Californians’ tax subsidies likely to shrink with Obamacare replacement plan, new data show

March 14--The Republican plan to replace the Affordable Care Act would dramatically reduce tax credits for many Californians purchasing health insurance through public exchanges and make coverage unaffordable for hundreds of thousands of people, according to data released Tuesday by the state's health exchange program, Covered California.

Under the American Health Care Act, authored by House Speaker Paul Ryan and released last week, many of the 1.3 million Californians enrolled in plans through the exchange, especially older people, will struggle to afford health insurance if the proposal becomes law, said Covered California director Peter Lee Tuesday. The GOP plan would also put at risk the insurance of about 3.6 million Californians now covered under a Medi-Cal expansion initiated by the Affordable Care Act, Lee said.

"We have about 5 million Californians who have gained coverage from a combination of the expansion of Medicaid and the tax subsidies and the provision that you can't be turned away because of your health status," Lee said. "All of those individuals are at risk if the proposal goes through."

On Monday, the Congressional Budget Office estimated that 14 million people nationwide would lose their insurance after the first year of the replacement plan's implementation.

Republican leaders have pointed out that the budget office also estimated a $337 billion reduction in the federal deficit under the GOP proposal.

Under the Affordable Care Act, individual tax credits were based on a person's age, income and health care costs where they lived. Credits under the American Health Care Act would be allocated based primarily on age.

That means people in Northern California would receive the same credit as people in Southern California, even though Northern California residents pay much more for medical care, Lee said.

A 62-year-old in San Francisco making $20,000 a year would see a $6,000 drop in their health care tax credit, the new analysis shows. If that person made $30,000 a year, they would see a $5,500 reduction in tax credits. People of all ages making $20,000 or less would also receive a substantially smaller tax credit than what they get currently.

The trend is different for people making more money. A person earning $50,000 a year would receive a $4,000 tax credit under the Republican plan, while they currently receive no credit under the Affordable Care Act, the state data show.

Covered California households received an average of $5,300 in tax credits in 2016, although some families received as much as $10,000, according to the new report.

"(Consumers) want insurance. They want peace of mind," Lee said. "What the subsidies do is make health care affordable, bring it within reach."

Sammy Caiola: 916-321-1636, @SammyCaiola

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