House Republicans are debating a plan to replace the Affordable Care Act that would give consumers tax credits to buy insurance, cut back on Medicaid and allow people to save their own money to pay for health care costs.
The outline plan is likely to take away some of the financial help low-income families get through Obamacare subsidies, and also result in fewer people being covered under the Medicaid health care program for the poor.
“In general this is going to result in fewer people covered nationwide,” says Caroline Pearson, a senior vice president at Avalere, a health care consulting group.
Republican leaders distributed the skeleton proposal at a meeting of the House Republican Conference in the Capitol on Thursday. Lawmakers now have an outline to bring with them to their districts for the Presidents Day holiday weekend, where they may face constituents with questions about what is going to happen to their health care. The plan is based on one outlined last summer by House Speaker Paul Ryan.
Rep. Bill Huizenga, R-Mich., called the 18-page outline “guideposts and a road map.”
“We know the direction we want to go and sort of the destination,” Huizenga said outside the meeting.
Lawmakers who attended the meeting said the plan is to repeal the Affordable Care Act with a bill similar to one that passed in 2015 but was vetoed by then-President Barack Obama. That proposal would have repealed all the taxes and subsidies associated with the health care law and would have killed the mandate for individuals to buy health insurance by getting rid of the tax penalty used to enforce it.
This Congress could either first pass a repeal bill and then a replacement bill, or include replacement elements in the repeal.
The meeting Thursday centered on “principles and goals on where we’re going in patient-centered care,” said House Ways and Means Committee Chairman Kevin Brady, R-La., after the meeting.
“We’re talking about repealing, replacing and starting to return control of health care and restoring the free market,” he said.
Most of the plan is silent on how much money lawmakers want to put behind their proposals, so it’s impossible to know exactly how generous the plan is and how many people it would cover.
The elements of the plan include replacing the subsidies that help people buy insurance through Obamacare exchanges with fixed tax credits to buy coverage on the open market.
The major difference between the two is that the Obamacare subsidies increase as premiums rise so that consumers are responsible for the same premium amount, which is tied to their income. The tax credits proposed by Ryan are not tied to income but rise as a person ages and insurance rates increase.
“The important thing on the tax credits is that they’re not income adjusted and we don’t know how big they are,” Pearson says.
She says it’s unlikely they’ll be as generous as the Obamacare subsidies.
“This likely means that low-income people will have difficulty affording individual insurance,” she says.
The outline distributed by Republicans repeatedly mentions that people will be able to buy so-called catastrophic coverage, which has limited day-to-day benefits but protects people when they have a serious illness or accident that requires a lot of health care.
The plan also calls for expanding health savings accounts, which allow people to save their own money tax-free to pay for health care costs. It calls for the limits on HSA savings to rise from $6,750 per family to $13,100.
HSAs are a favorite among conservatives because they encourage people to save and plan for their health spending and to shop around for price.
Democrats have criticized the focus on HSAs because they only help people who have extra money to put away and give a bigger tax cut to people with higher incomes.
The Republicans’ plan also calls for a major restructuring of the Medicaid health care program for the poor. It would repeal the Medicaid expansion that most states adopted under the Affordable Care Act, which allowed able-bodied people with incomes just above the poverty line to become eligible for Medicaid coverage.
And it would cap how much the federal government spends per person per year. Right now, Medicaid pays all health care costs for those who are eligible.
“This is a potentially significant incentive for states to get serious about efficiency,” says Paul Howard, director of health policy at the Manhattan Institute, a conservative think tank.
Howard says states currently have an incentive to increase their spending on Medicaid, because it boosts the amount of federal money they get.
Ryan’s plan would make Medicaid either a block grant program, where states receive a fixed amount of money, or it would be a per capita benefit, where the federal government would give the states a set amount for each beneficiary.
States could still offer Medicaid to those who became eligible under expansion, but the states’ share of the costs would be higher than it is under the Affordable Care Act, likely making it too expensive for many states to do so.
Finally, the Republican plan would offer states pools of cash to come up with ways to expand insurance access to more people.