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Today in Obamacare: The GOP plan keeps evolving — and looking more like ACA

What we know about the newest Republican replacement plan.

Photo by Bill Clark/Getty Images

The newest GOP replacement draft: what we know

We finally have a draft of the latest Republican replacement plan — Sen. Rand Paul couldn't find it, but Politico's Paul Demko did. The new plan is, by and large, similar to the old plan. But there is one key change in the works: Lawmakers are considering barring the highest-income Americans from qualifying for health insurance tax credits.

What it means: Both Obamacare and most Republican replacement plans include financial help for some Americans who purchase coverage on the individual market. These tax credits go toward the monthly premiums for health insurance.

While Obamacare’s credits are based on income, meaning poorer people get more help, the Republican plan would base them on age. The result would be regressive: Wealthy people would get more help buying insurance, while poor people would likely get less assistance.

Legislators are now considering the possibility of an income cap on who can qualify for financial help. This isn't quite the same as Obamacare's income-based tax credits; a low-income American still wouldn't get any more help than a middle-income American. But it would cut out the ultra wealthy. What we don't know at this point: where Republicans want to set that threshold for who is too wealthy to qualify.

Why Republicans are making this change: Republicans generally prefer age-based tax credits to income-based one. The justification is often twofold.

  1. Age-based tax credits are easier to administer. When everyone gets the same amount, you don't have to set up programs to verify income.
  2. Age-based tax credits eliminate work disincentives. Giving more help to people who earn the least, the argument goes, creates an incentive to stay in a lower-paying job and get more help.

That's the case for age-based tax credits. But lately, the case against this type of structure has emerged for two main reasons.

  1. Some Republicans don't like the idea of helping the wealthiest Americans buy insurance. Messaging a tax credit for billionaires like Bill Gates could be a problem. “I’m not real eager to be providing tax credits to the Warren Buffetts of the United States,” Sen. Susan Collins (R-ME) told Politico this week. “I have a real problem with an open-ended tax credit for insurance that would go to very wealthy individuals.”
  2. Universal tax credits are expensive. The more people who receive tax credits, the more funding Republicans will need to come up with. Capping the tax credit will likely reduce the bill's eventual cost score from the Congressional Budget Office.

The Obamacare replacement continues to look more like Obamacare

I've spent months now watching Republican replacement plans evolve from white papers to legislative language. The one thing that has struck me the most: They continue to look more and more like Obamacare.

Over the past few months, we've seen the size of the individual market tax credits go up — not all the way to the level of the Affordable Care Act, but certainly getting closer. The latest change, barring high-income people from receiving tax credits, would bring the GOP replacement even more in line with standing law.

Another place where you see this evolution: Medicaid expansion. Before the election, most Republican replacement plans would have eliminated the Medicaid expansion outright. But Republican governors have spoken out in the program's defense. Govs. John Kasich of Ohio and Scott Walker of Wisconsin are currently working on a proposal that would keep the program intact.

The Republican replacement plans are, to be sure, not a mirror image of the Affordable Care Act. The Kaiser Family Foundation's Larry Levitt has a good list of some of the elements that don't exist under the new proposals:

These are significant policy changes that will affect millions of Americans who rely on the health care law. But make no mistake: The Republican response is evolving, and each draft looks more like Obamacare, not less.

Chart of the Day

EpiPen competitors' surge in wake of pricing debacle


Remember that whole fight over EpiPen's 400 percent price hike this summer? New data from the health records firm AthenaHealth suggests it has cost the drug a whole lot of market share. The numbers show a surge in claims filed for EpiPen competitors in January and February. Read more here from AthenaHealth.

Kliff's Notes

With research help from Caitlin Davis

  • "How a Republican plan to shrink Medicaid could hurt red states": “'We’re very fortunate to have $2.5 billion coming into a state like Kentucky,’ said Dr. Eric Loy, who runs health centers in rural Kentucky that serve many patients on Medicaid. Loy said you can think of the money as an economic stimulus package. ‘If you look before the Affordable Care Act, there were four or five hospitals that were in bankruptcy,’ he said. ‘Now after [expanding Medicaid,] the hospitals have stabilized, the pharmacies have stabilized. Outpatient clinics have stabilized.’” —Dan Gorenstein, Marketplace
  • "Tying ObamaCare repeal to Planned Parenthood worries some in GOP": “Some Republicans say tying Planned Parenthood to the ObamaCare bill could put the repeal at risk. ‘I think we should also separate out the Planned Parenthood issue from the broader healthcare issue. I think healthcare reform is controversial and complex enough without Planned Parenthood. Why put it in it puts this whole exercise more difficult,’ said Rep. Charlie Dent (R-Pa.)” —Jessie Hellmann, The Hill
  • "Employers gear up for next fight after Cadillac tax": “The House Republicans' leaked draft of its ACA replacement plan would limit the tax break to the 90th percentile of current group health insurance premiums. Benefits above that threshold would be taxed. The cap would be the single source of revenue to fund the replacement plan, according to the draft. Republicans lawmakers say the draft is now outdated. Still, given the GOP support, it wouldn't be a surprise to see a change to the tax exclusion in the final plan.” —Shelby Livingston, Modern Healthcare

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