Republicans have said they want to move quickly to craft a replacement plan after successfully repealing Obamacare. But it is not clear how they will pay for a key part of that replacement, tax credits to pay down health insurance.
Republicans have not released a replacement plan for repealing Obamacare. However, some Republicans have introduced legislative text that give a sense of the direction the GOP wants to go.
For instance, Rep. Tom Price, the Georgia Republican who President-elect Trump nominated to be secretary of the Department of Health and Human Services, has a plan. Price’s Empowering Patients First Act includes tax credits that are pegged by age instead of income so a person who is younger would get a smaller tax credit than someone older who presumably has higher healthcare costs.
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The Republicans are thinking of leaving Obamacare’s regulations in place because they fear that a bill altering them would die in a filibuster. They are sure they can use a procedure for avoiding filibusters if they target only the law’s tax and spending provisions.
This course could cause the insurance exchanges, already in trouble, to collapse entirely. That’s because the Republican bill would scrap the individual mandate while keeping Obamacare’s requirement that insurers treat sick and healthy people alike.
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Repealing Obamacare could take months and developing replacement health insurance plans could take years, senior Republican aides in the U.S. Congress said on Thursday, discouraging talk of a quick end to the program after President-elect Donald Trump takes office on Jan. 20.
“We are talking a matter of weeks, in two months – but not a matter of many months” for Congress to pass a repeal, one aide said, adding that Republicans “certainly” hope Trump will sign the repeal into law in the first half of 2017.
Congressional Republicans are consulting with the Trump transition team on when the effective date of the repeal should be, another aide said. Setting it a few years out will provide lawmakers time to debate whether and how to replace some elements of the Obamacare law.
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Hundreds of insurers selling health plans in Affordable Care Act marketplaces are being paid less than 2 percent of nearly $6 billion the government owes them for covering customers last year with unexpectedly high medical expenses.
The $96 million that insurers will get is just one-fourth of the sum that provoked an industry outcry a year ago, when federal health officials announced that they had enough money to pay health plans only 12.6 percent of what the law entitles them to receive.
This time, the Obama administration made no public announcement.
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Federal regulators Thursday night extended the midnight deadline for Affordable Care Act insurance by four days, as consumers fought to get through to call center operators and log onto Healthcare.gov to buy insurance that takes effect Jan. 1.
“Nearly a million consumers have left their contact information to hold their place in line,” Healthcare.gov CEO Kevin Counihan said in a statement late Thursday. “Our goal is to provide affordable coverage to everyone seeking it before the deadline, and these two additional business days will give consumers an opportunity to come back and complete their enrollment for January 1 coverage.”
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Donald Trump’s White House and congressional GOP leaders are coalescing around an agenda focused on slashing taxes and repealing Obamacare early next year, a blueprint that could potentially avoid an intraparty clash over infrastructure investment early in Trump’s presidency.
On Wednesday morning, incoming White House Chief of Staff Reince Priebus said that the GOP will concentrate on budgetary issues and health care reform in the first nine months of the year. That largely overlaps with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell’s focus on tax reform and Obamacare repeal and suggests the party will spend much of its energy and momentum on those two issues.
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Next year, taxpayers will fork over nearly $10 billion more to cover double-digit premium hikes for subsidized health insurance under the ACA, according to a study from the Center for Health and Economy. The study estimates that the cost of premium subsidies under the ACA will rise from $32.8 billion currently to $42.6 billion. Under current law, “you get a premium increase, you pour more money in,” said economist Douglas Holtz-Eakin, founder of the Center for Health and Economy. “The concern is that will feed more premium increases.” If the health care law is repealed next year, it is still yet to be seen what the remaining carriers participating in the ACA exchanges will do in 2018. It is also unclear how supportive Congress will be for subsidies going into a system slated to disappear.
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Republicans are searching for a way to capture savings from repealing Obamacare in a piggybank they could later use to fund a replacement.
It’s not clear how or if such a maneuver would work, but if Republicans are successful, it could overcome the tricky political problem of paying for whatever health reform they try to put in the Affordable Care Act’s place.
The idea is to bankroll an Obamacare replacement that would start several years down the road with funds derived from repealing the law itself. A repeal bill Congress passed early this year, and President Obama vetoed, would have saved $516 billion over a decade, according to the Congressional Budget Office.
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It didn’t take long for Republican leadership in both houses of Congress to get over the shock of winning the election last month and start gaming out a repeal plan. The details remain under discussion, but House speaker Paul Ryan, Senate majority leader Mitch McConnell, and Vice President-elect Mike Pence (who is working closely with Ryan and McConnell on repeal) are already coalescing around a rough legislative framework. The plan might be summed up as: repeal, delay, replace. More precisely, Republicans plan to repeal most of the law, delay the implementation of most of that repeal for at least two years—and figure out what to replace it with in the interim.
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In new research for the Mercatus Center, I argue that one of the central aims for the ACA replacement should be to reduce government bias toward comprehensive insurance. Policymakers should instead focus on realigning incentives, removing government mandates and regulations, and directing government financial support to consumers instead of to insurers and providers. Doing so would lead consumers and providers to make decisions that lead to greater value from the massive amounts of money we spend each year on health care.
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