Health and Science

House GOP releases plan to repeal, replace Obamacare

Inside the GOP's Obamacare replacement bill
Inside the GOP's Obamacare replacement bill

Congressional Republicans finally unveiled their broad plan for replacing Obamacare, which includes killing the requirement that most Americans health insurance or pay a fine.

The GOP proposal also would end or radically change other aspects of the Affordable Care Act, including terminating Obamacare taxes on the wealthy, while keeping some of its more popular provisions.

Additionally, it would alter the system by which many customers get financial aid to buy insurance on the individual plan market.

It is unclear how much the Republican proposal, released Monday night and called The American Health Care Act, would cost, or to what extent Americans would gain or lose coverage under its provisions.

And it is by no means certain that the plan, in either its current form or an amended version, will become law, despite Republican control of both chambers of Congress and the White House.

Two House committees — Ways and Means, and Energy and Commerce — will start the process of marking up the bill Wednesday.

The GOP bill would significantly change the way the nation's Medicaid system is funded. And, it would eliminate the Affordable Care Act rule that requires employers with 50 or more full-time workers to offer them affordable health coverage or pay a penalty.

Repeal of the individual mandate penalty would be retroactive to Dec. 31, 2015, meaning that people who failed to have insurance coverage during 2016 would not have to pay the penalty when they file their tax returns by mid-April.

All of those changes, along with a proposed end to Obamacare subsidies for out-of-pocket health costs for lower income people, could by themselves lead to big increases in the number of uninsured Americans.

Read the bill here and a description of each section of the bill here.

In an effort to ease that effect, the Republican bill also proposes replacing Obamacare's tax credits with a new system of aid, and imposes a new financial penalty for people who let their coverage lapse.

Currently, Obamacare tax credits are used to lower the premiums of most customers of government-run insurance exchanges, with the value of credits tied to enrollees' income and to the cost of coverage.

In their place, the GOP plan calls for issuing a refundable, advanceable tax credit to customers of individual health plans, with the value of that credit tied to age and income.

Tax credits would begin at $2,000 for people in their 20s, and gradually increase to $4,000 for people over age 60. And they could be used for a broader array of health plans than are currently allowed.

The full value of the credits would be available to individuals who earn up to $75,000 annually, and to households that earn up to $150,000. The value of the credits would phase out at higher income levels.

People who let their individual health plan lapse would have to pay a 30 percent surcharge on their premiums during the year in order to resume coverage, according to the proposals.

Insurers also would be allowed to charge older people premiums up to five times the rate charged younger people, as opposed to the 3-to-1 rate allowed under Obamacare.

That change could help insurers stem the losses from covering customers in the individual health plan market.

The bill would repeal the authority of states to expand their Medicaid programs to nearly all adults by 2020, after which no newly eligible adults could sign up.

It also would cap the amount of federal funding a state will receive per person for its Medicaid program. That block-grant system has been seen as a means to reduce overall federal spending on Medicaid, leaving states facing a bigger cost burden.

But states under the proposal would be given a total of $100 billion to fund high-risk insurance pools or additional premium subsidies for their residents over a 10-year period.

Additionally, the GOP proposal would repeal the Affordable Care Act's taxes beginning in 2018 and would bar federal funding from going to Planned Parenthood.

It also would nearly double the current allowable contribution levels for Health Savings Accounts. By 2018, the limits would be $6,550 for an individual and $13,100 for a family.

The proposal also would remove the $500,000 cap on the amount of executive salaries that insurers can deduct from their taxes as a business expense. Under the bill, insurers could deduct the executives' full pay.

The bill does not call for eliminating the Obamacare provision that bars insurers from denying coverage to, or from charging higher rates, for people with pre-existing health conditions.

Nor would the bill end the popular ACA provision that allows adults under age 26 to be covered by their parents' plans.

Insurers would still be required to include 10 essential health benefits in their plans. And insurers would continue to be barred from setting maximum limits on benefits paid out for a customer.

The bill likewise would not kill the so-called Cadillac tax, which under Obamacare would by 2020 impose an excise tax on the value of employer-based health plans that exceed a certain value threshold.

But the bill would bar that tax from taking effect before 2025 at the earliest.

The bill is certain to face hurdles in the Senate, where four GOP members on Monday expressed opposition to the idea of rolling back the number of people covered by Obamacare's Medicaid expansion. And several Republicans also have opposed the elimination of Planned Parenthood funding.

The legislation also will be attacked by supporters of Obamacare, who have warned that GOP proposals risk ending coverage for millions of Americans who have obtained insurance as a result of the ACA.

The bill has yet to be "scored" by the Congressional Budget Office, which will provide lawmakers with an analysis of the costs of the programs, and any revenues it would generate, as well as an estimate of how many people would have health coverage once it takes effect.

Republicans said the costs will be covered by repealing Obamacare.

"Skyrocketing premiums, soaring deductibles, and dwindling choices are not what the people were promised seven years ago," House Speaker Paul Ryan, R-Wis., said in a statement after the plan was unveiled.

"It's time to turn a page and rescue our health care system from this disastrous law.

"The American Health Care Act is a plan to drive down costs, encourage competition, and give every American access to quality, affordable health insurance," Ryan said.

Sean Spicer, spokesman for President Donald Trump, said "Obamacare has proven to be a disaster with fewer options, inferior care, and skyrocketing costs that are crushing small business and families across America.

"Today marks an important step toward restoring health care choices and affordability back to the American people," Spicer said in a statement. "President Trump looks forward to working with both Chambers of Congress to repeal and replace Obamacare."

Leslie Dach, a former senior counselor at the U.S. Department of Health and Human Services in the Obama administration, blasted the plan.

"The Trump administration and Republicans in Congress are ignoring the fears of people across America and rushing forward to rip apart our health care," said Dach, now director of the Protect Our Care Campaign. "Simply put, the bill repealing the Affordable Care Act means less coverage, fewer protections and higher costs."

"Their plan for health care is to take coverage away from tens of millions, undermine protections for people with pre-existing conditions, raise premiums and costs for working families, defund Planned Parenthood and gut Medicaid — while giving hundreds of billions in tax breaks to the wealthy and big insurance and pharmaceutical companies," Dach said.

"After the public made their opposition to repeal clear at town hall meetings, Republicans went into hiding and literally wrote this plan in a secret, locked basement room. The fact that they want to rush it through — without debate, hearings or letting the public know what it means for patients and families — tells you all you need to know about how bad it really is for our country."

Several members of the House Freedom Caucus, a group of conservatives, said the proposal does not go far enough to repeal Obamacare.

"This is Obamacare by a different form," Rep. Jim Jordan, R-Ohio, told Politico. "They're still keeping the taxes in place and Medicaid expansion, and they're starting a new entitlement."

Obamacare has been credited with extending health-care coverage to about 20 million Americans since it took effect in 2010.

The ACA accomplished that through three major components.

The first, and earliest provision, allowed people under age 26 to remain on their parents' health plans.

The second allowed states to expand their Medicaid programs to cover nearly all poor adults.

The third authorized the creation of government-run insurance exchanges, and issued tax credits to help lower- and middle- income earners pay for individual health plans sold on those marketplaces.

Since its inception, the ACA has generated heated political debate. Republicans repeatedly have vowed to repeal the law.

But in recent months, since Trump took office, Republicans have increasingly been confronted by constituents worried about the prospect of losing insurance gained through Obamacare.

A number of Republicans also have expressed concern about the potential for millions of people losing coverage.

Correction: This story was revised to give the correct tax year that would be affected by repeal of the individual mandate penalty. It would be for 2016.