The GOP health plan would disproportionately hurt rural Trump voters

On Monday March 6, 2017 the GOP released its proposal to repeal and replace the Affordable Care Act. The proposed American Health Care Act (AHCA) would end or radically change aspects of the ACA, while keeping some of its more popular provisions. For instance, the AHCA will terminate the individual mandate, taxes on the wealthy, change the way Medicaid is funded, modify the subsidies, eliminate the employer mandate, and much more.

A report published by the Congressional BudgetOffice (CBO) on Monday revealed the deep flaws in this proposal, including the possible negative effects on many rural Americans. According to the CBO report, the GOP proposal would cause 14 million people to lose health insurance in the first year and 24 million people would lose health insurance by 2026. This immediate spike in uninsured Americans will result from higher premiums due to changes in subsidies and healthy people dropping insurance without the individual mandate. Rural states are expected to be disproportionately negatively impacted by these changes.

One of the most dramatic changes under the AHCA is the federal subsidies for health insurance. The AHCA would give Americans on average $1,700 less in subsidies in 2020 compared to the ACA. The subsidies proposed by the AHCA are refundable tax credits which phase-out for higher-income individuals, vary with age, and grow annually with inflation. These tax credits range from between $500 and $4,000 per year. The AHCA tax credits are refundable, which means that they reduce the amount a taxpayer owes on their federal income tax, but poor families must pay their premiums out of pocket up front. Under the ACA, the tax credits vary with family income, cost of insurance where people live, age, etc. These credits also increase annually along with premiums. The ACA also offers advanceable tax credits, meaning that they are available when the premium payment is owed and are reconciled based on actual income when a person files their income taxes. This benefits lower-income families who may not be able to pay for their premiums up front and wait for their tax refund. The differences in these tax credits are compared by the Kaiser Family Foundation in an interactive coverage map.

Credit: Kaiser Family Foundation

This chart illustrates the basic coverage differences by income and age between the ACA and the AHCA. Younger and wealthier Americans benefit from the new subsidies, while older and poorer Americas will suffer. Rural areas often have larger populations of poor and older individuals, meaning that they receive less subidies under the AHCA. However, this disparity only increases when the higher premiums that exist in many rural areas are taken into account. Rural regions have higher premiums in part because their populations are sicker and need more care on average, with higher rates of chronic conditions like heart disease and diabetes. As discussed in a previous blog post rural populations also have higher mortality rates, especially among women. Rural areas are experiencing higher rates of insurer drop outs and poorly drawn rating areas, which are also contributing to higher premiums. For more information on the Affordable Care Act in rural areas, see this previous blog post.

Trump carried the 11 states whose residents would lose the most in tax subsidies under the AHCA. The Center on Budget and Policy Priorities found that the average tax credits for marketplace consumers in these 11 states would decrease by over 50% under the AHCA. Ten of those eleven states have significant rural populations in their health insurance marketplaces, meaning 25% of the population live in rural areas. The average tax credits in these high-cost rural states would fall sharply under the AHCA, between $3,160 and $10,243 in 2020.

Credit: CNBC

In Alaska, a state with high health care costs, the premiums for a 45-year old with an income of $22,000 per year would increase by 1408%. The 45-year old would pay $784 for healthcare under the ACA and $11,820 for healthcare under the AHCA. This would likely mean that this person would not be able to afford health insurance since their premiums would be almost 54% of their income. The income cutoff for Medicaid in Alaska in 2020 would be $20,000 a year, so the 45-year old would likely be uninsured. Trump won Alaska by 14.7 percentage points.

In 27 Nebraska counties, a 60 year-old with an income of $30,000 would lose $12,950 in subsidies a year under the AHCA. All of these counties voted for Trump in the 2016 election. Fifty-one percent of consumers in Nebraska's health insurance marketplace live in rural areas.

In 22 Oklahoma counties, a 60 year-old with an income of $30,000 would lose $11,970 in subsidies a year under the AHCA. These counties also voted for Trump, who won Okaloma by 36.4 percentage points. Thirty-seven percent of consumers in Okalahoma's health insurance marketplace live in rural areas.

In Pennsylvannia and North Carolina, two swing states that helped Trump win the election, healht insurance subsidies would also decrease. In Berks and Lancaster counties in western Pennsylvania, the subsidies would decrease by $9,500. Trump won those counties by 9.9 and 19. 1 percentage points, respectively. In western North Carolina, the subsidies would plummet by over $10,000. Twenty-five percent of consumers in North Carolina's health insurance marketplace live in rural areas.

Despite these statistics, Trump and the GOP still claim that the AHCA will benefit all Americans. However, Trump did admit in an interview with Fox News last night that his working and middle-class supporters will not fare as well under the AHCA. Trump still claims that this is only the preliminary draft and that there will be negotiation in the Senate. Hopefully the next draft of the AHCA will contain more favorable provisons for rural Americans.