Republican Health Care Proposal Would Cover Fewer Low-Income Families

Feb 16, 2017
Originally published on February 17, 2017 8:15 am

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 That proposal would have repealed all the taxes and subsidies associated with the health care law and would have killed the mandate for individuals to buy health insurance by getting rid of the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.

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More than a month ago, the president said he nearly had a plan to replace Obamacare. He told The Washington Post it was down to the, quote, "final strokes on insurance for everybody." One month later, in yesterday's press conference, the president promised there would soon be a plan.


PRESIDENT DONALD TRUMP: We're doing Obamacare. We're in final stages. We should be submitting the initial plan in March - early March.

INSKEEP: That plan will come from Congress. House Republicans already have a skeleton proposal. And they've promised that any replacement will be better. NPR's Alison Kodjak reports it may actually be less generous.

ALISON KODJAK, BYLINE: Republicans discussed an 18-page proposal to replace Obamacare at a closed-door meeting yesterday at the Capitol. Michigan Congressman Bill Huizenga says the document gives members something to present to their constituents over the midwinter break, a sort of rough roadmap.

BILL HUIZENGA: We're going to be taking a six-lane highway or a four-lane highway. I don't think that's been determined yet. But we know the direction that we want to go and sort of the destiny.

KODJAK: Early analysis of the roadmap suggests it may leave more people without insurance. Caroline Pearson is a senior vice president at the health-care consulting firm Avalere.

CAROLINE PEARSON: Insurance coverage and affordability would both go down under the plan.

KODJAK: For example, the plan includes replacing the Obamacare subsidies that help people buy insurance with fixed tax credit to buy coverage on the open market. Those credits are the same no matter how much money you make. So a rich business owner will get the same benefit as a poor, single mom. But there's no indication how big those tax credits will be. Pearson thinks they'll be less generous than Obamacare. And that could leave some low-income people uncovered.

PEARSON: People receiving generous subsidies or Medicaid today are not likely to be able to afford private insurance.

KODJAK: The Republicans' roadmap repeatedly says people will be able to buy so-called catastrophic coverage. That's a policy with limited benefits that pays major bills from a serious illness or accident. But it doesn't pay for everyday care. So some people would have to pay for checkups with health savings accounts. These tax-free accounts are a favorite among conservatives because they encourage people to plan for their health spending and to shop around for low prices.

The Republican plan calls for doubling the amount people can save. But Democrats say they only help people who have extra money to put away, and they give the biggest tax cuts to people with the highest incomes. Finally, on Medicaid, the Republican plan would limit the amount of money that goes to states, either been giving a certain amount for each beneficiary or putting it in a block grant.

Paul Howard, the director of health policy at the conservative Manhattan Institute, says that might be a good thing. He says Medicaid today is ripe for waste and abuse.

PAUL HOWARD: The current, open-ended match system for Medicaid encourages an awful lot of state shenanigans.

KODJAK: Bottom line - this is the first proposal. And it's not clear how much will end up becoming law. President Trump has promised his plan will be better than Obamacare and cost less. Alison Kodjak, NPR News, Washington.

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