Here’s how the GOP’s new health-care plan stacks up against Obamacare

Some “rescue mission.”
Some “rescue mission.”
Image: AP Photo/J. Scott Applewhite
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In February, House speaker Paul Ryan characterized the GOP’s efforts to scrap Obamacare as a “rescue mission” for a troubled system on the brink of collapse. But Republicans’ proposed American Health Care Act (AHCA), released this week, would repeal most of Obamacare and replace it with a much less generous plan tilted heavily toward the healthy and wealthy. If this is a rescue attempt, it’s the equivalent of showing up and kicking the people you want to help in the shins.

With Obamacare, Democrats aimed to expand health coverage to nearly all Americans. And they succeeded, cutting the number of people without insurance in the country to an all-time low.  They did so by giving more low-income people access to Medicaid coverage, and by providing subsidies for blue-collar and middle-class people to purchase private insurance. Everyone is now obligated to purchase insurance or else pay a tax penalty. In exchange, insurers must offer coverage to everyone—healthy and sick alike.

The core problem with AHCA, by contrast, is that Republicans have no animating principle when it comes to health care—aside from knee-jerk hostility toward the plan created by the Obama administration. So they have kept the basic skeleton of Obamacare’s existing system while weakening it piece by piece.

The law’s Medicaid expansion has helped 11 million people gain insurance. But Republicans would begin rolling this back by 2020, cutting Medicaid spending by a half-trillion dollars over the next decade and throwing most of those 11 million people off of their insurance. Medicaid cuts jeopardize coverage for vulnerable populations like children, pregnant women, and the poor. And they would also imperil benefits relied on by the middle class, such as coverage for long-term care for people with disabilities and nursing home care for the elderly.

Republicans would also rejigger Obamacare’s subsidies to disadvantage the poor. Whereas Obamacare doles out subsidies to ensure that health insurance doesn’t consume more than a certain percentage of a person’s income, the GOP plan would provide a flat tax credit based solely on one’s age. This has the effect of taking thousands of dollars in subsidies from low- and middle-income people and giving them to higher earners instead.

This will force many people to pay higher premiums than they do under Obamacare, and could put coverage entirely out of reach for millions of people who currently have subsidized insurance on the law’s marketplaces.  To make matters worse, low-income patients will be on their own to cover out-of-pocket costs under the GOP’s plan, which eliminates the Obamacare program that chips in for co-pays and deductibles.

The Republican plan does keep Obamacare’s coverage guarantee for anyone with a pre-existing health condition. It also retains a version of the individual mandate to carry insurance. However, instead of paying a tax to the government, the Republican plan would let insurance companies charge any enrollees who fail to maintain continuous coverage a 30% premium markup.

This change manages to be both ineffective and inhumane. Young, healthy people—upon whom the insurance market relies—may not be that swayed by the prospect of paying higher insurance premiums sometime in the future. And someone who cannot afford insurance after losing a job or falling upon hard times will get penalized with higher premiums once she’s back on her feet.

Moreover, because this penalty is assessed only when you re-purchase insurance, it creates a huge incentive to just carry on without coverage—especially for the healthy. This bad incentive threatens to destabilize insurance markets and trigger the very health-care death spirals that conservatives have long imagined to afflict Obamacare.

Keep in mind that this mess of a bill is the GOP’s attempt to, as Ryan put it, “bring Obamacare relief as fast as we possibly can” to those allegedly suffering under the law.  Yet the only relief in sight is massive tax relief for the wealthy. The AHCA will repeal Obamacare’s taxes on corporations and households earning above $250,000 by 2018—which leaves the GOP with no plan to fund its own bill. Meanwhile, Republicans would more than double the amount that families can stash in tax-sheltered health savings accounts, again benefiting only those with the means to set aside $13,000 for health spending in a single year.

Perhaps sensing the painful implications of their own bill, Republicans are determined to speed the AHCA from the Capitol basement to a committee vote, with no time for the Congressional Budget Office to assess the bill’s impact on insurance coverage and the deficit. That’s because the CBO score will undoubtedly be a bloodbath, forecasting millions losing insurance and federal deficits imploding. The GOP’s long game is to ram the bill through the House and Senate before lawmakers head home to confront irate constituents over Congress’s April recess.

But the wheels may already be coming off. Conservatives in the House Freedom Caucus are rebelling against GOP leadership for being too generous to the poor. Meanwhile, centrist senators from states that have expanded Medicaid are rejecting any plan that jeopardizes their constituents’ coverage. After seven years of preparation, the GOP’s Obamacare alternative may barely even make it out of the gate.

That’s because the AHCA is utterly pointless legislation. The only rescue mission it carries out is one to rescue congressional Republicans. Having spent years grandstanding against Obamacare, the GOP has been caught flatfooted with little idea of how to really repeal and replace the law. So they’ve slapped together a stingier, less helpful replacement with little regard for the consequences just to back up their anti-Obamacare rhetoric. With the health of millions of people at stake, that’s downright despicable.