Obamacare repeal bill offers tax credits, big Medicaid changes
The House’s Obamacare repeal bill unveiled Monday would offer less generous insurance tax credits and phase out the law’s Medicaid expansion while striking its unpopular individual mandate penalty.
The House plan calls for age-based tax credits ranging from $2,000 to $4,000, replacing the Affordable Care Act’s income-based subsidies. Credits for a single household would be limited at $14,000. Subsidies would be phased out for individuals earning $75,000 and at $150,000 for families.
Obamacare’s Medicaid expansion, which has been adopted in 31 states and Washington, D.C., would shut down at the end of 2019. At that point, expansion beneficiaries would remain enrolled, but would become ineligible if they drop out of the program for 30 days.
The bill also proposes a major overhaul of Medicaid, a federal-state program covering more than 70 million low-income and disabled Americans. Instead of the current open-ended federal entitlement, states would get capped payments based on the number of Medicaid enrollees.
The bill hasn’t yet been scored by the nonpartisan CBO, so it’s not clear how many people the plan would cover or what it would cost. House committees will start considering legislation on Wednesday, with the goal of passing it within a few weeks.
In additional to scrapping the penalty for individuals who don’t obtain coverage, the bill would also get rid of the penalty for business that fail to offer coverage to employees.
Republicans are proposing a requirement that individuals maintain continuous coverage or face a financial penalty the next time they obtain insurance. A person whose coverage lapsed would have to pay a 30 percent surcharge on premiums for a year when they sign up again.
Another key piece of the House proposal: defunding Planned Parenthood for one year. That’s certain to spark an uproar from Democrats and reproductive rights groups, as well as some Republican Senate moderates.
The GOP proposal would also eliminate many of Obamacare’s taxes, including those on prescription and over-the-counter drugs, tanning services and health savings accounts. They will be eliminated in 2018, rather than this year as the House proposed in earlier leaked drafts.
One controversial provision that got dropped from the bill at the last minute: a cap on the tax exemption for employer-sponsored insurance. Earlier bill drafts capped the exemption at 90 percent of current premiums, but the final version eliminated that proposal.
The bill also includes $100 billion for state grants aimed at stabilizing the individual market over 10 years. States could use this money to create reinsurance programs or high-risk pools to cover the costs of the sickest, most expensive customers.
The House plan would also let insurers charger older customers more, while dropping costs for younger customers. Currently, insurers can charge their oldest customers no more than three times as much as younger enrollees, but the House wants to increase that to a five-to-one ratio.
The bill contains two provisions to help states that failed to take advantage of Obamacare’s Medicaid expansion. The law’s cuts to the safety net hospitals would be rescinded for those states starting in 2018. Obamacare cut those payments because the law’s coverage expansion was expected to reduce the financial burden on those hospitals. For states that expanded Medicaid, those cuts would not be lifted until 2020. The House proposal also includes a $10 billion pool spread over five years to help non-expansion states.
The proposal also increases federal payments to community health centers, which have enjoyed bipartisan support. The House bill includes $422 million in funding for the safety net facilities.