House GOP Releases Plan to Repeal, Replace Obamacare

Proposed legislation would dismantle much of Affordable Care Act, create refundable tax credit tied to age and income

The Wall Street Journal
By Stephanie Armour,
Kristina Peterson and
Michelle Hackman
Updated March 7, 2017 8:04 a.m. ET

House Republicans on Monday released a detailed proposal that marks their first attempt in the new Congress to unite fractious GOP members behind a plan to replace the Affordable Care Act and deliver on a central campaign promise by Republicans.

The proposed legislation would dismantle much of the 2010 law known as Obamacare and create a new tax credit tied to an individual’s age and income, aimed at helping Americans buy insurance if they don’t get it at work.

It is unclear how much the plan will cost or how many people could potentially lose health insurance under the changes as the proposal doesn’t provide an estimate.

The proposed plan would end the requirement that most Americans have health coverage or pay a penalty, a provision long derided by Republicans, and a mandate that larger employers provide health insurance to workers. It also would repeal most of the health law’s taxes starting in 2018 and freeze funding in 2020 for the 31 states that expanded Medicaid under the law.

The bill is a political gamble for House Republican leaders. The party and President Donald Trump ran for office on promises to repeal and replace the health law. Republicans have said their plan is aimed at decreasing costs and boosting choice for consumers. But to do so, their proposals would likely provide coverage for far fewer people than the ACA, according to a number of research reports.

“Working together, this unified Republican government will deliver relief and peace of mind to the millions of Americans suffering under Obamacare,” said House Speaker Paul Ryan.

“Trumpcare doesn’t replace the Affordable Care Act, it forces millions of Americans to pay more for less care,” said Senate Minority Leader Chuck Schumer (D., N.Y.)

Earlier versions included provisions opposed by both conservative and centrist Republicans, whose support for the now-altered bill will be crucial.

House Republican leaders hope the package will be passed by Congress by mid-April.

Mr. Trump praised the bill on Tuesday morning, writing on Twitter, “Our wonderful new Healthcare Bill is now out for review and negotiation. ObamaCare is a complete and total disaster—is imploding fast!”

In a statement Monday night, White House press secretary Sean Spicer called the bill “an important step toward restoring health care choices and affordability back to the American people.”

“President Trump looks forward to working with both Chambers of Congress to repeal and replace Obamacare,” Mr. Spicer said.

The legislation would provide tax credits to people who don’t get coverage through their job, replacing the subsidies the ACA gave to a narrower set of lower-income people to help them afford insurance policies. The ACA subsidies are also tax credits—advance credits paid to insurance companies to lower the cost of health-insurance premiums.

The proposal wouldn’t kill the ACA’s exchanges where people can obtain insurance, but far fewer people are expected to use them because the subsidies that reduce premium costs would no longer exist. Those subsidies are only available now to people who obtain coverage through the state and federal ACA exchanges.

The refundable tax credits have been a thorny issue for Republicans. Conservative Republicans vowed not to support an earlier draft that would have provided the tax credits regardless of income.

Under the House GOP proposal released Monday, the refundable tax credits would be tied to age, with people under 30 eligible for a credit of $2,000 a year, increasing steadily to $4,000 for those over 60. The size of a tax credit would grow with the size of a family, but would be capped at $14,000.

To assuage the concern among conservative lawmakers that the credits would be available to wealthy Americans, the tax credits would start to shrink for individuals making more than $75,000 or households making more than $150,000. For every $1,000 in income over $75,000, the tax credit would be reduced by $100.

In a sign GOP leaders’ changes may have assuaged some conservative concerns, Republican Study Committee Chairman Mark Walker (R., N.C.) said in a statement Monday night that the bill reflects “the right direction.” Mr. Walker, who had opposed an earlier version of the bill, said his group of conservative lawmakers would meet Tuesday evening to review it closely.

In a provision sure to draw resistance from moderate Republicans in the Senate, the House proposal would bar federal funding for the Planned Parenthood Federation of America, which provides reproductive-health services to women.

The bill also maintains the ACA’s Medicaid expansion temporarily. Sixteen Republican governors lead states that chose to expand Medicaid under funding provided by the health law, and they have been pressuring GOP leaders not to repeal the extended federal funding outright.

The GOP plan aims to appease their concerns by leaving the expansion untouched through the end of 2019. After that, funding would begin to be reduced in an attempt to make up for the revenue lost by repealing the taxes contained in the existing health law.

Beginning in January 2020, the federal government would transition into a system in which a set amount of funding would be sent to the states each year. The move is expected to save the federal government significant money over time but could result in fewer people having insurance coverage.

Bruce Siegel, president and chief executive officer of America’s Essential Hospitals, an association of public and nonprofit hospitals, urged Congress to wait for a Congressional Budget Office evaluation, or score, of the bill before taking action. “Without a CBO score, there are too many unknowns and too great a risk of coverage losses without affordable alternatives for many Americans,” he said.

Republican Sens. Rob Portman of Ohio, Lisa Murkowski of Alaska, Cory Gardner of Colorado and Shelley Moore Capito of West Virginia sent a letter Monday to Senate Majority Leader Mitch McConnell (R., Ky.) expressing concerns over the House’s approach to overhauling the Medicaid program in an earlier draft of the bill.

“We believe Medicaid needs to be reformed, but reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals,” the four lawmakers wrote.

Ms. Capito said Monday night that the House’s health-care plan was “moving in the right direction,” but that she needed to look at it more closely before backing it. She said she worried that the tax credit might not be generous enough for low-income individuals. “My understanding is that it’s on the low side.” she said.

House Republicans ducked one fight by deciding not to change the popular tax break on health plans that people get through their employer.

Instead, they are planning to pay for the bill by allowing the ACA’s taxes to remain in place until the start of 2018. They also would allow the tax on expensive employer health plans to kick in on Jan. 1, 2025, instead of being repealed. Congress already had voted to delay the tax until 2020.

That could prove unpopular with conservative Republicans, who wanted to get rid of all of the 2010 health law’s taxes immediately.

The House GOP bill also would expand health savings accounts aimed at helping people save money for health costs.

The proposal would also end a special executive compensation limit that the 2010 law applied to health insurers. That law prevented companies from deducting more than $500,000 in pay to executives. Other companies face a $1 million limit, but that cap doesn’t apply to performance-based compensation.

The bill, which was largely completed over the weekend in closed-door meetings with the White House and GOP leadership, is expected to be voted on in House committees this week.

To pass the bill, Republicans can’t lose more than two GOP votes in the Senate and 22 in the House, assuming no support from Democrats.