WASHINGTON — 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 bills drafted by two House committees, the GOP would no longer penalize Americans for failing to have health insurance and would begin winding down the ACA’s expansion of Medicaid three years from now.
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 pre-existing medical problems. It would, however, allow insurers to impose a surcharge on such people if they have had a gap in coverage.
The drafts culminate two months of intense work by a pair of House committees to try to carry out the GOP’s ardent desire, ever since the ACA was adopted seven years ago without Republican support, to replace the law with a more conservative set of health care policies.
The shift in approach to tax credits in particular reflects the treacherous political and substantive challenges that Republicans face in trying to convert anti-ACA talking points into an actual plan now that they have an ally in the White House.
To win enough support among Republicans who control both the House and Senate, the bill must address concerns of both conservatives concerned 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’ upper chamber could balk either at the cost of the proposal or if it leaves swaths of the country without insurance coverage.
Republican Sen. Rand Paul of Kentucky, one of 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 of Ohio, Shelley Moore Capito of West Virginia, Cory Gardner of Colorado and Lisa Murkowski of Alaska, wrote in a letter to Senate Majority Leader Mitch McConnell of Kentucky.
The four senators were split on exactly what proposals would meet their standards, but with 52 Republicans, McConnell would not have enough votes to pass repeal without the support of at least two of them.
The tax credits outlined by the Ways and Means Committee’s portion of the legislation incorporates 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.
This big pivot, developed by the Ways and Means Committee under the guidance of House Speaker Paul Ryan of Wisconsin, 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.
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, Trump has made clear that he is sensitive to any changes that would strand large numbers of people who gained coverage under the ACA.
In addition, it is unclear what the size of the tax credits will be compared with the ACA’s subsidies.
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 for the ACA’s expansion of the program against the concerns of a significant cadre of Republican governors — and the senators from their states — who fear losing millions of dollars that the law has funneled to help insure low-income residents.
Under the bill, the government would continue for now the aspect of the ACA in which the federal government pays virtually the entire cost of covering people who have joined the Medicaid rolls because their states expanded their program.
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.
Lauren Aronson, a spokeswoman for Ways and Means, which is drafting the tax provisions of the bill, declined Monday to comment on specific provisions, saying the bill was still being revised.
“We are now at the culmination of a years-long process to keep our promise to the American people,” said AshLee Strong, a spokeswoman for Ryan.
Certain details of the new approach to tax credits remained unclear, including whether they would be restricted to people under a certain income threshold — perhaps $75,000, according to the House member briefed on the plan — or whether the subsidy would taper off after a specific income level but not end entirely. Two sources said age would remain one factor in determining the size of a person’s credit.
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.
The goal of lessening the government’s role also is behind another major change from the ACA that the Republican plans envision: getting rid of the federal requirement on insurers to include a minimum set of “essential benefits” in health plans sold to individuals and small businesses.
Conservatives have aired sharp concerns about the inclusion of refundable tax credits that can be advanced to insurance providers through the year, calling them too similar to the ACA’s tax subsidies. They have also balked at revenue-raising measures that had been floated in previous proposals, including retaining the ACA’s “Cadillac tax” on especially generous employer-provided insurance plans, as well as capping the exclusion from taxation that employer-plan premiums now enjoy.
One member of Congress who was briefed on changes to the proposal over the weekend said that drafters were not only moving toward capping the tax credit, but were also exploring how to avoid taxing employer-provided plans for the first time — something that could provoke a fierce response from conservatives. Instead, the member said, the cost of the scaled-back tax credits could be offset by savings gained by rolling back the ACA’s Medicaid expansion over the coming years.
At 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 incur a net cost after its first 10 years in effect.