CHN: House Republicans Unveil ACA Replacement Outline

On Feb. 16, House Republican leaders unveiled to their members an outline of their plan to replace the Affordable Care Act. According to the Hill, CQ, NPR and others, the plan includes changes to the subsidies that help low-income people buy insurance, expanding health savings accounts, and major structural changes to Medicaid that advocates fear will leave many low-income people without coverage.

The subsidies that low-income people currently receive to help them buy insurance would be replaced with tax credits to be based on age rather than on income or the cost of the plan. Older people would get a higher credit. While the amount of the tax credits aren’t known, advocates suspect they will be less than the amount of the subsidies included in the ACA, making coverage more expensive for low-income individuals. The tax credits will only be available for the purchase of individual plans (not to subsidize the employee share of health insurance provided through work). Current requirements of minimum coverage would be overturned; individuals could limit their insurance to catastrophic coverage. Health savings accounts (HSA’s), also promoted in the plan, are less effective for low-income families who don’t have as much money to save. The proposal would greatly increase the amount that could be contributed to HSA’s, from $3,400 to $6,550 for individuals and from $6,750 to $13,100 for families in 2017, a change that would increase tax breaks to wealthier families.

Among the biggest concerns to advocates is the plan’s major overhaul of Medicaid. The plan calls for eliminating the open-ended federal commitment to match whatever states spend and instead instituting “per capita caps,” limiting the payments to states of a fixed per-person amount established for beneficiary categories such as aged, blind/disabled, children, or working age adults. Or, states could instead choose to receive its Medicaid money as a block grant. Either option would limit the amount of money available to states to serve its residents on Medicaid. Advocates believe both per capita caps and block grants would lead to damaging cuts to Medicaid. The Center for Law and Social Policy (CLASP), the Center on Budget and Policy Priorities and Families USA all have pieces showing how block grants and per capita caps would hurt low-income people.

The plan would also repeal the ACA’s Medicaid expansion “in its current form,” phasing out the money for states that chose to expand Medicaid coverage and eventually forcing states to cover the costs at their usual match rate if they want to be able to continue to provide coverage for those under the expansion umbrella. The Center on Budget and Policy Priorities believes the Republican outline would “result in a significant transfer of resources from low- and middle-income families to those at the top;” see this piece from CBPP for more information on the House GOP plan.

Several Republican senators have reportedly expressed concern about whether a major Medicaid overhaul would have the votes to pass the Senate. Many of the Republican senators whose states chose to expand Medicaid have expressed interest in keeping the additional funding their states received. Some Republican governors from these states have reportedly started pushing back on major changes to Medicaid, too, since a cut in funding would force them to cut services for their residents; their only flexibility would be to determine how to make the cuts.

The House GOP plan also immediately eliminates tax penalties on those who fail to buy or offer insurance. It would reinstate high risk pools, calling them “State Innovation Grants.” Funding provided to states for these grants could be used to reduce patient costs or to lower the cost of providing care to high utilization patients. Such funds could also fund preventive services, such as annual checkups that are now required in Affordable Care Act plans. The grants appear to allow subsidies to insurers or health providers. The purposes of the grants are broad enough to invite skepticism about their effectiveness in helping people with pre-existing and/or complex conditions to afford care.

Legislation based on the plan could be introduced after the Presidents’ Day recess. The Congressional Budget Office has not yet provided its analysis of how much the plan would cost.

The White House also took action on the ACA, issuing a rule on Feb. 15 that, if finalized, would let insurance companies offer plans with fewer benefits, less generous coverage and with higher deductibles than they are currently allowed to offer under the ACA. The Center on Budget and Policy Priorities’ analysis says that the new proposed rule would “raise premiums, out-of-pocket costs, or both for millions of moderate-income families. … As a result, the rule would force millions of families to choose between higher premiums and worse coverage.” The proposed rule is open for public comment until March 7, with the final rule expected to be issued in March or April. The Trump Administration also proposed shortening the annual enrollment period by over a month and a half. Families USA notes that this and other proposals in the rule “would create roadblocks to purchasing coverage,” and expects to develop sample comments to guide concerned individuals or organizations soon.

The conservative House Freedom Caucus voted on Feb. 13 to oppose a repeal bill that does not go as far as the repeal bill Congress passed in 2015. Advocates contend that members of Congress who vote to repeal the ACA with no plan in place to assure continued coverage, or a plan that reduces benefits or increases costs, are willing to put millions of people’s health and lives in peril. If all Democratic remain unified, the defection of three Republican senators would defeat specific ACA repeal/replacement plans. For more information Republicans’ efforts to repeal and replace the Affordable Care Act, see the Feb. 6 Human Needs Report.

Affordable Care Act
tax policy