The House Republican plan to repeal and replace Obamacare would leave poor Americans and those who have to buy insurance on the individual market with a much scaled-back alternative to the the 2010 healthcare law that the GOP has campaigned against for the past half a decade-plus.
The plan, leaked to reporters Friday, largely mirrors previous blueprints proposed by Republican lawmakers. It would repeal Obamacare’s individual mandate requiring all Americans purchase health insurance or pay a penalty. It would also eliminate all of the taxes used to fund Obamacare subsidies and the Medicaid expansion, including the controversial tax on medical devices.
Also to be eliminated: the planned expansion of Medicaid in 2020.
The draft also includes a provision to eliminate funding for Planned Parenthood for one year.
House Speaker Paul Ryan says he wants congressional committees to begin voting on details of the plan as soon as next week, but a lot of details still have to be worked out, including exactly how big Medicaid will be and the size and form of federal subsidies for Obamacare’s replacement. One specific dispute: Health and Human Services Secretary Tom Price is said to want somewhat smaller subsidies for individual coverage than this proposal contemplates. Price is still under orders to draft the Trump Administration’s repeal/replace plan by mid-March.
Many provisions of the House plan would affect those who buy insurance on the individual market. Rather than subsidize coverage based on income as the Affordable Care Act does, the GOP plan would provide tax credits based on age. For instance, a 30 year-old would get a $2,000 credit and those over 60 would get twice that. Insurers, however, would be allowed to charge older customers as much as five time more than their younger customers. Obamacare allows older individuals to be charged only three times more.
Obama’s individual mandate requiring anyone who doesn’t have coverage to pay a penalty would be scrapped. But like Obamacare, the plan would generally bar insurers from discriminating against people with pre-existing conditions unless the individuals allowed their insurance to lapse. To make sure people don’t wait until they’re sick to get coverage, the GOP plan would impose a one-year 30% premium surcharge on anyone who allows their coverage to lapse and then re-enrolls. It’s unclear what people with pre-existing conditions buying insurance for the first time would have to pay.
One Obamacare idea would stay: to help pay for the federal subsidies, tax breaks would be limited on generous “Cadillac” health plans some employers offer. That idea is likely to be put to serious test, as both business and labor groups oppose the tax on Cadillac plans.
Medicaid spending would be rolled back significantly. In addition to eliminating Obamacare’s planed 2020 expansion the plan would also eliminate today’s open-ended federal funding and states would get capped payments based on the number of Medicaid enrollees.
The draft comes as lawmakers are facing pressure from the law’s longtime critics to kill Obamacare and from those insured under the law to save it. At crowded town hall gatherings across the country this week supporters of Obamacare have loudly made known their fears of losing coverage and sometime disrupted the proceedings. Also last week, President Trump’s most ardent supporters linked up with traditional conservatives at the Conservative Political Action Conference held just outside of Washington.
In a speech to the CPAC crowd, Trump on Friday assured them repeal and replace was on the way.
“From a purely political standpoint, the single best thing we can do is nothing,” Trump said of Obamacare’s fate. “Let it implode completely, it’s already imploding. You see the carriers are all leaving. I mean, it’s a disaster. But two years, don’t do anything. The Democrats will come to us and beg for help, they’ll beg and it’s their problem. But it’s not the right thing to do for the American people, it’s not the right thing to do.”
As for the specifics and timing of repeal and replacement under the GOP plan, the penalties for failure to have insurance would be immediately repealed, but the tax subsidies and state expansion of Medicaid would remain in place until 2020. After that, individuals would receive tax credits to purchase coverage if they don’t get health insurance through their jobs.
For individuals who don’t have insurance and end up paying the 30% surcharge, $100 billion over 10 years would be set aside for the next for “state innovation” that could pay for high-risk pools or reinsurance programs to cover the costs of adding those with pre-existing conditions to join the insurance pool.
Restrictions on Health Savings Accounts would also be relaxed. [William McConnell]