The tax credits proposed by Republicans would be age-based, not income-based as they are under Obamacare. But in the bill released Monday, they would be reduced for individuals earning more than $75,000 and for households earning more than $150,000. Individuals earning more than $215,000 couldn’t receive any of the tax credits.
The bill would end Obamacare’s Medicaid expansion, but expansion states would continue to receive extra federal funding until 2020. During that period, anyone eligible in an expansion state could sign up for Medicaid.
After Jan. 1, 2020, people who are receiving coverage through the expansion will still get it. However, at that time Medicaid would turn into a per-capita system in which federal spending would be allocated based on how many people are signed up as opposed to the traditional fee-for-service model.
Per WaPo, the tax credits will be refundable, meaning that they’ll be available even to people who pay no federal income tax. Conservatives like Rand Paul and Mark Meadows have called that a red line, arguing that it’s nothing more or less than a Republican-created health-care entitlement.
Until now, the Republicans had been intending to veer away from the ACA subsidies that help poor and middle-class people obtain insurance, insisting that the size of tax credits should be based entirely on people’s ages and not their incomes.
But legislation to repeal the health-care law, drafts of which are expected to emerge as early as Monday evening, will propose refundable tax credits that would hinge on earnings as well as age, according to three sources familiar with the most current thinking of the House GOP leadership…
It is unclear what the size of the tax credits will be compared to the ACA’s subsidies.
Pegging credits to income, not just age, is a way to cut the costs of subsidies to the government and to give the GOP a defense to the inevitable charge that their system is designed to benefit the rich. The bill hasn’t been scored by CBO, likely for fear that it’ll project a sharp drop in the number of people with insurance, a rise in the deficit due to scaling back some of the taxes under ObamaCare, or both. Republican Bill Cassidy or Louisiana has already declared that a problem tonight. Expect to hear lots more about it tomorrow from Schumer and Pelosi.
Conservatives on Twitter are also buzzing about this section, which some are reading as a mandate:
Under GOP bill, anyone who goes w/o health coverage for two months or more would face a 30% surcharge on premiums for a year. pic.twitter.com/krmLYLTOTn
— Kyle Cheney (@kyledcheney) March 6, 2017
That’s not a true mandate in the sense that you’re (apparently) not required by law to have insurance and forced to pay a penalty if you don’t, but if you don’t sign up before 2019 you’re staring at a situation where your plan will be 30 percent more expensive if/when you do eventually decide to buy insurance. They’re trying to deter people from gaming the system when insurers are required to cover treatment for preexisting conditions, which the new GOP bill achieves. If you’re allowed to buy insurance as soon as you get sick, you’re getting all the benefits of the policy without having paid anything into it in advance. In that case, you’ve eliminated risk and turned insurance into a pure welfare program. The provision above would penalize people for that by slapping a 30 percent fee on them if they waited to get covered until they suddenly needed insurance.
Preserving ObamaCare’s Medicaid expansion for four more years might be the thorniest issue for McConnell and Ryan. Conservatives will balk at the extension (and the politics of phasing it out in an election year, no less). Moderates might balk at the fact that it’s being phased out at all. In fact, four Republican senators — Gardner, Portman, Murkowski, and Capito — issued a statement this evening claiming that they won’t vote for a bill that rolls back Medicaid:
All four senators represent states that opted to expand their Medicaid program under the ACA.
“We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states,” they wrote in a letter to Senate Majority Leader Mitch McConnell (R-Ky.)
“Reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals. Any changes made to how Medicaid is financed through the state and federal governments should be coupled with significant new flexibility so they can efficiently and effectively manage their Medicaid programs to best meet their own needs.”
It’s unclear if the draft of the House bill they saw is a previous one or the new one, with the phase-out in four years. If it’s the new one, McConnell has a major problem: He’ll start with 48 votes for the bill at a maximum, and possibly fewer than that. Remember, Rand Paul, Mike Lee, and Ted Cruz have said they won’t vote for any bill that doesn’t go at least as far as the GOP’s 2015 repeal bill does in overturning O-Care, which this bill per its refundable tax credits and Medicaid holdover presumably doesn’t. The new House bill would also defund Planned Parenthood for one year, something Susan Collins has criticized. Which leaves McConnell … where?
Senate ACA repeal obstacles among Rs:
* Medicaid: 4 (RobP, CG, SMC, LM)
* tax credits: 3 (Rand, TC, ML)
* P-P'hood: 1 (SC)
Need 6/8 to pass.
— Paul Kane (@pkcapitol) March 6, 2017
Stay tuned. By tomorrow morning, there’ll be lots of “I’m troubled but reserving judgment for now” statements by Republicans to sift through.