Republican Alternative to Obamacare Relies on Repeal

Rep. John Fleming, R-La., once operated 30 Subway restaurants and had a stake in 130 UPS stores, from Mississippi to Texas.
National Journal
Clara Ritger and Sophie Novack
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Clara Ritger Sophie Novack
Sept. 22, 2013, 8:50 a.m.

Des­pite passing le­gis­la­tion in the House on Fri­day to de­fund the Af­ford­able Care Act, Re­pub­lic­ans aren’t com­pletely op­posed to health care re­form.

Some are say­ing the Obama­care re­peal ef­fort must be ac­com­pan­ied by a re­place­ment pro­pos­al. Rep. Dar­rell Issa, R-Cal­if., said last week he wouldn’t re­peal “without vi­able re­place­ments for many of the things that the Af­ford­able Care Act chose to do.”

That’s why the Re­pub­lic­an Study Com­mit­tee in the House last week un­veiled the Amer­ic­an Health Care Re­form Act, a plan de­signed to re­peal Obama­care and re­place it with “mar­ket-based solu­tions.”

It’s not the first ACA al­tern­at­ive the GOP has pro­duced. In June, Rep. Tom Price, R-Ga. in­tro­duced the Em­power­ing Pa­tients First Act. It would provide in­sur­ance-premi­um tax cred­its based on in­come, sim­il­ar to the ACA, but wouldn’t out­law dis­crim­in­a­tion against people with preex­ist­ing con­di­tions. It has been re­ferred to com­mit­tee.

If the le­gis­la­tion sounds fa­mil­i­ar, it’s be­cause Price sponsored it in the last two Con­gresses. It did not make it out of com­mit­tee in either ses­sion.

The House GOP’s latest plan is an om­ni­bus pack­age con­tain­ing meas­ures that failed to gain trac­tion in the past. It has about 30 co­spon­sors. But a ma­jor stum­bling block is that the bill is not draf­ted as a re­form of the cur­rent law; it de­pends on a re­peal that is go­ing nowhere in the Sen­ate.

“Obama­care is not fix­able or re­par­able,” said Rep. John Flem­ing, R-La. who worked with the RSC on the bill. “It’s kind of like a sky­scraper that was built on a ter­rible found­a­tion. You would have to tear it down and start over.”

Re­pub­lic­an Study Com­mit­tee Chair­man Steve Scal­ise, R-La., called the bill a 180-de­gree turn from Obama­care. It would of­fer stand­ard­ized tax de­duc­tions across in­come levels, while the ACA provides tax cred­its on a slid­ing scale, de­pend­ing on age and in­come. Un­der the GOP plan, every­one would be giv­en the same in­come- or payroll-tax de­duc­tion: $7,500 for in­di­vidu­als and $20,000 for fam­il­ies. For low-in­come tax­pay­ers, the de­duc­tion would be up to the amount of their in­come taxes or payroll taxes owed.

The GOP plan would use the cur­rent in­di­vidu­al mar­ket but al­low con­sumers to pur­chase in­sur­ance across state lines. It also would al­low small busi­nesses to pool to­geth­er to lower their risk and re­duce in­sur­ance costs.

The ACA cre­ates a sep­ar­ate mar­ket­place — the ex­change — where in­di­vidu­als are able to shop around for the best deal on cov­er­age. However, in­surers can opt out of par­ti­cip­at­ing in the ACA ex­changes and only choose to serve the private mar­ket, which in some states has res­ul­ted in less com­pet­i­tion than in­ten­ded.

The plans also dif­fer in their treat­ment of low-in­come in­di­vidu­als and those with preex­ist­ing con­di­tions. Un­der the Re­pub­lic­an plan, in­di­vidu­als not cur­rently on Medi­caid or Medi­care would be buy­ing their in­sur­ance on the ex­ist­ing in­di­vidu­al mar­ket. The GOP be­lief is that mar­ket com­pet­i­tion would drive premi­um costs down so there are no pro­tec­tions in place for lower-in­come in­di­vidu­als. While the ACA of­fers states the chance to ex­pand Medi­caid and provides high­er sub­sidies for lower-in­come in­di­vidu­als, un­der the GOP plan, those in­di­vidu­als would rely on their stand­ard­ized tax de­duc­tions.

The Re­pub­lic­an plan, like the ACA, provides some pro­tec­tions for people with preex­ist­ing con­di­tions. But un­like the ACA, which sends these in­di­vidu­als to the ex­change, the GOP plan re­in­states the state high-risk pools and ex­pands fed­er­al sup­port to $25 bil­lion over 10 years, while cap­ping their premi­ums at 200 per­cent of the av­er­age premi­um in the state.

Re­pub­lic­ans who worked on the bill said their pro­posed struc­tur­al changes ad­dress what they see as the biggest prob­lem in the Amer­ic­an health care sys­tem: costs. Among the pro­vi­sions are a cap to the total dam­ages for med­ic­al li­ab­il­ity for doc­tors and a re­peal to the fed­er­al an­ti­trust ex­emp­tion for health in­surers in an ef­fort to break up mono­pol­ies and in­crease com­pet­i­tion in the mar­ket.

To ap­pease con­ser­vat­ives, the GOP bill elim­in­ates tax in­creases, which in the ACA fund the sub­sidies that make cov­er­age af­ford­able for low-in­come Amer­ic­ans. Ac­cord­ing to Rep. Phil Roe, R-Tenn., Scal­ise in­sisted that “you can’t have any man­dates in this bill. You can’t raise taxes. You’ve got to re­form the tax code, but there can’t be any sub­sidies in­volved.”

“That’s pretty lim­ited in what we can do,” Roe ad­ded. “I think with­in those para­met­ers, we came up with a pretty good bill.”

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