policies cost more. Cox said that’s one of the big trade-offs, and criticisms, of the ACA. She said a person might save money under the Republican plan by buying bare-bones coverage.
“So that might mean that you pay less for your premium, but when you go to the doctor or you have a hospital stay you pay more out of pocket,” Cox said.
The bill has provisions aimed at increasing the number of insurers in places like Alaska. Only one carrier now offers plans to Alaskans on healthcare.gov.
Alaska Gov. Bill Walker was at the White House recently and met with Health Secretary Tom Price. One thing Walker said he pushed to get across is that health care isn’t the same across every state.
“And how in some place you might take an ambulance three miles. In Alaska you call 911, you (could) end up with a medevac of some sort,” Walker said. “Could be, you know, tens of thousands of dollars. So it’s just a different situation in Alaska than it is in the Lower 48.”
Alaska’s U.S. senators say they want to repeal the Affordable Care Act, which they say isn’t working for Alaska. The House Republican plan, though, might not get Sen. Lisa Murkowski’s vote.
“We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states,” Murkowski and three other Senate Republicans pledged in a letter this week. They said a draft of the House bill did not meet their test, but the proposal has been altered since then.
The bill would also defund Planned Parenthood, by not allowing it to receive Medicaid reimbursement. Murkowski told the Alaska Legislature last month she won’t vote for a bill that denies Alaskans health care services from Planned Parenthood.
Liz Ruskin is the Washington, D.C., correspondent at Alaska Public Media. Reach her at lruskin@alaskapublic.org. Read more about Liz here.
