A nonprofit publication of the Kentucky Center for Public Service Journalism

Republican health plan proposal wouldn’t affect Medicaid until 2020, still awaits budget office review

House Republicans’ bill to replace the Patient Protection and Affordable Care Act has “a more conservative vision for the nation’s health-care system, replacing federal insurance subsidies with a new form of individual tax credits and grants to help states shape their own policies,” Amy Goldstein, Mike DeBonis and Kelsey Snell report for The Washington Post.

“Under two bills drafted by separate House committees, the government would no longer penalize Americans for failing to have health insurance but would try to encourage people to maintain coverage by allowing insurers to impose a surcharge of 30 percent for those who have a gap between health plans,” reports the Post. “The legislation would preserve two of the most popular features of the 2010 health-care law, letting young adults stay on their parents’ health plans until age 26 and forbidding insurers to deny coverage or charge more to people with preexisting medical problems.”

Vice President Mike Pence and House Speaker Paul Ryan (Speaker.gov Photo)

On the Medicaid expansion, which has been especially important in rural areas, the bill would allow states that expanded Medicaid “to continue getting federal funding as they would have under the ACA, until 2020,” The New York Times reports in a side-by-side comparison of the bill and current law. “Federal funding for people who become newly eligible starting in 2020 or who leave the program and come back, however, would be reduced. The bill also proposes capping federal funding per enrollee, based on how much each state was spending in fiscal year 2016.”

After 2020, Medicaid would become a block-grant program.

“States would no longer receive an open-ended federal match,” USA Today’s Maureen Groppe reports. “They would be given a set amount based on the number of enrollees.” As health-care costs rose, states would have to cut services or find other sources of revenue to support them.

For private insurance, “The tax credits outlined by the Ways and Means Committee’s portion of the legislation incorporate an approach that Republicans have long criticized: income-based aid to help Americans afford health coverage,” reports the Post. “Until now, the GOP 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 with which they planned to replace the subsidies should be based entirely on people’s ages and not their incomes. But the drafts issued Monday proposed refundable tax credits that would hinge on earnings as well as age—providing bigger credits for older and poorer Americans.”

The bill would cut taxes on wealthy, eliminating “a 3.8 percent investment tax on the well-to-do that Democrats had used to help finance the health-care law, as well as a 0.9 percent surcharge on wages above $250,000,” Brian Faler reports for Politico.

Also, the bill would eliminate the $500,000 cap on the amount of salary that insurance companies can deduct as a business expense, “so the more insurance companies pay their executives the less they will pay in taxes,” Hohmann reports.

But the bill still has no score from the Congressional Budget Office, so “We don’t know how many people will lose coverage or how much this might blow up the deficit over time,” Hohmann points out. But some conservatives see a big price tag coming; Sen. Rand Paul of Kentucky called the bill “Obamacare lite.”

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The Rural Blog is a digest of events, trends, issues, ideas and journalism from and about rural America, from the IRJCI, based at the University of Kentucky. The Institute for Rural Journalism and Community Issues is an extension program for rural journalists and news outlets. It takes no positions on issues and advocates only for strong news coverage, responsible commentary and things that make them possible, such as open-government laws. For more information see www.RuralJournalism.org.

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