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CITY TALK: Proposed ACA replacement might have limited impact on Savannah economy

As I write this, we don’t know if the bill intended to replace the Affordable Care Act (ACA, or “Obamacare”) will be changed significantly before becoming law. In fact, it remains unclear if the bill, which was proposed just a couple weeks ago, even has sufficient Republican support to get through the U.S. House of Representatives.

Still, I was immediately curious how the proposed American Health Care Act (AHCA) would impact the Savannah economy. Fortunately, I didn’t have to try to run some complex numbers myself. The Henry J. Kaiser Family Foundation (http://www.kff.org) has already released detailed estimates by state and county about some of the impacts of the AHCA, if it survives in its current form.

This might go without saying, but I am assuming for this column that the Savannah economy will likely fare better if as many residents as possible have health insurance. People with insurance will likely have better health outcomes, be more productive, and face less risk of financial ruin because of medical bills.

I am also assuming that higher tax credits will result in greater likelihood of folks being insured. Again, that might seem an obvious assumption.

We don’t know, however, whether the AHCA would lead to higher or lower insurance premiums, though the Congressional Budget Office projects that premiums would decline about 10 percent on average.

But it’s also worth noting that the bill in its current form would give private insurers the flexibility to charge older enrollees higher premiums than are currently allowed under the ACA. Right now, insurance companies can generally charge older Americans three times what they charge younger Americans, but the proposed ACA replacement bill would allow premiums to be five times higher for older Americans than for younger ones.

I also feel compelled to add that this column is not looking at the stories of individuals who might benefit from the AHCA or might be harmed by it. This wonky column is just looking at averages by county, age and income.

The Kaiser Family Foundation’s interactive map also considers only the premium tax credits under the two plans and does not include adjustments for the “cost-sharing assistance under the ACA that lowers deductibles and copayment for low-income marketplace enrollees.”

With those provisos out of the way, let’s look at some numbers.

In Savannah-Chatham

How would the Savananh area fare under the AHCA?

It looks like Chatham County would fare decently well, at least compared to more rural areas of the state.

Under the existing ACA, the average Chatham County 27-year-old ACA enrollee with a $20,000 annual income would get a tax credit of $1,850 in 2020. Under the proposed AHCA, she would get a tax credit of $2,000 — about 8 percent higher — in 2020.

However, a 60-year-old Chatham resident with $20,000 in income would get a $4,000 tax credit in 2020 under the AHCA, but she would get a $6,320 tax credit in 2020 under the current law.

On the other hand, a 60-year-old Chatham County resident with a $50,000 income would get a $2,180 tax credit in 2020 under the ACA. Under the AHCA, she would get a $4,000 tax credit in 2020. That’s a sizable increase, and it might even be enough to offset possible premium increases for older Americans.

Given these examples, one could plausibly argue that the AHCA would have limited impact on the number of Chatham County residents without health insurance.

Areas outside Chatham County

In less densely populated areas, however, it seems clear that the ranks of the uninsured would swell under the AHCA.

Less-populated areas typically have higher average insurance premiums than denser areas. The ACA compensates for this trend by giving higher tax credits in places with higher premiums, but the tax credits in the proposed AHCA would not vary by location.

So a 27-year-old ACA enrollee with a $20,000 income in Effingham County would get a $3,560 tax credit in 2020, but she would get $2,000 under the AHCA.

A 60-year-old Effingham resident with $20,000 income would get a $10,750 tax credit under the ACA in 2020, but would only get $4,000 under the AHCA.

If you look at the Kaiser Family Foundation’s interactive map, you’ll find steep decreases in tax credits across rural Georgia. In Colquitt County, for example, a 60-year-old with $30,000 income would get a $12,790 tax credit in 2020 under the ACA, but would only get that flat $4,000 tax credit in 2020 under the proposed AHCA.

Unexpected politics

The politics of the AHCA strike me as, well, bizarre. In more densely populated areas that Hillary Clinton won in November, the proposed ACA replacement bill might have limited economic impacts.

However, many counties that voted overwhelmingly for President Trump could be hit hard by the steep reduction in tax credits.

I’ve written occasionally over the years about the economic woes of rural Georgia. Atlanta, Savannah and a few other metro areas are adding population and jobs quickly, but many less populous counties have never really recovered from the 2007-2009 recession. Many of those areas are losing population.

In its current form, the AHCA would likely do even more damage to those struggling rural economies.

City Talk appears every Tuesday and Sunday. Bill Dawers can be reached via billdawers@comcast.net. Send mail to 10 E. 32nd St., Savannah, Ga. 31401.

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