Revealed: Leaked 106-Page Draft Shows How Republicans Will Propose to Replace Obamacare

Posted: Feb 27, 2017 10:25 AM

Earlier in the month, House Speaker Paul Ryan told reporters that Republicans would soon introduce tangible legislation to uproot the failing Obamacare status quo and replace it with a better system. GOP leadership released an outline in mid-February that hinted at the approach they were planning to adopt -- and now a more detailed draft proposal has leaked into the press. With all the necessary caveats in place about how the document is by no means a finalized piece of legislation, it provides the most comprehensive and specific glimpse to date at Republicans' long-awaited Obamacare alternative. Writing at CommentaryNoah Rothman sees a lot to like for conservatives:

[This would-be] bill eliminates most of the onerous, market-distorting provisions contained within the Leviathan ACA. It eliminates many of the subsidies that reduce the incentives for those who are currently outside the labor force to remain there, and it kills the individual mandate to purchase insurance. Based on age, not income, the plan would establish tax credits to help uninsured patients afford private insurance plans. The plan scales back or eliminates some of ObamaCare’s most burdensome tax provisions, including Medicare surtax on wages and self-employment income. It eliminates federal Medicaid expansion by 2020, but preserves capped payments to states based on the number of enrollees in states that expanded Medicaid already. Most encouragingly, the plan includes grants to states that would allow them to experiment with programs designed to increase coverage rates or reduce premiums.

Then again, he argues, other elements appear to partially mimic or tweak Obamacare's existing provisions. Conservative healthcare wonk Avik Roy also offers a 'mixed verdict' analysis of the roadmap laid out in the leaked document. He notes that Republicans appear to have abandoned the flawed "repeal and delay" strategy, which would have rolled back large swaths of Obamacare via reconciliation, then punted the replacement piece to an undetermined later date. The problem with this idea was that major Obamacare regulations would still have stayed in place even after the law's (admittedly faulty) structure to keep the entire system from rapidly collapsing had been gutted. The resulting market disruptions would have been catastrophic. The introduction and installation of a sustainable alternative plan to supplant Obamacare, as opposed to just creating a yawning Obamacare-less void, is both politically necessary and much more responsible from a public policy perspective. The GOP plan returns regulatory decisions about what viable coverage plans must cover back to the states (an important departure from Obamacare's federally-driven mandate bonanza), and gives insurers a wider berth for charging younger consumers lower premiums than older ones. These reforms would help create a wider array of available coverage, including cheaper options, and would help stabilize the risk pools that Obamacare is ruining.

In place of Obamacare's federal marketplace and direct taxpayer subsidies, the GOP solution implements a regime of tax credits to assist Americans afford insurance plans. Roy argues that the way in which the draft GOP plan structures the credits is flawed, and also analyzes the proposed dollar amounts -- which range from $2,000 to $4,000 annually for most people. The proposal also entails critical reforms to Medicaid (through a form of flexible block-granting) and Health Savings Accounts (roughly doubling the amount of money individuals and families can save for medical expenses tax-free). It also pumps billions into a modernized version of high risk pools, under which states can innovate and invest to help cover the medical expenses of their most vulnerable citizens. The new law would still prohibit insurers from denying coverage to people with pre-existing conditions, so long as those people have maintained continuous coverage. This strongly incentivizes consumers to obtain coverage without imposing an individual mandate tax (which is repealed under this plan), and while disincentivizing people to wait until they develop a health problem or injury before finally enrolling (by permitting insurers to charge substantially more to people who seek to sign up after a coverage gap).  

Overall, there are disputes and details that will undoubtedly still need to be ironed out.  That's what debates, negotiations and legislative mark-ups are for.  I'd be quite surprised if the eventual legislative language were identical to the draft document, which is a useful and important starting point.  Meanwhile, knee-jerk accusations from some conservatives that the plan amounts to "Obamacare lite" are unfair; the core of the troubled law is removed and replaced with a system that massively curtails burdensome federal mandates and taxes, and offers much more flexibility and discretion to the states. These changes, if adopted, would represent a welcome paradigm shift.  That said, it's not as if federal spending, mandates and revenue-raisers will all magically disappear.  Helping tens of millions of people have access to affordable coverage is a complex policy challenge.  Republicans' draft proposal seeks to end the current law, then provide needed solutions in a less intrusive and market-distorting way than the current sputtering reality under Democrats' failed scheme.  Finally, with media chatter about town hall meetings on healthcare all the rage these days (with appalling displays like this receiving scant attention), I'll leave you with a few points: (1) Conservatives should go out of their way to attend these events and make phone calls to their members' offices in order to help stiffen GOP spines in the face of intense, and sometimes coordinated, liberal opposition.  (2) Republicans ought to be prepared to defend their positions with compassion and confidence, as quite a few have been doing.  (3) Beware of  fake news stories about members "skipping" or "fleeing" town hall meetings that they'd never organized or committed to in the first place.  (4) How's this for a narrative disruptor?

UPDATE - Does President Trump have different plans -- that would leave much more of Obamacare unscathed -- being drawn up by...John Kasich?