With Obamacare again facing a major threat at the Supreme Court, an influential group of Republican lawmakers is offering a proposal that they see as a replacement to the president's health-care law.
The plan, presented by Sens. Richard Burr (R-N.C.) and Orrin Hatch (R-Utah) and Rep. Fred Upton (R-Mich.), is in part intended to help manage any potential chaos from a pivotal Supreme Court ruling expected later this year that could invalidate subsidies for federal-run health insurance exchanges across the country.
A ruling against the Obama administration would result in an estimated 8.2 million people losing health insurance, according to Robert Wood Johnson Foundation projections. But there is division among Republican lawmakers whether they should step in to rescue the Affordable Care Act if the insurance subsidies are overturned.
Meanwhile, Obama administration officials haven’t said how they might try to blunt the damage if the Supreme Court rules against the administration, and they have declined to say whether they’re drawing up contingency plans.
The GOP plan outlined by congressional aides Wednesday is similar to one that the senators offered last year, which the GOP never united around.
Aides who worked on the plan said they see some key differences this time with the GOP now in control of the Senate. Hatch is chairman of the powerful Senate Finance Committee and they now have House buy-in from Upton, the House Energy and Commerce Committee chairman. Further, some Republicans see an opportunity to push forward their reforms if the Supreme Court rules that subsidies in federal-run health insurance exchanges are illegal.
There’s no actual timetable yet for when lawmakers could write a bill or hold hearings on the plan, and it’s unlikely to move ahead of the Supreme Court’s decision on subsidies in the King v. Burwell case.
Still, health policy aides for Burr, Hatch and Upton said this plan could be the basis for the party’s long-term vision for health reform. Here's a breakdown of how this group would repeal and replace Obamacare:
No more individual mandate
This plan repeals the individual mandate, a mechanism that ACA proponents said was necessary to help end insurer discrimination against people's pre-existing medical conditions. The mandate was included in the law to ensure that enough healthy people bought insurance to help offset the costs of covering sicker patients, who can no longer be denied coverage.
A pre-existing condition ban, with a catch
This GOP plan also prevents insurers from charging sicker patients more, but with an important caveat. Under this plan, the lawmakers envision a one-time enrollment period to get adjusted to this new coverage scheme. After that, as long as you are continuously enrolled in coverage -- and that includes switching insurance if you get a new job, for instance -- insurers can't consider your medical history. But if you let your coverage lapse for a couple of months, insurers are allowed to take this into account.
A cap on tax preference for employer health plans
Both Republicans and Democrats have been wrestling with how to deal with the once-limitless tax exclusion for employer-sponsored health insurance plans. The ACA does it with the Cadillac tax, which is a 40 percent excise tax on the cost of coverage that exceeds a certain threshold -- starting in 2018, that threshold is $10,200 for an individual plan and $27,500 for a family plan.
The Burr-Hatch-Upton plan instead caps the tax exclusion at $12,000 for an individual and $30,000 for family coverage, and amounts above that would be taxed as regular income. That's a significant and more generous change from last year's GOP plan, which would have limited the exclusion to 65 percent of the average health plan. The average employer plan for an individual in 2014 cost $6,025 and the average family plan cost $16,834, according to the annual Kaiser Family Foundation/HRET survey.
The GOP plan also eliminates the ACA's employer mandate requiring businesses with 50 or more full-time employees to offer health insurance or pay a penalty.
Less generous subsidies
The ACA offers exchange subsidies to families of four earning up to 400 percent of the federal poverty level (FPL), or about $95,000. This GOP plan instead provides a refundable tax credit to purchase insurance to people earning up to 300 percent FPL. The tax credits are adjusted by age and family status, and unlike the ACA, aren't pegged to the cost of insurance premiums.
The tax credits are also available to anyone under the poverty line, whereas the ACA expanded Medicaid eligibility to this group (in states that opted for the expansion). Under the GOP plan, people enrolled in traditional Medicaid would also have the option of receiving the tax credit instead, and the massive ACA expansion of Medicaid would be undone.
Other ACA features survive
Insurers would no longer be required to cover a set of 10 essential health benefits as they are under the ACA, but some ACA elements are kept in place. Young adults can stay on their parents' health plans until they turn 26, and the ban on lifetime coverage limits remains. Instead of allowing insurers to charge older customers no more than three times the amount what they charge younger customers for the same plan, that ratio is widened to 5:1, which means cheaper premiums for younger enrollees. The GOP plan also keeps the ACA's $700 billion in Medicare cuts, as previous House budgets have done.
There are no official estimates yet of what this would cost or how many people it would cover. But the plan's authors claim it will be "competitive in terms of coverage" when compared to the ACA and cost less.
In the five years since the ACA became law, the party still hasn't agreed on how it would replace the ACA if given the chance because, frankly, it hasn't had to politically.
But with the Supreme Court case and the presidential race looming, this could be a starting point for that discussion. The next question is how serious the party takes this.