Obamacare 101: What’s in the GOP’s replacement?

WASHINGTON - House Republicans this week finally unveiled legislation to repeal and - just as important - replace the Affordable Care Act, popularly known as Obamacare.

The health law is complex. So it shouldn't be a surprise that what the GOP proposes in its place has a few knotty details.

Here's a guide to what's in the Republican plan and what it could mean for Americans.

Guaranteed coverage

Now: The guarantee allows Americans to get health insurance even if they're already sick. Americans can get coverage even if they've been uninsured for years.

Proposed: The House GOP plan would still prohibit insurers from denying sick consumers.

Insurance mandate

Now: Obamacare required Americans to have health insurance or pay a tax penalty. The penalty is assessed annually when people file taxes, though there are exemptions for people with low incomes or other hardships.

Proposed: The tax penalty is eliminated. But the House bill still penalizes people who don't get insurance. If consumers allow coverage to lapse for as long as two months, insurers would charge a 30 percent penalty when they buy a new plan. That could discourage people from getting coverage if they lose their plan, like from a job loss, and could increase the uninsured.

Medicaid

Now: For decades, being a poor adult often meant not having health insurance. That's because Medicaid historically limited coverage to select groups of low-income Americans.

These included children, pregnant women, the disabled and the elderly. Poor adults without children were barred in most states.

Obamacare tried to change that by offering states billions to expand Medicaid to childless adults. Thirty-one states including Iowa did so. That helped millions of low-income Americans get health coverage.

Proposed: The House GOP plan would make two big changes to the Medicaid program.

First, starting in 2020, it would phase out the additional federal money that has helped states expand their programs. Then it would eliminate the decades-old system that linked federal aid for states to how much medical care Medicaid enrollees used.

The GOP plan would instead cap how much aid the federal government provides states for Medicaid. The federal government would give each state a fixed amount of money every year for every person who qualifies for Medicaid. That amount then would increase annually by an amount linked to the medical inflation rate.

Many advocates and medical groups say that over time, the change would force states to scale back coverage for poor people and limit medical services.

Insurance markets

Now: All plans on the marketplaces, such as HealthCare.gov, must offer basic benefits such as hospital care, mental health services and prescription drugs. They cannot impose annual or lifetime limits.

Insurers can't charge older consumers more than three times what they do younger ones.

Proposed: The House plan largely preserves the marketplaces and Obamacare's requirements that health plans offer basic benefits.

Insurers would still be barred from imposing annual or lifetime limits.

But they would be able to charge older consumers five times more than younger consumers.

Insurance subsidies

Now: The law offers subsidies to low- add moderate-income people. But there are several complicated yet important caveats.

First, they are linked to consumers' incomes, so people who earn less get bigger subsidies.

Second, the size of the subsidies is also pegged to how much insurance plans cost. That means that if health plans are very expensive in one market, the subsidies in that market are larger.

There are huge variations in how much health care costs around the country, and insurance premiums can change a lot from year to year.

The subsidies are automatically applied to monthly insurance bills. That means low-income people don't have to pay a large premium and then wait for a rebate.

Proposed: The House plan scraps the subsidies. Instead, Americans who don't get coverage through an employer would qualify for a tax credit based on age.

Older consumers would get larger credit, as much as $4,000 annually for people over 60. Younger consumers would get a smaller credit, as little as $2,000 for people younger than 30. This reflects the assumption that insurers charge younger people less because they are healthier.

Linking the credit to consumers' age, instead of their income, is much simpler. But it risks leaving some people, particularly lower-income consumers, without enough aid to buy a health plan.

Taxes

Now: Obamacare's architects cobbled together a mix of taxes to offset the cost of subsidizing insurance. That meant new taxes on insurance companies and medical device makers.

Wealthy Americans are paying more, too. Families making more than $250,000 a year have seen their Medicare payroll taxes increase because of Obamacare.

Proposed: The House plan scraps the new taxes, which now means a tax cut for the medical device and insurance industry. Insurers say lower taxes would let them lower premiums.

It's also a large tax cut for the wealthiest taxpayers, who would no longer be subject to the Medicare payroll surtax.