The chairman of the House Republican caucus has said that he opposes the current Republican plan to repeal and replace the Affordable Care Act. The statements by Rep. Mark Meadows (R-N.C.) to CNN focused on a bill drafted in early February and leaked last week. At issue was how health care premiums paid by individuals will be treated by the IRS.
The draft version of the bill contained a provision that replaced Obamacare’s subsidies with a refundable tax credit for money paid in health insurance premiums to private plans. The credit would vary between $2,000 for people under 30 and $4,000 for taxpayers aged 60 to 64. Premiums paid toward employer-sponsored health plans would not be eligible for the credit.
“What is conservative about a new entitlement program and a new tax increase? And should that be the first thing that the President signs of significance that we sent to the new President?” Meadows said. “A new Republican president signs a new entitlement and a new tax increase as his first major piece of legislation? I don't know how you support that -- do you?”
Meadows argued that the tax credits would increase government expenditures on health insurance and complained that they were not focused on the needy. “So the headline is that the GOP is reducing subsidies to needy individuals when in fact, the growth of the taxpayer-subsidized reimbursements will actually increase. The total dollars that we spend on subsidies will be far greater,” he said. “So you can be a millionaire and not have employer-based health care and you're going to get a check from the federal government -- I've got a problem with that.”
Rep. Mark Walker (R-Ala.), chairman of the Republican Study Committee, also opposes the bill in its current form. In a statement, Walker said, “The draft legislation, which was leaked last week, risks continuing major Obamacare entitlement expansions and delays any reforms. It kicks the can down the road in the hope that a future Congress will have the political will and fiscal discipline to reduce spending that this Congress apparently lacks.”
Sources within the GOP told CNN that the current version of the bill is similar to the leaked version opposed by Meadows and Walker. They also said that tax credits are not a new idea for health care reform.
“Tax credits have long been a part of Republican health care plans, including the one authored by now-Secretary (Tom) Price that had broad support from members of the (Republican Study Committee) and Freedom Caucus,” an unnamed GOP aide said in a statement.
The argument is over the distinction between tax credits and tax deductions. Tax deductions reduce the amount of taxes owed by reducing taxable income. On the other hand, tax credits are applied directly to the tax owed and reduce it on a dollar-for-dollar basis. If the tax credit is refundable, the credit can also be used to increase tax refunds. Under the current GOP plan, taxpayers would receive refundable tax credits for buying health insurance that could be refunded if they had no tax liability.
Freedom Caucus members support a vote on a repeal bill that was vetoed by President Obama in 2015, considering the current bill weaker than the earlier one that did not include a replacement plan. “We didn't promise the American people that we would repeal it, except we're going to keep Medicaid expansion,” said Rep. Jim Jordan (R-Ohio). “We didn't promise the American people except we're going to keep some of the tax increases in it. We certainly didn't promise the American people we're going to repeal it but we're going to start this whole new entitlement called advanced refundable tax credits,” Jordan said. “I think this is the wrong thing to do.”
The problem with the Freedom Caucus strategy is that the GOP could repeal Obamacare with a simple majority using the budget reconciliation, the same way the Democrats passed the legislation, but later votes on a health care reform package would be subject to Democrat filibusters. Republicans would need a minimum of eight Democrat votes for cloture, meaning that future reform bills would probably have even more unpopular aspects to divide the GOP.
The current balance of power in the Senate is 52 Republicans to 48 Democrats. This means that, even with a repeal using the budget reconciliation, no more than two Republicans can defect and the bill still pass. Republicans have a 22 vote margin in the House.
President Trump and the Republican leadership favor a comprehensive approach that combines repeal with a replacement plan. The bet is that Republicans like Meadows and Walker won’t vote to preserve Obamacare, even if they have reservations about the Republican version of reform.
“You’re a Republican, you’ve been running to repeal Obamacare, they put a repeal bill in front of you,” hypothesizes Doug Badger, a Republican health policy advisor, in the Wall Street Journal. “Are you going to be the Republican senator who prevents Obamacare repeal from being sent to a Republican president who is willing to sign it?”
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