House Republican leaders outline plan to replace Obama health care act

Rep. Jim Jordan (R-Ohio) and Sen. Rand Paul (R-Ky.) at a Thursday news conference to discuss new legislation to replace the Affordable Care Act, on Capitol Hill.

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WASHINGTON — House Republican leaders Thursday presented their rank-and-file members with the outlines of their plan to replace the Affordable Care Act, leaning heavily on tax credits to finance individual insurance purchases and sharply reducing federal payments to the 31 states that have expanded Medicaid eligibility.

Speaker Paul D. Ryan and two House committee chairmen stood with the new secretary of health and human services, former Rep. Tom Price of Georgia, preparing Republican lawmakers for a weeklong Presidents’ Day recess that promises to be dominated by angry or anxious questions about the fate of the health law.

But the talking points they provided did not say how the legislation would be paid for, essentially laying out the benefits without the more controversial costs.

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It also included no estimates of the number of people who would gain or lose insurance under the plan, nor did it include comparisons with the Affordable Care Act, which has extended coverage to some 20 million people.

With the House proposal’s rollback of Medicaid payments to the states, it appears probably that the number covered would be smaller.

House Republican leaders asserted in a document describing their plan that they would not “pull the rug out from anyone who received care under states’ Medicaid expansions.”

But Kenneth E. Raske, the president of the Greater New York Hospital Association, expressed alarm, saying the proposals would “put a huge amount of pressure on state budgets and put many Americans at risk of losing health care coverage.”

Sketchy as the outline was, it envisions major changes.

It would fundamentally remake Medicaid, a Great Society program that provides health care to more than 70 million Americans, not just the poor, but also middle-class people who have run out of money and need nursing home care. Under the plan, Medicaid, an open-ended entitlement program designed to cover all health care needs, would be put on a budget.

The Affordable Care Act’s subsidies, which expand as incomes decline, giving the poorer people more help, would be replaced by fixed tax credits to help people purchase insurance policies. The tax credits would increase with a person’s age, but would not vary with a person’s income.

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And new incentives for consumers to establish savings accounts to pay medical expenses still assume that workers would have money at the end of a pay period to sock away.

The House Republican plan would also make it easier for consumers to buy health insurance from companies licensed in other states, an idea long promoted by Republicans in Congress and championed by President Donald Trump in his campaign last year.

After the recess, Ryan said: “We intend to introduce legislation to repeal and replace Obamacare. It has become increasingly clear that this law is collapsing. People’s premiums are getting higher and higher. Their deductibles are soaring, and their choices are dwindling.”

Price told House Republicans that Trump “is all in on this.”

Ryan’s presentation Thursday was meant to generate a sense of momentum for the Republicans’ campaign to eviscerate President Barack Obama’s health care law — a campaign that has been plagued by apprehensions, doubts and divisions among Republicans in the last few weeks.

It was not clear whether the plan as outlined would get Republicans much closer to resolution. Sen. Lamar Alexander of Tennessee, chairman of the Senate health committee, said that he and other Senate committee chairmen were working with their House counterparts, with the goal of developing a “consensus document.” The House, he said, will probably act first but “will have the input of senators and the president.”

House conservatives are saying that any plan must begin with a full repeal of the Affordable Care Act and a replacement that looks nothing like it. Rep. Mark Meadows, R-N.C., and the chairman of the hard-line Freedom Caucus, said Republicans needed to talk about replacement measures “in specific terms, not in aspirational terms.”

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“We believe that it’s time that we make some very difficult decisions and move forward,” Meadows said.

Any plan that can satisfy House conservatives would face great uncertainty in the more moderate Senate.

The plan unveiled Thursday by House Republican leaders would make huge changes in Medicaid. It would eventually undo the Affordable Care Act’s expansion of Medicaid and give each state a fixed amount of money for each beneficiary. As an alternative, they said, a state could receive a lump sum of federal money for all of its Medicaid program, or a block grant.

In either case, the federal government would gradually reduce the extra payments it makes to states that have expanded Medicaid under the 2010 health care law.

States could continue providing Medicaid to the newly eligible beneficiaries, but the federal share of the costs would decline to the regular federal share of Medicaid costs for other beneficiaries.

The federal government now pays more than 90 percent of the costs for newly eligible beneficiaries in states that expanded Medicaid. Under the House Republican plan, the federal share would decline to 50 percent in states like California, Connecticut, New Jersey and New York, resulting in a significant loss of federal revenue.

In a number of states that have expanded Medicaid, Republican governors and Republican members of Congress have made clear that they do not like the idea of a block grant or a per-beneficiary allotment.

The Congressional Budget Office says that 12 million people have insurance because they became eligible for Medicaid under the Affordable Care Act, and it estimates that federal spending for this group will be $70 billion this year.

The House Republican plan would immediately eliminate tax penalties for people who do not have insurance and employers that do not offer it.

It would also eliminate taxes and fees that help pay for the expansion of coverage under the 2010 health care law. These include fees collected from health insurance companies and manufacturers of brand-name prescription drugs and an excise tax on makers of medical devices.

House Republicans have repeatedly said that they would continue providing some protection for people with pre-existing medical conditions. But the document describing their proposal does not say how they would do that.

Ryan said the tax credits envisioned by House Republicans were different from those provided in the Affordable Care Act.

Under that law, the tax credits are available only for insurance products that meet detailed federal standards and are purchased through an insurance exchange like HealthCare.gov.

By contrast, Ryan said, with the Republican version of tax credits, people can “buy the health insurance plan of their choosing,” which could cost less and have less generous coverage than the plans now available.

“You get the freedom to do what you want and buy what you need,” Ryan said.

During a transition period, House Republicans would continue “Obamacare subsidies,” but they would provide a little more assistance to young people and a little less to older Americans.

The House Republican plan would provide an unspecified amount of money for “innovation grants,” which states could use to help defray consumers’ out-of-pocket costs or to establish “high-risk pools” for people with serious chronic conditions.

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Emmarie Huetteman contributed reporting.

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