Moderate and Conservative Republicans May Have Found a Compromise Obamacare Repeal Bill

Apr 20, 2017

Several weeks ago, Speaker of the House Paul Ryan withdrew the Republican plan to repeal and replace Obamacare. Although the Republicans have a majority in the U.S. House, moderates and conservatives could not agree on the specifics of the new plan and consequently Ryan did not have the votes to pass the bill.

The leadership of the moderate and conservative factions has been working this past week to find a compromise acceptable to all Republican Members. (here)

The original bill, called the American Health Care Act, has these features (here):

  • Repeals the individual and employer mandate.
  • Eliminates virtually all of the ACA taxes and defers the “Cadillac tax” on high-cost health insurance plans until 2025.
  • Provides a refundable tax credit based on age, not income. The credit starts at $2,000 per person for 18 year olds and gradually increases to $4,000 as people age. The maximum for a family is $14,000.
  • People purchasing catastrophic health insurance plans, without the current ACA benefit mandates, can receive the tax credits.
  • Expands health savings account (HSA) contributions to $6,550 per year for individuals and $13,000 per year for families.
  • Reforms Medicaid. States would receive per capita federal block grants. States that did not expand Medicaid under the ACA would receive more federal money for disproportionate share hospitals (those hospitals that have a higher share of low-income patients) and possibly more funds because of changes in the federal match. Phases out Medicaid expansion starting in 2020 and gives states more control over the entitlement.
  • States would receive federal money through a $100 billion grant over the next decade which apparently could be used for such things as high-risk pools.
  • Retains several ACA provisions. Children can stay on their parents’ health insurance plans until age 26. The bill addresses the pre-existing condition mandate. (There is a loop-hole for insurance companies, however. If a person does not continuously have insurance for two months, the company can charge an additional 30 percent premium surcharge.)
  • Changes the community rating from 3:1 to 5:1 which will make health insurance more affordable for younger, healthier individuals.

The non-partisan Congressional Budget Office estimates the bill would:

  • Cut $337 billion off the federal deficit over ten years.
  • Lower taxes by $883 billion for everyone who uses health care. Eliminates the ACA taxes on drug companies, medical device manufacturers, insurance companies and insurance plans.
  • Lower insurance premiums ultimately by 10 percent.
  • Place a limit on Medicaid spending for the first time in the history of the entitlement, saving $880 billion over ten years.

The current compromise bill would:

  • Allow states to eliminate the community rating mandate, but they would then be required to participate in a federal high risk pool.
  • Maintain the 10 essential health benefits of Obamacare, but would allow states to opt out if they can show that doing so would decrease health insurance premium rates, increase the number of insured people or "advance another benefit to the public interest in the state."
  • Use a federal high risk pool and eliminate the guaranteed issue mandate.

A conference call among House Republicans is scheduled for this weekend. The compromise bill does not address several of the main hurdles to pass a repeal/replace bill. It does not address the Medicaid reform and its $800 billion cut, which will alienate the moderates. It also does not eliminate or modify the refundable tax credits, which became a major objection of the conservatives.

As proposed, the compromise bill shifts more control to the states, but essentially leaves the main features of the original repeal/replace bill intact. More compromises may be in order. Republicans have run on repealing Obamacare for the past seven years. At some point they will need to take an actual vote.