GOP Offers a Sketchy Plan to Replace Obamacare
Policy + Politics

GOP Offers a Sketchy Plan to Replace Obamacare

REUTERS/Joshua Roberts

House Republicans on Tuesday unveiled their latest vision for replacing Obamacare and overhauling the nation’s health care system, including changes to Medicare and Medicaid, the premier federal health care programs for the elderly and poor and lightning rods in presidential and congressional politics. 

The proposal, largely engineered by House Speaker Paul Ryan (R-WI) and a handful of committee chairmen, provides the most definitive Republican explanation of how they would go about replacing the 2010 Affordable Care Act, President Obama’s signature health care initiative that to date has helped to insure 21 million Americans, mostly through an expansion of Medicaid. 

Related: Can Paul Ryan and the GOP Deliver a Credible Obamacare Alternative? 

The study provides scant details of the cost implications of their proposals or the number of Americans who would be helped or hurt by a dramatic shift in national health care policy. That suggests that even now, after years of attempting to repeal Obamacare, GOP leaders and their rank and file still can’t agree on the details of a replacement plan. 

However, the crux of the plan is to end the Obamacare mandates on individuals and insurers to facilitate a major expansion of health care coverage and eliminate the federal and state-run insurance exchanges that provide subsidized coverage to many low income people. Instead, individuals and families that do not receive coverage through employers, Medicare or Medicaid would receive refundable flat tax credits to purchase coverage in the private market. 

Those tax credits, made available on a monthly basis to help pay for premiums, would be adjusted by age and would increase over time, so that the older you are, the more credit you receive. Although the report offers no specific value of the credits, it indicated that they would be large enough to purchase a typical pre-Obamacare health insurance plan.

The report -- which Ryan planned to discuss in a speech later today, hails the GOP approach as a way of slowing the rate of growth of health care spending – especially Medicare and Medicaid – while relaxing federal regulations and granting the states a bigger role in future health care policy.

“Americans deserve an accessible and affordable health care system that promotes quality care and peace of mind. It should empower patients and support innovation,” The 37-page House GOP report states. “Sadly, that is not the system we have today. Obamacare has limited choices for patients, driven up costs for consumers, and buried employers and health care providers under thousands of new regulations.” 

Related: Uninsured Rate Hits New Low, but Obamacare’s Still a Hot Potato 

The Republicans’ latest plan comes at a time when the much-maligned Affordable Care Act is beginning to achieve some successes. For instance, the uninsured rate for Americans has declined dramatically over the past few years in the wake of Obamacare and expanded Medicaid coverage, according to a recent survey by Gallup and Healthways. Only 11 percent of adults and children are still without healthcare coverage, according to the findings, which is down nearly a full percentage point from the fourth quarter of 2015. 

Moreover, a new study by the Urban Institute concludes that overall health care costs are rising at a slower rate than previously assumed. The Centers for Medicare and Medicaid Services (CMS) projected that national health care spending levels would reach $4.6 trillion by 2019 because of expanded coverage under Obamacare and an improved economy were exaggerated. However, the Urban Institute study says the annual cost that year will be closer to $4 trillion. 

House Democrats today berated the GOP health care reform plan, saying it was “disappointing to see Republicans continue to devote so much time and energy to half-baked policy ideas” instead of devoting their attention to improve Americans’ access to health care. 

“The fact is that the Affordable Care Act is working,” said Rep. Frank Pallone Jr. (D-NJ), the ranking member of the House Energy and Commerce Committee, and Rep. Gene Green (D-TX), the ranking member of the Health Subcommittee, in a joint statement. … It’s time for Republicans to stop litigating the past and to work with us to continue improving the quality of health care in America.” 

Related: Here’s Why Obamacare Is So Important to Hillary Clinton 

There are many specifics missing from the Republicans’ health care overhaul blue print that must be filled in to assess the credibility of the proposal and its overall impact. And the plan is premised on a highly uncertain political calculation that the GOP will retain sizeable majorities in the House and Senate and that Republican Donald Trump wins election in the November. The presumptive GOP presidential nominee has repeatedly vowed to repeal Obamacare if he is the next president. 

It’s also far from certain whether Trump as president would sign off on many of the ideas contained in the House GOP plan designed to overhaul and curtail Medicare, Medicaid and other entitlement programs. Trump has long said that he considers Social Security and other entitlement programs off limits to cuts. But his top policy adviser, Sam Clovis, said in May that Trump, if elected, “will start to take a look at all of the programs, including entitlement programs like Social Security and Medicare” to control the deficit. 

With Clinton, the presumptive Democratic presidential nominee, and Sen. Bernie Sanders of Vermont vowing to protect or expand entitlement programs, the new Ryan recommendations could provide added grist for debate in the presidential and congressional campaigns this fall. Among the Republicans’ latest proposals: 

Gradually raise the eligibility age for Medicare in tandem with Social Security from the current 65 to 67, beginning in 2020. It would be part of a conservative push to address projected long-term growth in federal entitlement spending that threatens to drive the deficit back up and deplete resources for seniors and retirees. 

More Bad News for the Remaining Obamacare Co-ops 

Transform Medicare into “a fully competitive market-based model” known as premium support. To allay the concerns of seniors, Ryan would preserve vestiges of the current traditional fee-for-service health care program that for decades has been the primary source of older Americans health care. But traditional Medicare would be thrust into direct competition with private plans offered by major health insurance companies like UnitedHealth and Aetna, beginning in 2024. 

A Medicare premium support payment would be paid directly to the enrollee’s private plan or the fee-for-service program – with the amount of the premium depending on an individual’s health status and income. Precisely how large the premium supports would be – and how much of the premium they would cover – is far from clear.

Also, under the GOP approach, Medicare Parts A and B – for hospital coverage and physician care, respectively – would be combined for the first time and share a single deductible beginning in 2020.

Eliminate Obamacare’s Medicaid expansion coverage that provides health care insurance to millions of Americans in three fifths of the states and the District of Columbia. Republicans would temporarily leave Medicaid expansion in place in 32 states; states that didn’t take advantage of the opportunity would no longer be qualified to sign on. The GOP plan would also gradually reduce the federal share of the cost of the expanded coverage for adults.

The Medicaid system itself would be overhauled, with the federal government providing each state with a fixed amount of money for each beneficiary or a lump sum for the entire state program. At present, Medicaid is jointly funded by the states and the federal government.    Moreover, states could further tighten eligibility by setting more stringent requirements, such as imposing work requirements on able-bodied beneficiaries, and set premiums.

Allowing consumers to purchase coverage across state lines. The plan would work like car insurance by making it easier for states to enter into interstate compacts for pooling.