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Freedom Caucus backs ACA ‘repeal and replace’ that counts on private health care

Sen. Rand Paul (R-Ky.) during a Senate Small Business Committee hearing in Washington on Jan. 24. (Aaron P. Bernstein/Bloomberg)

House conservatives, frustrated by GOP leadership’s slow and tentative approach to replacing the Affordable Care Act, have gotten behind legislation by Rep. Mark Sanford (R-S.C.) and Sen. Rand Paul (R-Ky.) that would repeal most of the law and move millions of Americans Health Savings Accounts (HSAs).

“We were tired of waiting,” said Rep. Jim Jordan (R-Ohio) at a Wednesday press conference on the legislation, “and that’s why we said: Let’s go. Let’s go now.”

The plan, endorsed by the House Freedom Caucus, would end the ACA’s Medicaid expansion, de-couple health insurance from employers, offer a tax credit of up to $5000 to fund HSAs, and eliminate most regulations on what health plans must cover. Insurers would be able to sell policies across state lines; regulations that mandate birth control coverage would be nixed.

“What if 30 percent of the public had Health Savings Accounts?” said Paul. “What do you do when you use your own money? You call up doctors and ask the price… if you create a real marketplace, you drive prices down.”

Part of the rationale for backing this: Paul’s bill exists, and the frequently rebranded plan from GOP leadership does not.

“There seems to be a coalescing around principles; I don’t think it’s gotten deep in the weeds about what it will actually include yet,” Sanford in an interview, criticizing the larger GOP effort.

Sanford was among the Freedom Caucus members who met Monday night, with a 15-minute visit from Vice President Pence — who, as a member of the House, had been among the most active conservatives. The caucus members, who do not take any position unless 80 percent of them come to an agreement, left the meeting in agreement that this year’s repeal bill needed to be “at least as good” as the 2015 budget reconciliation measure that was passed by Republicans and blocked by then-President Barack Obama.

“The 2015 resolution is the floor,” said Rep. Scott Perry (R-Pa.) at a roundtable for reporters Tuesday. “We all approved of that in 2015. There should be no reason we can’t approve of that again.”

The Sanford-Paul legislation is designed to build on that floor, counting on repeal to leave in place provisions that allow young people to stay on their parents’ insurance, while counting on people left out by repeal to use their HSAs to pay for private plans. It eliminate the ACA’s essential health benefit requirements, end antitrust laws for health-care providers “to increase competition and drive down prices for consumers,” and turn Medicaid into a block-grant program for states.

Like every possible GOP replacement of the ACA, the Sanford-Paul bill would allow customers to buy health insurance plans across state lines. The idea has an iffy record of success; a 2016 study by Kaiser Health News found that Georgia legalized interstate insurance sale in 2011, and found no takers even as the ACA went into effect.

The bill’s main replacement for the coverage expanded by the ACA, and now at risk, is a reform of health savings accounts that would allow them to be used for premiums and an expanded menu of preventive care. It would also offer a tax credit, “up to $5,000 per taxpayer, to fund the plans,” though money in the HSA would be not be allowed to fund elective abortions.

That tax credit also sets up a fight between conservatives and their leadership. In interviews about what he might introduce, Speaker of the House Paul Ryan has said that a “refundable tax credit” would be created to help consumers pay for plans, an echo of the subsidies currently available to people who purchase plans in ACA-created exchanges. On Wednesday, Paul made it clear that conservatives favored a smaller tax credit, one that “not everybody” would get.

“It’s not refundable in the sense that if you didn’t pay taxes you don’t get money,” said Paul. “A new refundable tax credit is a subsidy by another name.”

By getting out ahead of the Republican leadership, House and Senate conservatives hope to include these ideas in any discussion of ACA repeal. But their first step is holding the line on the 2015 budget reconciliation. Heritage Action has joined them in frustration that the 2015 version of repeal can’t be passed right away.

“Republicans in Congress and President Trump promised to fully repeal Obamacare over and over again,” the group wrote in a memo this week. “The longer Congress delays, the less likely Obamacare repeal will ever happen, and the closer we are to the 2018 election.”

And at the Heritage-sponsored reporter roundtable Tuesday, a few Republicans veered into cynicism about their leadership’s strategy. The idea of “repairing” the law, a frame advocated by messaging guru Frank Luntz, struck them as completely unacceptable.

“If we don’t repeal Obamacare, then what was our fight about for the last six years?” asked Rep. Raúl R. Labrador (R-Idaho). “If our party was only opposing it because it was proposed by Obama and Democrats, the base is going to leave the party.”