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February 17, 2017

House GOP outlines ACA replacement plans

Daily Briefing

House GOP leaders on Thursday released a proposal outlining their plans to repeal and replace the Affordable Care Act (ACA), though experts say many questions about Republicans' ACA replacement plans remain unanswered.

GOP leaders release policy brief with ACA replacement details

According to Axios, the policy brief is similar to a health care proposal included in a policy paper Republicans released last year called "A Better Way."

The new policy brief contains several health reform provisions that could be passed through the budget reconciliation process. The proposal would repeal the ACA's:

  • Employer mandate;
  • Individual mandate;
  • Medicaid expansion;
  • Taxes intended to fund the law, including taxes and fees collected from health insurance companies and pharmaceutical and medical device manufacturers; and
  • Reductions in hospitals Disproportionate Share payments.

Subsidies: The plan would implement a "transition period" during which the federal government would "slightly" adjust subsidies currently available to help U.S. residents purchase coverage under the ACA. According to the brief, the subsidies would be adjusted "to provide additional assistance for younger Americans and reduce the over-subsidization older Americans are receiving."

The plan eventually would replace the ACA's subsidies with fixed tax credits that would be available to U.S. residents who are not covered by employer-sponsored health plans. The credits would increase with an individual's age but would not vary by income. U.S. residents could use the refundable, "advanceable," credits to purchase private health plans and would be able to purchase plans with less comprehensive coverage than the ACA currently allows. The brief stated that "advanceability is a key feature" of the tax credit proposal "because many Americans need help paying their monthly premiums" and "cannot afford to wait until they file their taxes the following year to get assistance."

The policy brief does not include details on how the federal government will fund the proposed tax credits or how much the tax credits will cost. According to The Hill, lawmakers said the brief does not contain cost estimates because the Congressional Budget Office is not yet finished analyzing the proposal.

HSAs: The plan also would increase the amount of money U.S. residents can contribute to Health Savings Accounts and make it easier for individuals to purchase coverage across state lines.

Medicaid: The proposal would repeal the ACA's Medicaid expansion "in its current form." The proposal would allow states that expanded Medicaid to continue offering the expanded coverage for a "limited period" the brief did not define, but federal funding for the expansions would gradually decline to the amount the federal government reimburses states for traditional Medicaid coverage, which is 50 percent of the coverage's costs, meaning states would bare a larger share of cost burden.

The proposal also states that lawmakers are considering implementing a "per-capita cap" for Medicaid, meaning states would receive capped amounts of federal funding for their programs. The funding caps would take into account the number of beneficiaries enrolled in states' Medicaid programs.

According to the policy brief, lawmakers also are considering whether to allow states to choose "to receive federal Medicaid funding in the form of a block grant or global waiver." The brief stated that "block grant funding would be determined using a base year and would assume that states transition individuals currently enrolled in the Medicaid expansion out of the expansion population into other coverage." Under a block grant, states would be able to determine how to spend the funding, "but would be required to provide required services to the most vulnerable elderly and disabled individuals who are mandatory populations under current law."

High-risk pools: Further, the federal government under the proposal would provide states with "innovation grants" to help states set up high-risk pools that would offer coverage for U.S. residents with pre-existing medical conditions or to help offset consumers' out-of-pocket costs.

The policy brief does not include estimates of how many U.S. residents could lose or gain coverage under the proposal, the specific amount of tax credits U.S. residents would receive under the plan, or the specific amount of innovation grants states would receive.

Observers say policy brief leaves questions unanswered, express concerns

Consumer groups criticized the proposal, saying the reforms could increase the United States' uninsured rate.

In addition, Democrats argued that basing the proposal's tax credits on U.S. residents' ages, and not their incomes, could mean that low-income U.S. residents do not receive enough financial support to help offset coverage costs. Further, Democrats could oppose the plan's proposal to implement per-capita caps for Medicaid, which they have argued could cut federal funding for the program.

Hospitals fear payment cuts as GOP mulls ACA replacement

Kenneth Raske, president of the Greater New York Hospital Association, expressed concern that the proposals' Medicaid reforms could "put a huge amount of pressure on state budgets and put many Americans at risk of losing health care coverage."

Next steps

According to The Hill, Republicans' proposal still has "a long way to go" before lawmakers can vote on the plan. Lawmakers will need to write the policy into legislation that includes cost projections and come to a consensus on how the federal government will fund the proposal. One option, according to House Ways and Means Committee Chair Kevin Brady (R-Texas), could be reducing tax exemptions on costly employer-sponsored health plans, but Brady said lawmakers have yet to agree on that proposal. According to The Hill, some lawmakers have expressed concern about limiting those exemptions.

House Speaker Paul Ryan (R-Wis.) said Republicans "intend to introduce legislation to repeal and replace" the ACA after lawmakers return from their upcoming recess, which ends Feb. 27.

Meet the Republican governors who want to save Medicaid expansion

Trump on Thursday echoed those plans, saying a plan to repeal and replace the ACA will be released in "early March."

However, the plan could face opposition from some Republicans who think  does not go far enough to completely repeal the ACA—as well as from other Republicans who want to keep Medicaid expansions in their states in place in their current form.

In addition, the plan could face difficulty in the Senate, where Republicans do not have as much leeway given their smaller majority (Hackman et al., Wall Street Journal, 2/16; Sullivan, The Hill, 2/16; Pear/Kaplan, New York Times, 2/16; AP/Sacramento Bee, 2/16; Nather, "Vitals," Axios, 2/17; Kodjak, "Shots," NPR, 2/16; Morgan et al., Reuters, 2/16).

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