House Republican leaders are under fire for unveiling a plan that repeals major portions of Obamacare and replaces it with what some critics are calling “Obamacare Lite.”
The American Health Care Act has too many similarities to the Affordable Care Act, conservative lawmakers and think tanks say. The GOP bill unveiled Monday doesn’t go far enough to fulfill Republicans’ longstanding promise to eviscerate former President Obama’s landmark health reform law, they argue.
“The House leadership Obamacare Lite plan has many problems,” tweeted Senator Rand Paul on Tuesday. “We should be stopping mandates, taxes and entitlements not keeping them.”
It’s not surprising that some of Obamacare’s most popular provisions aren’t touched. These include allowing children under age 26 to remain on their parents’ policies and protecting those with pre-existing conditions. President Trump and GOP lawmakers have said all along that they would like to maintain these reforms.
But there are several other key provisions that are all too familiar, say some of those pushing for full repeal.
Here are some of the most obvious ones:
Using refundable tax credits to help people pay for coverage: Both Obamacare and the proposed GOP plan help people afford policies by providing refundable tax credits that are paid in advance to insurers. Those buying plans on the individual market are eligible, but those covered through their jobs or the government are not.
There are some significant differences. Obamacare’s subsidies are based on enrollees’ incomes and cost of coverage in their areas. The Republican tax credits vary with age, ranging from $2,000 for 20-somethings to $4,000 for those in their early 60s.
But Obamacare and the Republican plan both have income caps. An enrollee making more than $47,500 does not qualify for assistance under Obamacare. If the GOP plan becomes law, those making more than $75,000 would see their tax credits start to phase out, and an enrollee making more than $215,000 would no longer be eligible.
Keeping the tax on generous employer health insurance plans: Obamacare also sought to curb the tax break on employer plans. Its vehicle of choice was the so-called Cadillac tax, which calls for imposing a 40% levy on employers on the amount of their premiums that exceed $10,200 for individual policies and $27,500 for family plans.
The idea is to have employers limit their benefits packages to a certain level, slowing the growth of health care spending and usage. The Cadillac tax was to have started in 2018, but it was delayed until 2020 amid pressure from companies and unions.
The Republicans would keep the Cadillac tax, but would push it off until 2025. An earlier draft of the GOP legislation called for replacing the levy with a cap on the tax benefits of employer-sponsored plans. It would have required the priciest plans to pay tax on their premiums, but lawmakers removed the provision from the bill unveiled on Monday.
Eliminate the individual mandate, but let insurers penalize the uninsured: One of the most reviled provisions of the Affordable Care Act is the individual mandate, which requires most Americans to have health insurance or pay a penalty. Those uninsured in 2017 will have to pay $695, or 2.5% of their income, whichever is higher.
The mandate’s purpose is to draw young and healthy Americans — who might not feel they need coverage — into the market. Their participation is crucial to balance out the higher costs of older and sicker enrollees, whom insurers are required to cover under Obamacare.
Since Republicans have said they want to protect those with pre-existing conditions, lawmakers must find a way to get these young and healthy consumers to buy policies. Their solution? Allowing insurers to charge more — a 30% surcharge on top of their premium for a year — to those who let their insurance lapse. But to some, this is simply letting the insurers levy a penalty.
All these provisions don’t sit well with conservatives.
“This is ObamaCare-lite,” said Jason Pye, director of public policy and legislative affairs of FreedomWorks, which promotes free markets and individual liberty. “It creates a new entitlement through the refundable tax credits. It allows insurance companies to assess a 30% penalty on those who don’t keep continuous coverage for 63 days, which is an individual mandate by another name.”
