Republicans in Congress are voting on a plan to repeal and replace the Affordable Care Act -- the health insurance law popularly known as Obamacare -- and according to WalletHub, the proposed replacement plan could cause people living in many U.S. cities to pay more for their health insurance than they're paying now. Is your city among those that could be hit hard by the American Health Care Act?
What's happening?
As a refresher, Obamacare created state marketplaces that allow uninsured Americans to shop for insurance. Premiums on plans sold through these marketplaces can qualify for subsidies that reduce their cost and, depending on a person's income, help pay out-of-pocket costs, including co-pays.
Image source: Getty Images.
Obamacare members qualify for subsidized health insurance premiums if their income is less than four times the federal poverty level, or $98,400 for a family of four in 2017. To qualify for help with other out-of-pocket expenses, a household must have an income that is less than 2.5 times the federal poverty level.
Obamacare has brought the country's uninsured rate to record lows. However, insurers selling plans on the exchanges are struggling to turn a profit, and that's got Republicans arguing that Obamacare could collapse under its own weight. Some of the nation's largest insurers have already stopped selling plans on the exchanges because of losses due to rising healthcare costs and too few healthy young Americans enrolling in their plans.
In hope of creating a system that works better, Republicans have put forth the American Health Care Act, or AHCA. The AHCA dismantles most of Obamacare's provisions, and it creates a new insurance program that's based on annual tax credits, rather than subsidies.
Under the AHCA, young Americans will receive $2,000 per year, while older Americans will receive up to $4,000 per year. Americans covered by health insurance through work can't receive these credits, and the credits are the same regardless of whether you live in areas where health insurance has typically been more expensive. The credit begins phasing out when an individual's income exceeds $75,000 and a family's income exceeds $150,000.
Age-based tax credits may be a better option; however, WalletHub finds that they could cause many Americans to pay more for their insurance than they're paying today.
These cities face the biggest increase
WalletHub calculated the difference in premium subsidies provided to average households under Obamacare and the AHCA across 457 U.S. cities, and they determined that health insurance premiums could increase most in cities located in Arizona, North Carolina, and Texas.
Based on WalletHub's analysis, Yuma, Arizona; Anchorage, Alaska; and Syracuse, New York, face the biggest increases. The list of the top 10 U.S. cities most impacted by passage of the AHCA also includes three cities in North Carolina.
As you can see in the following table, the extra amount that people may end up paying is substantial. For example, in Yuma, a two-person household earning the median income would get $7,815 less in credits under the AHCA than under Obamacare.
|
Rank |
City |
Average Tax Credit Under AHCA |
Average Subsidy Under ACA (Obamacare) |
Difference |
|---|---|---|---|---|
|
1 |
Yuma, AZ |
$5,000 |
$12,815 |
($7,815) |
|
2 |
Anchorage, AK |
$5,000 |
$12,748 |
($7,748) |
|
3 |
Syracuse, NY |
$4,000 |
$10,398 |
($6,398) |
|
4 |
Reading, PA |
$4,000 |
$10,149 |
($6,149) |
|
5 |
Chattanooga, TN |
$5,000 |
$10,786 |
($5,786) |
|
6 |
Greenville, NC |
$4,000 |
$9,067 |
($5,067) |
|
7 |
Fayetteville, NC |
$5,000 |
$9,687 |
($4,687) |
|
8 |
Birmingham, AL |
$5,000 |
$9,494 |
($4,494) |
|
9 |
Wichita Falls, TX |
$5,000 |
$9,434 |
($4,434) |
|
10 |
Asheville, NC |
$5,000 |
$9,232 |
($4,232) |
Data source: WalletHub.
It's not all bad news
Some cities will do better under the AHCA, particularly cities where residents' higher median incomes are unlikely to qualify for any Obamacare subsidies. For example, in Pleasanton, California, an affluent San Francisco suburb, a couple earning median income doesn't receive any Obamacare subsidies, but they would get an average $6,000 in credits under the AHCA. Similarly, residents of Newton, Massachusetts, and Norwalk, Connecticut, could make out better under the AHCA.
In any case, there's still a lot of debate over the replacement plan, and that suggests that it may not pass Congress without changes. Obviously, any changes to it could alter the results of WalletHub's study, so if you live in a city that's impacted by replacing Obamacare, you'll want to pay close attention as this plan makes its way through Washington.
