What's likely to change in the GOP bill to repeal Obamacare

Under fire from all sides, House Republican leaders have agreed to make changes to their bill to repeal and replace Obamacare.

 

The legislation, known as the American Health Care Act, is currently being reworked to give states more flexibility under Medicaid and to help older Americans afford coverage on the individual market. The full House is expected to vote on the bill on Thursday, the seventh anniversary of former President Obama signing the Affordable Care Act into law.

To appease conservative lawmakers, House Speaker Paul Ryan and Republican leadership are looking at giving states the option of requiring able-bodied Medicaid recipients to work, a provision Republicans have long wanted. Right-leaning members have been especially irked since Obamacare expanded Medicaid to 11 million able-bodied adults without children.

 

The Trump administration is already moving in this direction through the Medicaid waiver system. Health & Human Services Secretary Tom Price and Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, sent a letter to governors Tuesday saying they are open to allowing states to add work requirements for Medicaid recipients -- as well as premiums and co-pays. Granting such waiver requests from the states would be a major departure from how the Obama administration oversaw Medicaid. It rejected attempts by states to add a work mandate.

Republicans argue that work requirements better prepare participants to transition off government assistance and into jobs. But consumer advocates say that many Medicaid recipients who can work already do. Requiring more enrollees to get jobs would make it harder for those who face hurdles to employment -- such as transportation or child care costs -- to get health care coverage.

Also, the legislation would give states the option to receive federal Medicaid funding as a block grant. The current legislation calls for giving states a set amount of money per enrollee, known as a per capita cap system. Both would be a major change from the current way Medicaid is funded, which is open-ended federal support tied to state spending on the program.

Under a block grant, states would receive a fixed amount of federal funding each year, regardless of how many participants are in the program. This would reduce federal support for Medicaid even more since the funding level would not adjust for increases in enrollment, which often happens in bad economic times.

These changes to Medicaid would likely further reduce the number of people covered under the program. Adding requirements will likely dampen enrollment, while reducing federal support means states will likely have to tighten eligibility rules, cut benefits or reduce provider payments.

In its assessment of the original legislation, the Congressional Budget Office predicted 14 million fewer people would be covered by Medicaid in 2026, and federal funding would be cut by about 25%.

Separately, lawmakers have been getting hammered over how the legislation would affect Americans in their 50s and early 60s who purchase plans on the individual market. So Republicans are now looking to enhance the tax credits for this group. The GOP's tax credits are not as generous as Obamacare's subsidies for lower-income enrollees.

"We believe that we do need to add some additional assistance with people in those older cohorts," Ryan said on Fox News Sunday.

The American Health Care Act would give refundable tax credits of $3,500 to those in their 50s and $4,000 to those in their early 60s. (Americans over age 65 are eligible for Medicare.) But Obamacare's subsidies take into account both income and cost of coverage, which is typically much higher for an older consumer. So the Republican tax credits are expected to cover less of the premium for these enrollees, particularly those with lower incomes.

The original bill also would allow insurers to charge these folks more than younger consumers, causing premiums for older enrollees to spike. The CBO projected that premiums would be 20% to 25% higher for a 64-year-old in 2026 than they would be under Obamacare.

All told, a 64-year-old making $26,500 would pay $1,700 for coverage in 2026 under Obamacare, thanks to the subsidies, according to CBO. But under the GOP plan, his annual premium would be $14,600 since the tax credit would not offset as much of the cost. The difference would likely drive many older consumers out of the individual market, CBO predicted.

The legislation has drawn the ire of influential groups, such as the AARP. The advocacy group released a statement Friday that it intends to inform its 38 million members how their representatives voted on the bill.

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