House unveils Obamacare replacement

Washington Examiner – by Robert King

House Republicans on Monday announced their long-awaited legislation to repeal and replace Obamacare, but they can’t say how many people would get or lose coverage compared to the Affordable Care Act.

The bill puts income restrictions on insurance tax credits and drops a proposed cap on the tax break for employer-sponsored health coverage. The Congressional Budget Office has not released its estimate on how much the bill would cost, and Republicans hope to use savings from repealing Obamacare to pay for the new provisions.  

The Republican-backed measure, called the American Healthcare Act, repeals most of the Affordable Care Act’s taxes, but at a later date than originally envisioned. It would keep the law’s “Cadillac tax” on high-cost health plans on the books, but would delay its implementation until 2025.

The legislation is expected to be marked up in separate sessions of the House Energy and Commerce Committee and House Ways and Means Committee on Wednesday.

The tax credits proposed by Republicans would be age-based, not income-based as they are under Obamacare. But in the bill released Monday, they would be reduced for individuals earning more than $75,000 and for households earning more than $150,000. Individuals earning more than $215,000 couldn’t receive any of the tax credits.

The bill could have a rough road getting through Congress due to several major provisions.

The inclusion of refundable tax credits draws a line in the sand in an intra-party fight over Obamacare’s repeal and replacement. Conservatives consider refundable tax credits a new entitlement, since people who don’t pay taxes can get money. Instead, they want a tax deduction that limits the tax liability for people buying individual insurance.

The House Freedom Caucus and Sen. Rand Paul of Kentucky, a budget hawk, last week called refundable tax credits a new entitlement, since people who don’t pay taxes can get money.

“That is simply subsidies by another name,” Paul said last week.

Conservatives were swift to bash the bill Monday evening.

Rep. Justin Amash, R-Mich., simply tweeted that it was “Obamacare 2.0.”

Paul called it “Obamacare lite.”

The bill also includes a measure defunding Planned Parenthood, a key request from anti-abortion groups but one that could get stiff pushback from some Republican senators.

Sen. Susan Collins, R-Maine, who killed a similar provision in a 2015 repeal bill, wouldn’t comment on the latest legislation while leaving the Senate Monday night. However, she and Sen. Lisa Murkowski, R-Alaska, are key supporters of Planned Parenthood.

The bill also would end Obamacare’s Medicaid expansion, but expansion states would continue to receive extra federal funding until 2020. During that period, anyone eligible in an expansion state could sign up for Medicaid.

After Jan. 1, 2020, people who are receiving coverage through the expansion will still get it. However, at that time Medicaid would turn into a per-capita system in which federal spending would be allocated based on how many people are signed up as opposed to the traditional fee-for-service model.

After 2020, people seeking coverage on the individual market, which is for people who don’t get insurance through their employers, would receive tax credits based on their age.

The 19 states that have not expanded Medicaid could still do so until 2020, but House aides said they don’t expect any other states to take that step.

The new Medicaid provisions appeared to soothe some Republicans in states that expanded their Medicaid programs under Obamare. A group of four Republicans sent a letter on Monday concerned about how an earlier draft would affect people who received coverage through the expansion.

Sen. Shelley Moore Capito, R-W.Va., one of the letter’s authors, said Monday that the new version was “going in the right direction,” based on what she had heard.

She told reporters she was heartened by more flexibility for governors and an “ability for the Medicaid expansion population to have the assurance that they are not going to be left out in the cold.”

Sen. Rob Portman, R-Ohio, another letter author, said that “what I heard on the floor was relatively positive.”

The tax credits would be given out based on certain age brackets. People under 30 would get $2,000, and people ages 30-39 would get $2,500, 40-49 would receive $3,000, and 50-59, $3,500. People over 60 years old would receive $4,000 a year.

Another provision on the bill could garner stiff opposition from the AARP, which is a change to the age band ratio in insurance.

While Obamacare plans on the individual market can charge seniors only three times the premium they give a younger person, House aides said that the age band would increase to five times the premium.

Prior attempts to change the age band ignited fervent opposition from leading senior lobby AARP, which complains it would increase healthcare costs for seniors.

The healthcare law’s individual mandate and employer mandate also would cease to exist once the legislation was signed. Under the bill, people who did not have health insurance in 2016 would not have to pay the Obamacare penalty on their tax returns, which are due next month. The employer mandate, which requires employers with 50 or more full-time workers to offer insurance, was supposed to go into effect in 2018.

Another section seeks to preserve coverage for people with pre-existing conditions, a popular part of Obamacare.

However, the bill includes a penalty for people who don’t maintain continuous insurance coverage, which aides said could be about 30 percent of premiums.

House aides added that the bill would enable people to buy catastrophic coverage, which they currently cannot do.

But aides did not want to venture into how many people would gain coverage or lose coverage compared to current levels because of the lack of a score from the CBO.

The legislation includes a new penalty for people who haven’t had continuous insurance coverage and seek to apply for coverage on the individual market.

Starting in the 2019 coverage year, there will be a 12-month period to determine if an applicant went longer than 63 days without continuous health insurance.

“If the applicant had a lapse in coverage for greater than 63 days, then the insurer will give a 30-percent late-enrollment surcharge on top of their base premium based on their decision to forgo coverage,” a summary of the bill reads.

The late-enrollment surcharge is for all people entering the market, regardless of their health status.

The provision aims to limit problems with special enrollment periods, which let someone sign up for Obamacare year-round. Insurers said Obamacare had too many special enrollment periods, which allowed too many people to use them only when they got sick and then drop coverage when they were treated. That wreaked havoc on insurers’ finances, leading the Obama administration to try to clamp down on who signs up during those periods.

Aides said that when Obamacare was first marked up in the House, it was done without a score. A score from the CBO would not only determine how many people are covered but also the costs and impact to the federal deficit over the next decade.

Many questions have not been answered, chief of which is who would be covered or not compared to Obamacare’s programs. House aides told reporters that they didn’t know when a budget score from the CBO will be available.

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