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GOP Bill Would Repeal Obamacare Taxes And Penalties, Keep Some Subsidies

After weeks of internal debate, House Republicans have released their plan for the Affordable Care Act, aka Obamacare. It faces challenges from within the GOP, from interest groups — and the public.

SHARE GOP Bill Would Repeal Obamacare Taxes And Penalties, Keep Some Subsidies
House Speaker Paul Ryan is leading efforts to repeal and replace the Affordable Care Act.

House Speaker Paul Ryan is leading efforts to repeal and replace the Affordable Care Act.

Allison Shelley/Getty Images

After years of waiting, it’s finally here.

The Republican plan to reshape for the Affordable Care Act — what they call “repeal and replace” — kills the requirement that everyone buy health insurance and eliminates the tax penalty for those who don’t buy coverage. It also makes significant changes in the financial assistance people can receive to buy a health plan.

The bill would offer tax credits, refundable in advance, to people with incomes below $75,000. But those credits will be lower in many cases than the subsidies now offered in the ACA.

The bill, which will go through many revisions and challenges, was released late Monday by two House committees, Ways and Means and Energy and Commerce. Members are expected to start voting on parts of the bill Wednesday.

It will ultimately need approval by the full House and the Senate before it goes to President Trump for his signature. Until then, most of what is known as ‘Obamacare’ will stay in place.

But it’s far from clear that Republicans in the House are unified in their support of the bill. Members of the far-right Freedom Caucus have said they oppose giving tax credits to people who don’t pay any federal income tax. And only a few Republican defections in the Senate could defeat the bill.

Four Republican Senators wrote a letter to Majority Leader Mitch McConnell saying they were concerned an early draft of the House plan would not adequately protect people who have insurance through Obamacare’s Medicaid expansion. And Senator Rand Paul was among three conservative Republicans who criticized an earlier version of the bill as “Obamacare lite.”

Under the proposed bill, tax credits would start at $2,000 a year for individuals under age 30, rising to $4,000 for those of 60. The proposal, first seen in Feb. 10 draft of the bill, has been criticized as too meager to cover the full cost of a health insurance plan that provides full benefits.

But the proposed tax credit could potentially pay for insurance that protects only against a catastrophic health event.

Tax credits would begin to be phased out at incomes of $75,000 for individuals and $150,000 for families.

To encourage people to buy coverage, the plan allows insurers to charge a 30 percent penalty to people who let their insurance lapse, and then try to buy a new policy.

In states that expanded Medicaid, people who are eligible can continue to enroll until January 1, 2020, and those states would continue to benefit from the federal government paying a greater share of the health costs of those beneficiaries.

Several taxes contained in the ACA would be repealed at the end of this year. These include taxes on health insurers, pharmaceutical and medical device manufacturers, and a tax on high-cost employer-sponsored group health plans (aka Cadillac plans).

The plan offered by the House Republicans falls short of the outright repeal that has been demanded by more conservative members, including those in the House Freedom Caucus.

That could be due to the shift in public attitudes toward the ACA in recent weeks.

Public opinion has grown more favorable as major changes appeared imminent. A Kaiser Family Foundation tracking poll in late February found 48 percent having a favorable opinion versus 42 percent viewing the law unfavorably. Kaiser says the shift is due largely to a change in the view of political independents, among which 50 percent now view the law favorably.

We will have more on this story as it develops.

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