Policy primer: What's in the GOP’s healthcare plan

Republicans are quickly pushing ahead with their plan to repeal and replace ObamaCare. 

The GOP measure, called the American Health Care Act (AHCA), has advanced out of two House committees and is on its way to a floor vote in a matter of weeks despite taking fire from conservatives, some centrists and a range of healthcare groups.

The measure repeals many core aspects of ObamaCare, including the subsidies to help people buy insurance, the extra federal funds for the expansion of Medicaid after 2019 and the law’s taxes and the mandates. In its place would be a new system centered on a new tax credit to help people afford insurance.

Here’s a rundown:

The GOP bill repeals ObamaCare’s subsidies and Medicaid expansion.

The AHCA repeals ObamaCare subsidies that help offset the cost of insurance, as well as the expansion of Medicaid after 2019. In their place, the GOP bill would provide a new tax credit, ranging between $2,000 and $4,000 per individual, increasing with someone’s age and family size.

The new tax credit would be substantially smaller on average than ObamaCare’s financial assistance. The new tax credit would be 36 percent, or $1,700, less on average than under ObamaCare, according to the Kaiser Family Foundation.

Experts say the combination in the bill of rolling back the Medicaid expansion, capping federal Medicaid payments and providing less financial help in the tax credit would result in a significant number of people losing coverage.

An analysis by the Brookings Institution on Thursday found “at least 15 million people will lose coverage” under the GOP plan. A separate study from Standard & Poors put the figure at between 6 million and 10 million people losing coverage.

Republicans counter that they are not trying to compete with ObamaCare’s coverage numbers, which rely in part on the mandate that people either get covered or pay a fine.

White House Office of Management and Budget Director Mick Mulvaney said on MSNBC Wednesday that “insurance is not really the end goal here.” Instead, Republicans are looking at if people “can afford to go to the doctor,” he said.

The Republican bill includes protections to people with pre-existing conditions, while repealing ObamaCare’s mandate.

The GOP bill would keep many provisions from ObamaCare that protect people with pre-existing conditions, like the ban on insurers denying them coverage or charging them more.

A change, though, is that the measure also eliminates ObamaCare’s mandate for people to have coverage, which Democrats used to try to encourage healthy people to enroll and balance out the costs generated by the sick.

Republicans have long denounced the mandate as infringing on personal freedom.

In its place, the GOP bill would allow insurers to charge people 30 percent more on their premiums for a year if they had a gap in coverage and then enrolled again. The idea is to incentivize people to maintain coverage so they don’t face that situation, though some experts worry that healthy people would be discouraged from signing up by the 30 percent surcharge, increasing instability in the market. 

The new tax credit would be structured differently than ObamaCare’s, providing less help to low-income people. 

Both ObamaCare and the new GOP plan are centered on a refundable tax credit to help people buy insurance. That has led to conservative attacks that the GOP bill is “ObamaCare lite.”

But there are also crucial differences between the ObamaCare system and the Republican proposal. ObamaCare’s tax credits are based on income, so low-income people get more help. The GOP credits are based on age, not income, with older people receiving more assistance.

Avik Roy, a leading Republican health policy expert, sharply criticized the GOP bill for failing to adjust up its tax credits for low-income people. 

“The critical mistake of the AHCA is its insistence on flat, non-means-tested tax credits,” Roy wrote in Forbes. “The flat credit will price many poor and vulnerable people out of the health insurance market.”

Republicans counter that adjusting the tax credits based on income disincentives people to work; such a system, they say, punishes people who end up earning more by reducing their tax credits. 

The Congressional Budget Office has previously found that ObamaCare results in a reduction in work hours equivalent to two million jobs over a decade.

The bill repeals ObamaCare’s taxes.

The GOP measure repeals almost all of ObamaCare’s taxes. That includes a tax on medical device companies that Republicans say cost jobs, and a health insurance tax that insurers say drives up premiums. 

The one controversial exception is that the bill would bring back ObamaCare’s “Cadillac tax” on generous health plans after 2025 in order to prevent the bill from adding to the deficit in that decade.

The measure also repeals a pair of ObamaCare taxes on high-earners, which Democrats emphasize will result in a massive tax cut for the wealthy.   

The plan would restructure Medicaid to cap federal payments. 

Besides dealing directly with ObamaCare, the GOP bill would restructure Medicaid, which provides coverage for about 70 million poor, disabled and elderly people.  

The proposal would cap federal Medicaid payments to states for each enrollee, a change from the current, more open-ended federal commitment.

Republicans refer to the plan as an entitlement reform that is necessary to get control over a massive government program and rising federal spending. Democrats warn that the idea would lead to cuts that harm enrollees.  

The left-leaning Center on Budget and Policy Priorities projected that Medicaid costs would rise 0.2 percent faster each year than the proposed caps would rise, resulting in a $116 billion reduction in federal Medicaid payments over a decade, in addition to rolling back ObamaCare's expansion of Medicaid.