What’s Actually Inside the GOP’s Obamacare Repeal Draft?
Here’s What You Need to Know
Last week, a draft of a House Republican bill designed to repeal and replace Obamacare was leaked. The legislation is a first look at how House Republicans, working with the Trump Administration, are planning to break down the policies of Obamacare while simultaneously replacing key elements of the healthcare reform law.
The main points of the leaked proposal include:
- Trading The Individual Mandate For Individual Penalties: The GOP draft proposal does eliminate Obamacare’s individual mandate, but establishes penalties for individuals who fail to maintain consistent coverage. Specifically, the penalty punishes those who re-enroll in the healthcare marketplace by increasing their premiums by 30% for one year. This mechanism would replace the individual mandate as a tool to disincentive people from only getting health coverage when they get sick.
- Changing Subsidies To Tax Credits: The Republican plan also eliminates Obamacare’s expansive income-based subsidies, and instead creates a system of age-based tax credits. Beginning in 2020, persons under 30 would receive a tax credit of $2,000, and that amount would increase by $500 each decade beyond 30 until age 60 when the tax credits would cap at $4,000.
- Creating “State Innovation Grants”: One area Obamacare received bipartisan support was the law’s handling of pre-existing medical conditions. The Republican plan looks to maintain that success through the creation of “state innovation grants,” offering the states federal money to establish high-risk pools for those people with pre-existing conditions.
- Big Changes For Medicaid: The GOP draft measure also seriously rolls back Obamacare-driven Medicaid spending, completely eliminating the law’s Medicaid expansion by 2020. The measure also reforms the pre-Obamacare Medicaid system by converting it to per-capita subsidies, in which states are given the latitude to build safety-net health insurance programs with federal funding in the form of a fixed dollar amount for each Medicaid enrollee resident within their borders.
- Eliminating Taxes, And Some Tax Breaks: Another fundamental of the Republican plan is the elimination of all taxes associated with Obamacare. However, in order to pay for the tax credits and grants in the new plan, Republicans would also eliminate tax breaks on generous health plans offered by employers. This proposal is notably similar to Obamacare’s controversial “Cadillac tax,” which Republicans actively opposed and received fierce criticism on from businesses and labor unions alike. Should this remain in a final GOP plan, it would likely be a major political fight and elicit cries of hypocrisy from Democrats.
The response to this “discussion draft” has been less than heartening for anyone betting on its success. Beyond predictable Democratic opposition, conservative Republicans criticized the legislation for not going far enough in efforts to erase several key Obamacare policies. Senator Rand Paul underscored this opposition by calling the plan “Obamacare lite” while the Heritage Foundation released their own version of a repeal-and-replace plan to push back against GOP leadership efforts.President Trump discussed the repeal-and-replacement of Obamacare during his address to the joint session of Congress this Tuesday night, yet both establishment and conservative Republicans claim the President endorsed their version. Speaker Ryan has said House Republicans hope to present their Obamacare repeal legislation after the coming recess, but this draft illustrates just how far they have to go before reaching something that will be able to muster anything resembling consensus.
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