Although the American Health Care Act (AHCA) did not have enough votes to pass in the U.S. House of Representatives, low income and older people would have likely incurred higher penalties, according to a study by one Washington consulting firm.
Avalere published the results of its study of the differences between the Affordable Care Act's (ACA) mandated penalties and those included the failed Republican bill.
Both approaches were designed to ensure that sick and healthy, as well as old and young, Americans pay into the insurance pool to promote affordability, Caroline Pearson, senior vice president with Avalere, wrote in a blog post announcing the results of its study.
"Because premiums are age adjusted, the penalty would be higher for older people and lower for younger individuals," Pearson wrote. "Additionally, because the AHCA’s penalty is not tied to income, low-income individuals will pay significantly more under the AHCA’s penalty."
Health expert Devon Herrick of the National Policy Analysis responded to the study with his own take on the impact of the penalties, agreeing with the general thrust of the study.
"Any insurance system that allows sick people to join with pre-existing conditions has to have some way to discourage them from waiting to join until they are sick," Herrick told Patient Daily.
He compared the coverage gaps for ACA and AHCA, both of which encouraged people to have continuous coverage, to those that were in place before regulations went into effect.
"The AHCA penalizes people who have gaps in coverage of more than 62 days," Herrick said. "Interestingly, the ACA also allowed individuals to have gaps of up to two calendar months without penalty, which presumably was taken from the prior regulations that also defined continuous coverage of no gaps of more than 62 days. With the ACA, the penalty was assessed on the number of months people went without coverage and rose with income. I believe the AHCA merely assesses a 30 percent penalty on the premium for one year."
Based on those formulas, different people would have faced a different penalty depending on a variety of factors, Herrick said.
"Low-income 50-year-old uninsured for three months would face a higher penalty under the AHCA than under the ACA since the ACA fine would be based on three months at a low income; whereas the AHCA would be based on a 30 percent hike in premiums all year," he said.
By contrast, a high-income 27-year-old uninsured all year would have been better off under the AHCA than the ACA with penalties of $1,006 and $2,676, respectively, Herrick said.
"Higher income young people uninsured all year would fare better under the AHCA; whereas older, lower-income people uninsured for a short duration do better under the ACA," he said. "Of course another reason for the 30 percent penalty under the AHCA is because people who drop and want to rejoin later presumably have waited until their medical needs are greater. In that regard, it’s not so much a penalty as it is a way to charge more for costlier enrollees."
Pearson, in her post on the Avalere website, said a 50-year-old individual at 100 percent of the federal poverty level ($11,880 in income for 2016) could have paid over $1,000 more in penalties under AHCA for not having insurance in the prior year than what she would pay for not having insurance under the current law.
