House Republicans Release Long-Awaited Plan to Replace Obamacare

House Republicans on Monday released long-anticipated legislation to supplant the Affordable Care Act with a more conservative vision for the nation’s health-care system, replacing federal insurance subsidies with a new form of individual tax credits and grants to help states shape their own policies.

Under two bills drafted by separate House committees, the government would no longer penalize Americans for failing to have health insurance but would try to encourage people to maintain coverage by allowing insurers to impose a surcharge of 30 percent for those who have a gap between health plans.

The legislation would preserve two of the most popular features of the 2010 health-care law, letting young adults stay on their parents’ health plans until age 26 and forbidding insurers to deny coverage or charge more to people with preexisting medical problems. It would also target Planned Parenthood, rendering the women’s health organization ineligible for Medicaid reimbursements or federal family planning grants — a key priority for antiabortion groups.

The debate, starting in House committees this week, is a remarkable moment in government health-care policymaking. The Affordable Care Act, former president Barack Obama’s signature domestic policy achievement passed in 2010 with only Democratic support, ushered in the most significant expansion of insurance coverage since the creation of Medicare and Medicaid as part of President Lyndon B. Johnson’s Great Society programs of the mid-1960s.

There is no precedent for Congress to reverse a major program of social benefits once it has taken effect and reached millions of Americans.

Taken together, the bills introduced Monday night represent the Republicans’ first attempt — and best shot to date, with an ally in the White House — to translate seven years of talking points about demolishing the ACA into action.

At the same time, major aspects of the plans, notably the strategy for tax credits and Medicaid, reflect the treacherous terrain that Republicans face to win enough votes within their own conferences in the GOP-controlled House and Senate.

The bills must address concerns of both conservatives worried about the cost of the overhaul and worries that it might in effect enshrine a new federal entitlement, as well as more moderate members who want to ensure that their constituents retain access to affordable health care, including those who received Medicaid coverage under the ACA.

Even so, signs emerged on Monday that Republicans in Congress’s upper chamber could balk either at the cost of the proposal or if it leaves swaths of the country without insurance coverage.

Sen. Rand Paul (R-Ky.), one of at least three conservative senators who opposes the plan to provide income-based tax credits, tweeted: “Still have not seen an official version of the House Obamacare replacement bill, but from media reports this sure looks like Obamacare Lite!”

And four key Republican senators, all from states that opted to expand Medicaid under the ACA, said they would oppose any new plan that would leave millions of Americans uninsured.

“We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states,” Sens. Rob Portman (Ohio), Shelley Moore Capito (W.Va.), Cory Gardner (Colo.) and Lisa Murkowski (Alaska) wrote in a letter to Senate Majority Leader Mitch McConnell (R-Ky.).

The tax credits outlined by the Ways and Means Committee’s portion of the legislation incorporate an approach that Republicans have long criticized: income-based aid to help Americans afford health coverage.

Until now, the GOP had been intending to veer away from the ACA subsidies that help poor and middle-class people obtain insurance, insisting that the size of tax credits with which they planned to replace the subsidies should be based entirely on people’s ages and not their incomes. But the drafts issued Monday proposed refundable tax credits that would hinge on earnings as well as age — providing bigger credits for older and poorer Americans.

This big pivot, developed by the Ways and Means Committee under the guidance of House Speaker Paul D. Ryan (R-Wis.), stems from a combination of problems that were arising with the idea of age-only credits that would have been available to any individual or family buying insurance on their own, no matter how affluent.

The Republican plan would offer tax credits ranging from $2,000 per year for those under 30 to $4,000 per year for those over 60. The full credit would be available for individuals earning up to $75,000 a year and up to $150,000 for married couples filing jointly. The credits would phase out for individuals earning more — for each $1,000 in additional income, a person would be entitled to $100 less in credit, meaning a 61-year old could make up to $115,000 and still receive some credit.

The income-based phase-out of the credit allows the GOP plan to be funded without taxes on employer-provided insurance that had been considered earlier in the drafting process. In addition, the latest proposal would delay the ACA’s “Cadillac” tax, a levy on the most generous employer-provided health plans, until 2025. It also retains the tax exclusion for premiums paid for employer-provided health plans.

Estimates from congressional budget analysts and the White House’s Office of Management and Budget kept showing that the credits would be both too small to provide enough help to lower-income people and too expensive overall for a GOP determined to slash federal spending that the ACA has required.

Those analysts have not had time to assess how this new configuration would affect federal spending or the number of people with insurance coverage.

While the number of Americans who can afford health insurance has never been the priority for the GOP that it is for Democrats, President Trump has made clear that he is sensitive to any changes that would strand large numbers of people who gained coverage under the ACA.

Compared with the ACA’s subsidies, the tax credits would go to more people but provide less financial help to lower-income people, according to Larry Levitt, senior vice president of the Kaiser Family Foundation.

Meanwhile, the portion of the legislation drafted by the Energy and Commerce Committee would substantially redesign Medicaid in a way that attempts to balance the GOP’s antipathy toward the ACA’s expansion of the program against the concerns of a significant cadre of Republican governors — and the lawmakers from their states — who fear losing millions of dollars that the law has funneled to help insure low-income residents.

Medicaid would be converted from its current form of entitlement to anyone eligible into a per capita cap on funding to states, depending on how many people they had enrolled. In states that expanded Medicaid under the ACA, the government for now would continue paying for virtually the entire cost of the expansion.

Thirty-one states, plus the District of Columbia, have adopted that expansion. Starting in 2020, however, the GOP plan would restrict the government’s generous Medicaid payment — 90 percent of the cost of covering people in the expansion group — only to people who were in the program as of then. States would keep getting that amount of federal help for each of those people as long as they remained eligible, with the idea that most people on Medicaid drop off after a few years.

For the other 19 states that did not expand Medicaid, the legislation would provide $10 billion spread over five years. States could use that money to subsidize hospitals and other providers of care that treat many poor patients.

While members of the two committees working on the replacement drafts were determined to begin considering legislation this week, final work on them was still underway over the weekend and Monday, according to three individuals with knowledge of the process.

The change in thinking about tax credits emerged since Friday, when a White House meeting chaired by Budget Director Mick Mulvaney and attended by key GOP congressional figures was called to finalize key provisions.

At the same time, the shift to take income into account could create a potentially difficult ripple effect for Republicans, who regard a reduction in the federal government’s role in health care as a central reason to abandon the sprawling 2010 health care law. One motivation for the GOP thinking that credits could depend only on age was that the Internal Revenue Service would no longer have needed to verify the eligibility of people for financial help, as it has for ACA subsidies. If income is taken into account, the IRS would still need to be involved.

Coming out of a closed-door GOP conference meeting last week, several House Republicans expressed concerns that the committees might start to work on the legislation without a complete fiscal assessment. To be eligible for special budget rules known as “reconciliation” — allowing bills to pass in the Senate by a simple majority — the legislation cannot increase the deficit after its first 10 years in effect.

Several House GOP aides involved in drafting the legislation could not say when the Congressional Budget Office would provide its formal analysis of the bill, but the two committees of jurisdiction are poised to advance the bill without it. One said committees “regularly go through the markup process without a formal CBO score.”

But House Minority Leader Nancy Pelosi (D-Calif.) said Monday that Republicans should not move the legislation through committees without the CBO analysis: “The American people deserve to see what Republicans are trying to do to their health care.”

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