Republicans in Congress have unveiled a bill to fulfil their long-held desire to scrap President Obama’s Affordable Care Act (ACA).

What is it?

The America Health Care Act (AHCA) is a draft bill to cut back the government’s role in healthcare with a more market-orientated system. It seeks to replace the ACA, Barack Obama’s flagship domestic achievement and what became known as Obamacare. The proposed changes have inevitably already been labelled Trumpcare.

Does Donald Trump support the plan?

Yes. Trump frequently pledged to repeal Obamacare on the campaign trail and has tweeted his official endorsement of the bill, which his officials helped to draw up.

Our wonderful new Healthcare Bill is now out for review and negotiation. ObamaCare is a complete and total disaster - is imploding fast! — Donald J. Trump (@realDonaldTrump) March 7, 2017

The White House press secretary, Sean Spicer, said the bill was an “important step toward restoring healthcare choice and affordability”.

Does AHCA repeal Obamacare?

Not entirely. It scraps some of the key features of Obamacare, notably the individual mandate that taxes people who don’t purchase health insurance. But its proposed replacements on this and many other aspects represent something of a compromise, reflecting the difficult and unprecedented task of reversing a huge welfare programme and the significant support for the existing system.

Under the AHCA, Americans would have to pay a surcharge if they allow their health insurance to lapse. Insurers would be allowed to charge an extra 30% for a year to those who allow their cover to lapse for more than 63 days.

How will it be funded?

Income-based subsidies will be replaced with aged-based tax credits to encourage people to buy insurances on the open market. The credits will rise with age starting at $2,000 (£1,640) a year for under-30s and rising to $4,000 a year for those aged 60 and over. Whole households would be limited to $14,000 in tax credits and credits would be phased out for those earning more than $75,000 a year.

The bill thereby reverses the current tax increases on higher earners. Those who earn more than $48,280 get no help under Obamacare. The new system would give tax credits to anyone earning under $75,000. Tax levied on drugs, tanning services and health savings accounts would also be dropped.

What else will be scrapped?

It will phase out the expansion of Medicaid – a scheme that helps 70 million poor and disabled Americans. Republicans had initially threatened to immediately halt the expansion of Medicaid in 31 states that opted to participate in it.

Instead, Medicaid expansion will be phased out from 2019. The current open-ended entitlement to Medicaid funding will be replaced with a per-person lump sum paid to the states.

The bill also bows to pressure from anti-abortion groups by making women’s health organisation Planned Parenthood ineligible for Medicaid or federal family planning grants. It also delays until 2025, the “Cadillac tax” – a levy on the highest cost employer-provided plans.

A glossary of key terms in US health care policy Co-pay

Out-of-pocket expenses ​for ​paid by patients for doctors’ visits, drugs or procedures. Deductible Amount a patient must pay out of pocket for prescriptions or healthcare before their insurance coverage kicks in. Healthcare exchanges The name for state insurance marketplaces created under the Affordable Care Act. Individuals shopping for health insurance can see what subsidies they may qualify for and sign up for a plan. ​But in some areas shoppers face a lack of options. ​ Individual mandate A penalty for people who don’t carry health insurance policies. ​As such it’s unpopular. But it’s also the linchpin to the Barack Obama health care law; w ​Without it, not enough healthy people would carry insurance to make a market. Medicaid A joint federal and state program that helps with medical costs for some people with limited income and resources. ​One of the largest payers for healthcare in the United States, with 70m enrollees. Spending accounted for 10% of the federal budget in 2015. Established by the Social Security Act, signed into law in 1965. ​ Medicare A federal health insurance program for people who are 65 or older, certain younger people with disabilities and others. ​The biggest public health care program by cost ($540bn in 2015, or 15% of the federal budget) with an enrollment of about 57m. Established by the Social Security Act, signed into law in 1965. ​ Premium If you need insurance, this is what it will cost you. The premium is a periodic payment for health or prescription drug coverage. Single-payer A pie-in-the-sky (for America) system in which a single payer, the government, would pay all health bills. Could that possibly work? The UK’s NHS is exhibit A. –Tom McCarthy

Will older people have to pay more for health insurance?

Yes. Under Obamacare, insurers can charge older people up to three times more than younger people for insurance. Under the Republican plan, this limit will rise to five times more.

What aspects of Obamacare will survive?

The most popular parts of the current system will be preserved. These include: ending lifetime caps on coverage; allowing adult children to stay on their parents’ healthcare plan until the age of 26 and banning insurers from denying coverage, or imposing higher charges, on people with pre-existing medical problems.

How many people will be affected?

Obamacare helped 20 million previously uninsured Americans to get healthcare and it is feared that the bill will leave many of these without health cover. Under the existing system, the poorest get the most help. The Republicans’ proposals are more market-oriented, based mostly on age, with an element on income.

The bill will also reduce the number of poorer people helped under Medicaid. It is feared that of those on marginal incomes only the sickest, who really need insurance, will be prepared to pay the surcharge on lapsed plans. Estimates of the impact of the proposals and their costs have yet to be carried out by the independent Congressional Budget Office.

Will it pass into law?

Although Republicans control both the House and narrowly the Senate, there is a significant minority of Republicans who have voiced their opposition to the plan. Some think it goes too far. Four Republican senators have publicly stated that they cannot support eliminating the expansion of Medicaid. Other Republicans think the bill doesn’t goes far enough, such as Senator Rand Paul, who described the plans as “Obamacare-lite” and Representative Justin Amash, who called it “Obamacare 2.0”. Just three Republican defections in the Senate would be enough to defeat the bill, assuming all Democrats vote against it.