The Republican health care bill’s uninsured penalty punishes the poor way more than the rich

One group that will really lose out with the Republican health care bill to repeal and replace Obamacare: the poor.

Consider the bill’s uninsured penalty. Under the Affordable Care Act (or Obamacare), individuals are required to obtain health insurance or face a fine, which scales based on income. Under the Republican-backed American Health Care Act (AHCA), you can go without health insurance. But once you try to get insurance again after 63 days of no insurance, you have to pay a 30 percent higher premium for a year.

According to a new analysis by the health research firm Avalere, the AHCA scheme will effectively punish the poor more than Obamacare’s individual mandate penalty did, while actually costing the wealthy less.

Avalere put together a helpful chart to work this through. It imagines a 27-year-old who’s seeking out a bronze or silver plan (the type of metal indicates quality, scaling from bronze to platinum) in the individual marketplace. Red indicates someone who’s getting a worse deal under the Republican plan, while green indicates someone who’s effectively paying less. Here’s the chart:

In this situation, someone who makes $59,400 a year (500 percent of the federal poverty level) and hasn’t had insurance for a year would effectively pay a smaller penalty under the AHCA than under Obamacare, while someone who’s making $11,880 a year (100 percent of the federal poverty level) would pay more.

And in general, the AHCA penalty is just harder for the poor. Since it doesn’t scale with income, everyone, from Bill Gates to someone making nothing a year, will have to pay the same amount: a flat 30 percent extra on a premium. But that penalty — which adds up to $1,006 for a 27-year-old on a bronze plan — is a much bigger share of a person’s income if he or she makes $10,000 a year instead of $100,000, $1 million, or $1 billion.

The story is similar for a 50-year-old seeking out insurance, although it takes an even higher income at that age (since insurance becomes more expensive as you age) before a 50-year-old would break even in the move from Obamacare to the AHCA.

It would be one thing if this were made up with tax credits for the poor. That’s one of the things that happens under Obamacare: It gives tax credits for health insurance, giving lower-income people more generous subsidies. But the AHCA does away with the income-based tax credits altogether, moving toward a tax credit system that scales based on age instead of income — although only individuals who make up to $75,000 a year can get a tax credit — and is, generally, just less generous.

The result is that low-income people will generally obtain lower tax credits under the AHCA than they did under Obamacare, while those with higher incomes will get more, according to the Kaiser Family Foundation.

Putting this all together, the AHCA makes it much harder for low-income Americans — those who are most likely to need help in affording health insurance — to get signed up for health care than Obamacare did.