The details of a GOP-crafted ACA substitute have emerged, but the specifics of a finalized bill have yet to be seen.
Congressional Republicans have sketched out an initial draft of their alternative to former President Barack Obama’s Affordable Care Act (ACA). According to a memo obtained by Politico, the plan centers on eliminating the individual mandate, income-based subsidies, and taxes implemented to support the ACA.
By repealing those elements, House GOP lawmakers are on track to slash what they have consistently claimed are the most unpopular components of Obamacare. Other GOP proposals outlined in the plan, however, stand to stir up considerable debate when the bill is introduced to Congress. According to House Speaker Paul Ryan (R-WI), that may happen soon after lawmakers return from the President’s Day recess this week.
Reduced Medicaid State Grants
Currently, the federal government places no limits on funds allocated to states in order to cover low-income ACA enrollees insured through Medicaid. Under the GOP plan, Medicaid grants to states would be capped at the number of Medicaid recipients, thereby cancelling the Obamacare-era Medicaid expansion.
Another contentious issue in the ACA reform debate is how to insure patients with pre-existing conditions. As it stands, the ACA requires that insurers provide coverage to all applicants, regardless of their health history. Republican legislators instead want to allocate $100 billion worth of “state innovation grants” so that states can form high-risk pools for patients who require more expensive health care. Presumably, these grants would affect a good portion of those with pre-existing conditions.
In exchange for income-based subsidies, enrollees would receive tax credits based on age starting in 2020. Those age 30 and under would be eligible for a $2,000 credit, and that amount would double for people over 60.
Also addressed in the GOP plan is the “Cadillac tax” that levied a 40% excise tax on high-cost, employer-sponsored health plans. In place of the Cadillac tax, Republican lawmakers have devised a formula to limit the tax exemption for employer-sponsored health insurance at the 90th percentile of current premiums. Benefits exceeding that standard would be taxed. But as the Politico article notes, while tax limits have earned bipartisan support, businesses and unions who protested the Cadillac tax may push back against this reform as well.
To bolster the individual insurance market (which is beset by premium hikes and high profile insurer exits), the GOP proposal would enable insurers to increase premiums for older customers up to five times the amount charged to younger policyholders.
Debate Among Republicans
The GOP proposal was leaked at a time of significant disagreement among the public and lawmakers within the GOP over how to craft an acceptable ACA replacement. During the February recess, many Republican legislators faced angry crowds during town hall meetings demanding details about an Obamacare alternative.
The schism within the GOP was further exposed when former House Speaker John Boehner claimed at a health care conference that Republicans will likely tinker with Obamacare in lieu of completely overhauling it. Boehner expressed confidence that some of the ACA’s basic tenets will be left intact, such as subsidies for low-income families to be able to afford coverage and the clause which prohibits insurers from denying coverage to people with pre-existing conditions.
Nevertheless, Vice President Mike Pence reiterated the Trump’s administration’s vow to repeal and replace Obamacare at an appearance in Missouri. “We're going to repeal Obamacare once and for all,” he said. “Get rid of its mandates to taxes and its intrusion on your lives and on your businesses. And, best of all, at the same time we repeal Obamacare, Obamacare is going to be replaced with something that actually works.”
What it Means to Your Clients
Given the divergent views even within the GOP, a Republican-crafted health insurance plan will likely undergo several iterations as it churns through the legislative process. Until Congress enacts a law, your clients cannot make firm decisions about their health insurance policies.
Still, some of the components of the GOP plan may become law, so you should prepare your clients with pre-existing conditions for a scenario where they need to consider obtaining coverage through a high-risk pool. Based on their age, they may have to pay higher premiums, which could be offset by tax credits if they are over 60. Initiate those conversations now, and begin to draw up cost estimates so that your clients have all the information they need to make a decision based on their preferences, health, and financial status.