Republican health plan: Lower costs, better care or road to ruin?

WASHINGTON - Top House Republicans say their outline for replacing President Barack Obama’s health care law is a pathway to greater flexibility and lower costs for consumers. Democrats see a road to ruin for millions who’d face lost coverage and higher medical expenses, particularly the poor.

The plan “ensures more choices, lower costs and greater control over your health care,” according to talking points GOP leaders handed lawmakers heading home to face constituents during this week’s recess.

Democrats say the proposal would threaten the coverage of 20 million Americans gained under Obama’s 2010 overhaul. “It’s like rationing” health care, said Rep. Frank Pallone of New Jersey, the House Energy and Commerce Committee’s top Democrat.

The GOP package lacks details, which are a work in progress, and has no estimates of cost or the number of people it would serve. It’s also uncertain whether enough Republicans would support it — a hurdle that’s flummoxed leaders over seven years of trying to dismantle Obama’s law.

The plan’s highlights and each side’s views:

Medicaid

Serves 77 million people, mostly the poor and those with nursing home costs. Benefits go to anyone who qualifies.

GOP lawmakers want states to receive fixed federal sums per beneficiary. These would probably be less generous than today’s payments, which generally cover costs automatically. They’d give more power to states to decide who and which services are covered, and phase out Obama’s expansion for additional lowerearning people that 31 states accepted.

Republicans: The program is unsustainable. Its costs are projected to grow from $390 billion this year to nearly $500 billion in 2022.

Democrats: The GOP will cut Medicaid’s budget, and cash-strapped states can’t make up the difference.

Individual mandate

If people don’t get policies at work or from government programs like Medicare or veterans’ coverage, Obama’s law requires them to buy it privately or pay tax penalties. Millions purchase insurance on online exchanges the statute established, and nearly nine in 10 get federal subsidies.

The GOP would erase the penalty and phase out subsidies, replacing them with a tax credit for everyone not insured on the job or by government programs. The amount is undecided, but it would be larger for older people and not vary by people’s income. It would cover dependent children up to age 26 and be paid monthly. If one’s tax liability is smaller than the credit, the IRS would refund the difference with a check.

Republicans: Unlike Obama’s subsidies for use on exchanges, the GOP tax credit lets people spend it for any state-approved policies. Adjusting the credit for income like Obama’s subsidies, which are higher for the poor, creates disincentives for work. Consumers would curb medical expenses because they could deposit leftover funds into health savings accounts.

Democrats: A boon to better-off people at the expense of poorer consumers, who today get bigger subsidies than those in higher income brackets. Unlike Obama’s subsidies, the GOP credit is not adjusted for local health care costs.

HSAs

People can already contribute money to these taxfavored funds if they also have health insurance with high annual deductibles. Once the deductible is met, money in the funds can be tapped to pay medical bills. This year’s contributions are capped at $6,750 for families.

Republicans would increase contribution limits, perhaps letting them nearly double. Money could be spent for over-the-counter products.

Republicans: Creates incentives for people to shop for medical care and curb spending, which helps control costs.

Democrats: A gift to the rich. Useless for low- and middle-income families already having trouble saving money.

High-risk pools

More than 30 states tried these government-subsidized funds for people whose pre-existing medical conditions made them costly to insure. They had a problematic history, often losing money and with coverage limits and long waits. The GOP would create federal grants that states could use to help finance pools or any effort to stabilize their insurance markets, like helping people pay premiums.

Republicans: An innovative way to let states design programs to help “their most vulnerable patients,” the talking points say.

Democrats: Historically, the pools get less government money than needed to function well. No substitute for Obama’s mandated individual coverage, fines and subsidies.