House Republicans released a long-awaited plan Monday to reduce the federal footprint in health care by repealing Obamacare’s unpopular mandates, replacing its subsidies with a new form of tax credits and gradually overhauling the Medicaid insurance program for the poor.
Party leaders cued up committee votes Wednesday on the proposal, which no longer requires Americans to hold insurance and poses a major test for President Trump and congressional Republicans who used the health care law as a political whipping boy for years.
“Skyrocketing premiums, soaring deductibles and dwindling choices are not what the people were promised seven years ago. It’s time to turn a page and rescue our health care system from this disastrous law,” House Speaker Paul D. Ryan said.
However, Mr. Ryan and chairmen of the House Energy and Commerce and tax-writing Ways and Means Committee will have to sell their plan to skeptical conservatives — one Republican member immediately dubbed it “Obamacare 2.0” — as Democrats pledge to resist any attempt to dismantle President Obama’s signature achievement, the Affordable Care Act of 2010.
“Trumpcare doesn’t replace the Affordable Care Act; it forces millions of Americans to pay more for less care,” said Senate Minority Leader Charles E. Schumer, New York Democrat.
How the bill contrasts with Obamacare, which covered roughly 20 million people, is a key sticking point for the debate ahead.
Leaders are hurtling forward without a complete report from congressional scorekeepers on how the bill will affect coverage or federal deficits, a move that is angering Democrats who were accused of passing Obamacare without knowing what it did.
Analysts believe it will cover far fewer people than Mr. Obama’s reforms, though Republican leaders promised to provide only “access” to coverage.
Republican leaders are under intense pressure to get moving, however, after they slipped by initial deadlines for scrapping the law alongside a long-sought White House partner in Mr. Trump.
“Obamacare has proven to be a disaster with fewer options, inferior care, and skyrocketing costs that are crushing small business and families across America,” White House press secretary Sean Spicer said. “Today marks 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.”
As expected, the Republican plan scraps Mr. Obama’s mandate requiring people to hold insurance or pay a penalty. It is retroactive, so people who shirked insurance last year will not be penalized on this year’s returns.
Insurers still cannot deny people with pre-existing medical conditions, though they can charge higher premiums to those who had gaps in coverage, so people don’t buy insurance only when they become sick.
Starting in 2020, Obamacare’s income-based subsidies would be replaced with refundable, age-based tax credits ranging from $2,000 to $4,000 for people who do not have coverage through a job or government insurance program. The tax credits become more generous as people get older, effectively serving as a proxy for health risks as opposed to Obamacare’s means-tested program serving low- and middle-income Americans.
However, the assistance in the Republican plan would phase out for individuals who make at least $75,000 or households making $150,000. People would lose $100 in tax credits for every additional $1,000 they earn.
In a major shift, lawmakers dropped a plan to begin taxing a portion of particularly generous employer-sponsored plans to pay for the tax credits, after some Republicans said it would strain the middle class.
Instead, the plan waits until 2018 to repeal the law’s array of taxes on medical device makers, insurers and others to retain some revenue in the meantime, while allowing Obamacare’s 40 percent “Cadillac tax” on generous employer plans to take effect after 2025, so the plan doesn’t boost deficits after 10 years.
Republican leaders are using fast-track budget rules to avoid a Democratic filibuster of their plans, but they cannot afford to lose more than 21 of their party’s votes in the House or more than two in the Senate, where they hold just a 52-48 majority.
Republicans will overhaul Medicaid, which covers more than 70 million Americans, by replacing its open-ended entitlement with a fixed amount of money based on the number of enrollees in each state.
Yet it will allow the 31 states that expanded their Medicaid program to those making 138 percent of federal poverty level to keep the expansion through 2020. The federal government would continue to pay for 90 percent of the cost for those who made it into the expanded program before the cutoff year, with the hope that those people will churn out of the program within a few years.
States that didn’t expand, meanwhile, will receive additional money to help them treat poor residents.
A quartet of Senate Republicans whose states expanded Medicaid had asked leaders to tread carefully, saying a fumbled transition will hurt the most vulnerable.
“As the largest payer of mental health and substance use services in the United States, it is critical that any health care replacement provide states with a stable transition period and the opportunity to gradually phase in their populations to any new Medicaid financing structure,” said Sens. Rob Portman of Ohio, Shelley Moore Capito of West Virginia, Cory Gardner of Colorado and Lisa Murkowski of Alaska.
Like Obamacare, the Republican proposal allows young adults to stay on their parents’ plans until age 26.
Mr. Obama’s law drove the uninsured rate to historic lows after its full implementation in 2014. Yet the administration fumbled the rollout of the law, and its “individual mandate” proved to be a weak prod in the early rounds, meaning the marketplace failed to attract young and healthy enrollees in great enough numbers.
Insurers responded by raising their rates or withdrawing from certain markets, putting the law on an unsustainable path.
Mr. Trump has suggested that the law would collapse of its own weight, leaving Democrats to shoulder the blame, but he said Republicans have a duty to step in. Yet the president may have to settle disputes within his own party first.
Two key conservative factions and a trio of Senate conservatives — Rand Paul of Kentucky, Ted Cruz of Texas and Mike Lee of Utah — balked at earlier plans, saying the party should instead revive a 2015 repeal effort that had widespread support before they debate and pass replacement measures.
“Still have not seen an official version of the House Obamacare replacement bill, but from media reports this sure looks like Obamacare Lite!” Mr. Paul said on Twitter late Monday, echoing the “Obamacare 2.0” crack on Twitter from Rep. Justin Amash, Michigan Republican.
Repealing the law is what the party rode to sweeping electoral wins in 2010, in 2014 and in November, they said, and voters expect them to follow through.
Republican leaders on Monday argued that is exactly what they’re doing.
“Republicans didn’t create Obamacare or all the problems that followed — from rising premiums to crumbling exchanges to bankrupt co-ops to lost plans and restricted networks,” said House Majority Leader Kevin McCarthy, California Republican. “We didn’t create these problems, but we’re going to fix it.”