The Devil Is In The Details Of Latest GOP Obamacare Repeal Plan

Congressional Republicans are inching closer to cementing an approach to dismantling the Affordable Care Act that reportedly will include some replacement measures in the repeal legislation. The effort marks a victory for the GOP lawmakers who lobbied against repealing the law without a replacement, but it’s by no means the end of the intra-party battles. The ability of the replacement measures to work will depend on how much money GOP lawmakers are willing spend on them, health care policy experts tell TPM, and that there will almost certainly be more fights to come.

“The tension between conservatives who want to spend less and moderates who are willing to maintain federal spending on health care to keep people covered will become very clear, sooner rather than later,” Larry Levitt, vice president at the Kaiser Family Foundation, told TPM. “The previous repeal-and-delay approach kind of deferred the big fights over money, but this approach would bring those fights on almost immediately.”

According to reports by CNN and Politico, House Republicans are considering adding four major replacement elements to the legislation that will repeal large swaths of the law. The provisions focus on tax credits, high-risk pools, health savings accounts and block granting Medicaid. The first three measures in particular could theoretically address some of the political and policy obstacles Republicans have encountered in its push to overhaul the health care system. They are also mainstays of typical GOP Obamacare alternatives.

“There is method to this approach, and there is some sense to it,” said Tevi Troy, CEO of the American Health Policy Institute and a George W. Bush administration alum. “The challenge is making sure you get the same coverage numbers. You’ve got to make sure you design a combination of tax benefits” that can vary in shape and size, he said.

“Money is so central to all of this. If a replacement spent comparable amounts to the ACA you could come up with all kinds approaches that could probably get the same level of coverage in a different way,” Levitt said. “But Republicans have generally been very clear that they want the federal government to spend less than what the ACA called for.”

The tax credits could function similarly to the subsidies in Affordable Care Act, with the key differences being whether they would adjust according to income and local premium rates, or just by age (as is the case in previous GOP proposals.) High-risk pools could solve the problem of covering those pre-existing conditions by siphoning the people insurers deny coverage to into a separate coverage option, while bringing premiums down for healthy people. And Republicans have pointed to health savings accounts as an option that consumers can use to blunt high deductible policies, which are often an outgrowth of Republican health care plans.

“What you can do is pair those higher deductible plans with a subsidized health savings account and that could be used to help pay for the deductible,” Sen. Susan Collins (R-ME), who has co-sponsored her own Obamacare replacement plan, told reporters last month.

But these reasonable ideas in theory are very complicated in their details, and invite major disagreements that will be tough to settle on the expedited timeline Republicans hope to vote on repeal.

If the tax credits aren’t scaled according to income, high-income earners would get the same benefit as low-income people, which doesn’t make for the most ideal political optics. If credits also don’t take into account the differences in average premiums across geography, that could lead to fights over the formula that determines them.

“The Republicans plans would give people the same tax credit, no matter where they lived. That would produce some big winners and losers relative to the ACA,” Levitt said. For instance, the tax credits wouldn’t go as far in rural areas, where premiums tend to be higher.

High-risk pools have been touted by Speaker Paul Ryan (R-WI) and other Republicans as a way to address the problem of people being barred from insurance due to pre-existing conditions, which the ACA made illegal.

“On paper, high-risk pools could work to lower premiums for healthier people and provide adequate coverage to those with pre-existing conditions, it really comes down to the money,” Levitt said.

A number of states operated them before the ACA, but because they were so expensive, most states offered coverage on them to a very small portion of people on the individual market, much smaller than the percentage estimated to be barred from insurance without the ACA’s pre-existing conditions coverage requirements.

“The issue, of course, is the people in the high-risk pool are going to be very expensive, so you’re going to have to have some sort of funding mechanism to subsidize or otherwise pay for the coverage that they get,” said Yevgeniy Feyman, a health care policy expert at the right-leaning Manhattan Institute.

Estimates for the average annual cost for the federal government range from $15 billion to $178 billion, while Ryan’s “Better Way” heath care reform white paper reserved an average $2.5 billion per year to subsidize state risk pools.

Expanding the use of health care savings accounts is a popular idea among GOPers, who have bashed the ACA for imposing new regulations on them. The theory goes that by encouraging a system where people ration for themselves what kind of health care they seek, they won’t spend on unnecessary treatments, which will help curb health spending inflation.

“When you have smart consumers making value-based decisions, you see lower costs and higher quality,” Troy said.

But the devil is in the details here, too. Some GOP plans include health care savings accounts that are extremely regressive. They function as tax shelters that are most beneficial for high-income people, who could afford to save the money, and use it on anything from insurance premiums to gym memberships. Other lawmakers have offered versions that attempt to make them more useful to low-income people, through subsidies or other means.

“The only really viable HSA proposal would have some sort of funding mechanism for low-income people,” Feyman said.

Even as these ideas remain in the hypothetical, already battle lines are being drawn over how much federal funding should be used to prop them up, among the many other policy questions they would bring.

House conservative hardliner David Brat (R-VA), for instance, told reporters Tuesday that he opposed some of the HSA proposals from previous Republican plans, including the legislation authored by Rep. Tom Price (R-GA), the nominee for Health and Human Services secretary.

“When it comes to how much you want to park in the HSAs for providing catastrophic care, that, when it comes, to the safety net, we have to find the Milton Friedman way of doing that,” Brat said. “The Price bill would do tax credits. I am not a fan of those because it keeps the federal government in the center of that.”