House GOP Health Plan Would End Individual Mandate, Focus on Tax Credits, Savings Accounts

A House Republican plan to “repeal and replace” the Affordable Care Act (ACA) would retain some popular features but undo a core tenet designed to make it work financially: a requirement that all Americans buy health insurance.

The plan, to be formally offered today, is outlined in a 37-page policy document that House Speaker Paul Ryan, R-Wisconsin, said reflects the first consensus plan to replace the ACA with something market-driven and consumer focused. The healthcare plan is perhaps the most anticipated in a series of House Republican policy proposals released under the umbrella, “A Better Way.”

The ACA, the plan states, “should empower patients and support innovation.” Instead, “Obamacare has limited choices for patients, driven up costs for consumers and buried employers and healthcare providers under thousands of new regulations.”

The House GOP plan offers a blend of old and new ideas—including some of the few specific healthcare concepts proposed by presumptive GOP Presidential nominee Donald Trump. The plan includes the businessman’s call to “get rid of the artificial lines” that preclude consumers from purchasing coverage licensed outside their home state. A much less-detailed healthcare policy document Trump issued earlier this year supported tax credits and health savings accounts (HSAs).

So far, there are no estimates of how much the plan will cost or how many of the estimated 21 million Americans who have gained coverage would remain insured. Ending a requirement that Americans buy healthcare coverage would unravel the financial calculus of the ACA: keeping premiums lower for older, sicker consumers is impossible without participation from younger, healthier ones.

In a press conference this morning, Ryan was realistic about the plan’s chances before the president leaves office, but said it shows voters what a revamped healthcare program could look like under “a Republican president.”

“We’re not going to repeal Obamacare when the current president is a guy named Obama,” Ryan said.

While Democrats will likely take aim at elements that include raising the age of eligibility for Medicare or per-capita payments for Medicaid, there are elements to address some of the fallout of the ACA: consolidation in healthcare, the rise of narrow networks, and the lack of availability of physicians willing to accept Medicaid payments. Broadly, these pieces are addressed with an increased focus on tax credits and HSAs to put more consumers back in the commercial market.

Other elements of the plan include:

· Repealing Obamacare, which the plan says “cannot be fixed.” The House GOP does call for continuing to allow adult children to stay on parents’ plans up to age 26, a highly popular tenet of the ACA that most experts believed would survive.

· Expanding Tax Credits and Health Savings Accounts (HSAs), as vehicles to provide health coverage for all willing to pay. Notably, there would be no income limits or requirements to use an exchange, and the GOP would bring back bare-bones plans that have been largely phased out under the ACA. While the plan states a need to protect employer-based coverage for those who have it, tenets call for increasingly portable financial tools that decouple health coverage from the job, which the plan says would have the effect of increasing full-time employment.

· Medicaid expansion would be capped at those states that have already signed on. Federal matching dollars for Medicaid would be overhauled in favor of a per capita allotment (an idea first floated by President Bill Clinton in 1995, the plan notes), to reduce incentives to run up spending and encourage efficiency. A transition period would phase in this change, and states could charge premiums and create work requirements for non-disabled adults.

· Pre-existing conditions would not be a reason to be denied coverage, but those who fail to remain covered continuously could face financial barriers to getting coverage if they return to the market. These consumers might be forced into state-run “high risk pools,” which historically have struggled to keep rates affordable. To address this, the GOP would direct $25 billion to support them. The plan also prohibits sudden cancellations for patients who get sick.

· Promotes wellness programs that were called for in the ACA but have suffered setbacks due to rulings from the Equal Employment Opportunity Commission.

· Create pooling mechanisms for small businesses or individuals to buy coverage together.

· Caps tax breaks for employer based coverage; the plan claims it is “far cry” from the “Cadillac tax” in the ACA that has been delayed.

· Changes to Medicare include gradually raising the eligibility age to 67 and calling for beneficiaries to move to a “premium support” model that lets seniors choose a health plan, with Medicare funding a portion of it.

While many of the elements have been discussed within GOP policy circles for years, the call to end the “individual mandate” would eliminate a policy that famously began within the conservative Heritage Foundation. It was a feature of Massachusetts healthcare reform, when former GOP Presidential nominee Mitt Romney was that state’s governor.

The concept of the “individual mandate” is rooted in the idea of personal responsibility—that no one should expect hospitals or other taxpayers to foot the bill for a catastrophic illness or injury if one is not willing to take reasonable steps to pay for healthcare.

Despite the rejection of the individual mandate, other pieces of the House GOP plan more toward the goal of personal choice—both for consumers and providers. The conservative embrace of HSAs, for example, is rooted in the idea that the more Americans understand what healthcare costs, the more they will do to be judicious in their spending—and take better care of themselves. This concept is seen in support for letting employers reward healthy behavior and an easing on limits for setting premiums based on actuarial factors.

The House GOP plan also has a host of features to dismantle several entities that set policy and pricing, notably the Independent Payment Advisory Board in Medicare and the Center for Medicare and Medicaid Innovation.