GOP Leaders Offer Outlines of Plan To Replace Obamacare

House Republican leaders began laying out what components of an Affordable Care Act replacement could be included in a reconciliation bill at a closed-door meeting Thursday, but stopped short of offering concrete details of what would come after former President Barack Obama’s signature health care law.

Party leaders, including chairs of key committees, proposed repealing the expansion of Medicaid and offering tax credits to help people afford insurance. They also floated ideas on how to pay for the replacement plan, such as capping the tax exclusion currently offered only to employer-sponsored health plans.

House members received a policy brief Thursday, obtained by Morning Consult, that outlines where legislation is headed, though it lacks details about how the plans would be financed and echoes policies that have long been proposed by Republicans.

Actual legislation to repeal and replace Obamacare is likely to come after next week’s President’s Day recess, House Speaker Paul Ryan said, though the exact date is unclear since any bills must still be scored by the Congressional Budget Office. Rep. Bill Flores (R-Texas) said committee work is expected to begin after the recess.

Members leaving the meeting said the repeal aspect of a reconciliation bill should look similar to a 2015 bill that would have repealed the ACA and was vetoed by then-President Barack Obama. The House Freedom Caucus has pushed for a quick vote on that repeal bill.

But many proposals are likely to face pushback from GOP moderates and the far-right flank – such as the issue of Medicaid expansion or how to finance reforms. And many members of the Senate also have their own ideas about how to approach the issue, posing a challenge for any reconciliation bill that aims to avoid Democratic opposition.

In the policy brief, Republicans laid out plans to offer a tax credit to all Americans, which would replace Obamacare’s subsidies and scrap taxes levied on various players in the health industry. But lawmakers are still weighing whether tax credits would be refundable or come as a tax deduction.

The policy brief proposes creating “a new, advanceable, refundable tax credit,” that would be age-based, not income-based, as under the ACA, and would give consumers more freedom, said Ryan, who defended the idea.

Republicans are also weighing whether to cap the employer health care tax exclusion, which allows people to avoid taxes on premiums paid for employer-sponsored health insurance. The Congressional Budget Office estimates the exclusion saves workers about $250 billion annually, and removing it could face pushback from major employers and unions.

“It’s one of several options we’re looking at, and the goal would be to unlock that health care benefit, which is the largest tax break in the tax code, but is only available the way the government tells you you can have it: at work,” Ways and Means Committee Chair Rep. Kevin Brady (R-Texas) told reporters.

Brady added that the hope would be to change that tax credit and “structure it in such a way that we preserve employer-sponsored health care.” Such a move could help finance the cost of individual tax credits, a key part of the GOP plan, though no decisions have been made about the size of tax credits and where to cap the employer tax exclusion.

Rep. Mark Sanford (R-S.C.), who has introduced an ACA replacement plan backed by the conservative House Freedom Caucus, noted that setting the cap could be challenging for some Republicans.

The employer tax exclusion “is a vestige of 1948, and so the idea of changing it I think makes sense,” Sanford said. “The question of having some cap at $30,000 and anything above that and that being a de facto tax increase is something that’s probably going to give a lot of Republicans pause.”

Treatment of Medicaid is also still up in the air. Brady told reporters they’re still discussing block grants and per capita funding, and how to treat states that opted to expand Medicaid.

The policy brief received by members proposes repealing the Medicaid expansion but giving states that chose to expand a transition period where they would still get federal funding for people who have already signed up. Afterwards, a state could choose to maintain that program but would get the lower “traditional” federal funding. States would also get to pick between block grants and per capita funding from the federal government.

Update: This story has been changed throughout to incorporate a policy document obtained by Morning Consult. It was also updated to include Rep. Kevin Brady’s comments on the employer tax exclusion.