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New GOP bill to replace Obamacare is leaked

By Harris Meyer  | March 3, 2017

(Story updated at 3:54 p.m. ET)

In the latest leaked draft of their healthcare plan, House Republicans propose to cut off premium tax credits for wealthier Americans. But they haven’t decided on the details.

A leaked draft, dated Feb. 10, 2017, emerged last week. It would offer refundable premium tax credits starting in 2020 based on age, unlike the Affordable Care Act’s income-based credits. People under 30 would receive $2,000, while people over 60 would get $4,000. Both lower-income and higher-income people would get the same amount.

A document obtained by Politico describing revisions in the draft bill and dated Feb. 24, 2017, would set some type of higher-end cutoff of the tax credits. It still would phase out the ACA’s Medicaid expansion to low-income adults. And it would convert Medicaid from an open-ended entitlement to a program of capped federal payments to the states.

The slight changes in the new draft are unlikely to significantly lessen criticism from both Republicans and Democrats. The most conservative congressional Republicans oppose any type of refundable tax credit that exceeds what people have paid in income tax, which they denounce as a new entitlement. Still, the higher-end cutoff may ease their concerns about tax subsidies going to very wealthy people who don’t need them.

Even if more affluent Americans would not qualify for the credits, they would benefit greatly from the bill’s repeal of the ACA’s Medicare payroll tax on high-income individuals, along with its surtax on net investment income. According to the Congressional Budget Office, that would provide $346 billion in tax relief to higher-income people over the next decade.

Healthcare providers are deeply worried about the GOP’s proposed repeal of the Medicaid expansion and restructuring Medicaid financing, and how these moves would affect their ability to care for low-income and disabled patients.

“It doesn’t make sense that when healthcare costs are going up, we would reduce the number of people who qualify for coverage,” said Randy Oostra, CEO of Toledo, Ohio-based ProMedica. “You have to take time to think through what it would mean for families.”

Both versions of the bill would repeal all the ACA taxes that finance the law’s premium subsidies, Medicaid expansion and Medicare benefit enhancements. In their place, the bill would establish a new tax on employees for the value of generous employer health benefits. It would hit plans at and above the 90th percentile of current premiums. That idea is broadly unpopular with business groups, labor unions, and conservatives.

House Speaker Paul Ryan wants House committees to mark up and advance an ACA repeal bill as early as next week. He wants Congress to pass it through the expedited budget reconciliation process on a straight party-line vote before the Easter recess in early April.

But Democrats, healthcare industry groups, and the general public have not yet gotten a chance to see the latest House GOP bill. Critics note that Republicans repeatedly have promised to pass an ACA repeal-and-replace bill through an open and inclusive process offering everyone plenty of time for input — unlike what Republicans claim was the backroom process by which Democrats passed the ACA.

It took the Democrats dozens of committee hearings and nearly 14 months to pass the law, which included many Republican amendments.

On Thursday, House Republicans refused to allow Republican Sen. Rand Paul or House Democrats to see their latest bill.

According to Politico, the latest House GOP bill draft eliminates a provision that would have allowed “grandmothered” health plans to remain in the insurance market indefinitely.

That contrasts with the Trump administration’s move last week to allow insurers and consumers to extend for an additional year individual and small-group health plans that do not comply with the Affordable Care Act’s coverage rules.

It’s estimated that fewer than one million people currently remain in grandmothered individual-market plans in the three dozen or so states that still allow them. The rest of the states, including California and New York, already halted the sale of non-ACA compliant plans to strengthen their ACA-regulated markets.

The Obama administration’s original decision to allow grandmothering of plans was blamed by many for some of the individual market’s problems. That decision was driven by widespread criticism of President Barack Obama for failing to live up to his famous promise that if people liked their health plan they could keep it. Under his administration’s last extension, grandmothered plans would have ended Dec. 31, 2017.

Critics say the fundamental question about the Republican repeal proposal is how it can provide better and more affordable coverage for people with much less federal spending. “They’re cutting dollars while they’re promising people more,” said David Cutler, a health policy expert at Harvard University who supports the ACA. “Basically the math doesn’t work.”

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