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Today’s Presentation Proves House Republicans Still Lack a Real Plan to Replace the ACA

Today’s Presentation Proves House Republicans Still Lack a Real Plan to Replace the ACA

The ACA replacement document circulated by House leadership today is a recycled list of unpopular ideas that lacks necessary details—not a real plan.

House Speaker Paul Ryan meets with reporters in Washington on February 16, 2017. (AP/J. Scott Applewhite)
House Speaker Paul Ryan meets with reporters in Washington on February 16, 2017. (AP/J. Scott Applewhite)

Earlier today, House Republican leaders privately presented to their caucus members a document that they claim is a new plan to replace the Affordable Care Act, or ACA.

Although House Speaker Paul Ryan (R-WI) promised to introduce repeal and replace legislation after the upcoming congressional recess, the document that circulated after the meeting is merely an outline. It largely consists of recycled proposals from Speaker Ryan’s “A Better Way” health care report from last summer, which was itself merely an outline consisting of recycled proposals. And once again, the document lacks enough specifics to fully assess just how much harm it would cause to consumers, providers, and states.

Today’s presentation was intended to reassure panicking and increasingly desperate members of Congress that the majority is making progress on a plan to repeal and replace the ACA. Yet as multiple news reports this week have shown, this display of consensus is a mirage. Members who have pledged to repeal and replace the ACA remain deeply divided, with one report characterizing their internal debates as “open warfare.” This lack of consensus is why their efforts to repeal the ACA have been delayed well behind the original schedule, with little concrete action to show for it.

As the Center for American Progress has previously explained, if enacted, the repackaged proposals included in this document would leave millions uninsured or with worse coverage than under the ACA and would significantly raise many consumers’ out-of-pocket costs.

Conservative proposals are inadequate replacements for ACA protections

Similar to the previous repeal bill passed by Congress through reconciliation and vetoed by President Barack Obama in 2016, this proposal would repeal major provisions of the ACA, including the premium tax credits, certain taxes on the health industry that help pay for the law’s coverage expansions, the enhanced federal payments for Medicaid expansion, and the penalties associated with the individual and employer mandates.

To ostensibly replace these provisions, Speaker Ryan’s outline includes a number of perennial conservative proposals that would fail to maintain the ACA’s coverage gains or provide the same level of financial protections.

First, it would replace the ACA’s premium tax credits with new tax credits. Although the document does not give details on the tax credit amounts, they are likely to be less than under the ACA, which means that many enrollees could end up paying more for coverage. These new tax credits would not be adjusted for income as they are under the ACA, so low-income people would not receive more help. Instead, they would merely be adjusted for age. And unlike under the ACA, the tax credit amount would not be linked to the cost of premiums.

Second, the proposal would not replace the ACA’s cost-sharing reduction subsidies, which are crucial in reducing out-of-pocket costs for low-income people; although the document lacks details, it appears to repeal all of the ACA’s consumer tax credits, including the cost-sharing reductions. Instead, it would expand tax-advantaged health savings accounts, or HSAs, ostensibly to help people afford their out-of-pocket health costs. However, research has shown that HSAs benefit the wealthy significantly more than low-income people because HSAs are only useful for those who have extra money to contribute. Furthermore, because higher-income people are in a higher tax bracket, they can save more in taxes than lower-income people do by putting pretax dollars in a health savings account. In other words, this proposal would replace assistance for low-income people with a tax shelter for the wealthy. Finally, HSAs are generally tied to high-deductible health plans, meaning that this would encourage the proliferation of plans with higher deductibles.

Third, this proposal would repeal the penalties associated with the individual mandate while simultaneously claiming to protect people with pre-existing conditions. However, it does not specify any details on how it would avert a resulting death spiral in the individual market. Speaker Ryan’s previous proposal included a continuous coverage requirement, which would have considerably weakened protections for Americans with pre-existing conditions. Yet rather than elaborating on this requirement, today’s report provides even fewer details than before.

Fourth, the proposal would fund “State Innovation Grants” for states to use for purposes such as running high-risk pools for individuals who cannot afford coverage. Instead of guaranteeing everyone access to the regular insurance market, a high-risk pools approach would quarantine less healthy people into a separate, more expensive market. High-risk pools have consistently failed in the past, and Speaker Ryan’s previous proposals did not provide sufficient funding to sustainably finance them. Today’s document provides no details on funding levels for the State Innovation Grants.

Additional provisions would gut Medicaid and leave millions uninsured

The document released today would also end the Medicaid program as we know it, including the ACA’s Medicaid expansion. In states that expanded Medicaid, it would repeal the ACA’s enhanced federal payment rate for expansion beneficiaries after an undefined transition period. After that period, states would only be paid the standard rate to cover their expansion beneficiaries. This would represent a massive shift in costs to state budgets, likely making it impossible for states to fully maintain Medicaid expansion for the nearly 11 million expansion enrollees. As a result, this approach would roll back Medicaid expansion over time as states would be forced to make cuts to eligibility or benefits.

In addition, the proposal would dramatically change Medicaid’s financing structure, replacing the current entitlement structure—in which the federal government pays a certain share of each state’s Medicaid costs—with either a per-capita cap model or a block grant. These two approaches would cap federal spending on Medicaid on either a per-beneficiary basis or an overall state basis, respectively. The current system protects low-income Americans and gives states flexibility to respond to economic downturns and public health crises.

Although this proposal does not specify the growth rate, in Speaker Ryan’s previous proposal, the level of the per-capita cap or block grant payment would be set to grow more slowly than health inflation; this would massively cut Medicaid spending over time, shifting costs to states and beneficiaries. Although per-capita caps are sometimes marketed as a compromise approach, one analysis of a similar proposal determined that if all states choose per-capita caps, this would cut federal Medicaid per-beneficiary spending by “about 50 percent by the tenth year.” Cutting federal per-beneficiary spending in half is not a compromise—it would cripple the Medicaid program, massively shift costs to state budgets, and likely result in millions of low-income people becoming uninsured. Block grants would have similar effects; past proposals to impose block grants on all states would have cut federal funding for Medicaid by one-third by the tenth year, resulting in an estimated 14 million to 20 million low-income people losing coverage.

Both per-capita caps and block grants would have the same basic effect: Many fewer people would be eligible for Medicaid coverage, and those who are still eligible would face increased costs and have worse benefits. Furthermore, both tactics would compound this proposal’s already-aggressive cost-shifting to states that hoped to keep the ACA’s Medicaid expansion, making that task even more impossible. For example, the document explicitly states that expansion enrollees would not be included when calculating the size of a state’s block grant.


The fact that House majority leaders presented a recycled list of the same unpopular ideas they have been floating for the past seven years simply demonstrates the complete lack of progress they have made on reaching a real, actionable consensus.

They had no replacement plan yesterday, and they continue to lack a real plan today.

Thomas Huelskoetter is the Policy Analyst for the Health Policy team at the Center for American Progress.

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Thomas Huelskoetter

Policy Analyst