WASHINGTON — House Republican leaders, speeding to put finishing touches on plans to dismantle the Affordable Care Act, are preparing to embrace an approach they have long criticized: income-based aid to help Americans afford health coverage.
Until now, the Republicans 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 should be based entirely on people’s ages and not their incomes.
But legislation to repeal the health-care law, drafts of which are expected to emerge as early as Monday evening, will propose refundable tax credits that would hinge on earnings as well as age, according to three sources familiar with the most current thinking of the House GOP leadership.
The shift reflects two desires: to limit the cost of tax credits to the government, and to try to avert a precipitous drop in the number of Americans who are insured. It also highlights the difficulty Republicans face trying to fulfill their promise to repeal Obamacare. One the one hand, Republicans are trying to satisfy conservatives, who have been rallying for years to eliminate what they see as the entitlements that the ACA created. On the other, they are increasingly worried that pushing too many Americans off insurance rolls would prompt a political backlash.
President Donald Trump, although he campaigned on a promise to repeal the ACA, has said publicly he does not want any Americans to lose coverage.
The drafts will culminate two months of intense work by a pair of House committees to try to carry out the GOP’s ardent desire, ever since the ACA was adopted seven years ago without Republican support, to replace the law with a more conservative set of health-care policies. The shift on tax credits is an early glimpse at what the legislation will contain.
It is unclear what the size of the tax credits will be compared to the ACA’s subsidies.
This big pivot, developed by the Ways and Means Committee under the guidance of House Speaker Paul Ryan, R-Wis., stems from a combination of problems that were arising with the idea of age-only credits that would have been available to any individual or family buying insurance on their own, no matter how affluent. Estimates from congressional budget analysts and the White House’s Office of Management and Budget kept showing that the credits would be both too small to provide enough help to lower-income people and too expensive overall for a GOP determined to slash federal spending that the ACA has required.
According the sources, including one House member briefed on details of the Ways and Means Committee’s work, this shift reflects the treacherous political and substantive challenges that Republicans face in trying to convert anti-ACA talking points into an actual plan, now that they have an ally in the White House.
While the number of Americans who can afford health insurance has never been the priority for the GOP that it is for Democrats, Trump has made clear that he is sensitive to any changes that would strand large numbers of people who gained coverage under the ACA. In addition, the House leadership is trying to thread its way through a minefield of conflicting priorities even within the chamber’s GOP conference.
To win enough support among House Republicans, the bill has to address concerns of both conservatives concerned about the cost of the overhaul and worries that it might in effect enshrine a new federal entitlement, as well as more moderate members who want to ensure that their constituents retain access to affordable health care, including those who received Medicaid coverage under the ACA.
Even as the two committees working on aspects of an ACA replacement, Energy and Commerce, along with Ways and Means, are determined to begin considering legislation this week, the sources said that final work on them was still underway over the weekend and Monday. Lauren Aronson, a spokeswoman for Ways and Means, which is drafting the tax provisions of the bill, declined Monday to comment on specific provisions, saying the bill was still being revised.
The change in thinking about tax credits has emerged since Friday, when a White House meeting chaired by Budget Director Mick Mulvaney and attended by key GOP congressional figures was called to finalize key provisions.
“We are now at the culmination of a years-long process to keep our promise to the American people,” said AshLee Strong, a spokeswoman for Ryan.
Certain details of the new approach to tax credits remained unclear, including whether they would be restricted to people under a certain income threshold – perhaps $75,000, according to the House member briefed on the plan – or whether the subsidy would taper off after a specific income level but not end entirely. Two sources said age would remain one factor in determining the size of a person’s credit.
At the same time, the shift to consider income could create a potentially difficult ripple effect for Republicans, who regard a reduction in the federal government’s role in health care as a central reason to abandon the sprawling 2010 health care law. One motivation for the GOP thinking that credits could depend only on age was that the Internal Revenue Service would no longer have needed to verify the eligibility of people for financial help, as it has for ACA subsidies. If income is factored in, the IRS would still need to be involved.
The goal of lessening the government’s role also is behind another major change from the ACA that the Republican plans envision: getting rid of the federal requirement on insurers to include a minimum set of “essential benefits” in health plans sold to individuals and small businesses.
Conservatives have aired sharp concerns about the inclusion of refundable tax credits that can be advanced to insurance providers through the year, calling them too similar to the ACA’s tax subsidies. They have also balked at revenue-raising measures that had been floated in previous proposals, including retaining the ACA’s “Cadillac tax” on especially generous employer-provided insurance plans, as well as capping the exclusion from taxation that employer-plan premiums now enjoy.
The member of Congress who was briefed on changes to the proposal over the weekend said that drafters were not only moving toward capping the tax credit, but were also exploring how to avoid taxing employer-provided plans for the first time — something that could provoke a fierce response from conservatives. Instead, the member said, the cost of the scaled-back tax credits could be offset by savings gained by rolling back the ACA’s Medicaid expansion over the coming years.
Multiple people familiar with GOP plans say that the text is on track to be released as early as Monday evening, setting up Wednesday votes by the Ways and Means and Energy and Commerce Committee, which has focused primarily on changes to Medicaid and other aspects of the law.
As of Monday afternoon, nonpartisan congressional budget scorekeepers were still evaluating the GOP bills, and it was not clear when they would finish.
At a close-door GOP conference meeting last week, several House Republicans expressed concerns that the committees might start to work on the legislation without a complete fiscal assessment. To be eligible for special budget rules known as “reconciliation” – allowing bills to pass in the Senate by a simple majority – the legislation cannot incur a net cost after its first 10 years in effect.