Tax credits may provide rallying point for Senate Obamacare repeal

Senate Republicans are working on a potential breakthrough that could help push through an Obamacare repeal bill – by making insurance subsidies look a lot like Obamacare.

There’s growing support for the idea of pegging the tax credits in the House repeal bill to income and making aid more generous for poorer people. But those moves — while they may win consensus among Senate moderates — are unlikely to sit well with House conservatives.

The financial assistance in the House bill “is just not robust enough to make sure that low-income individuals can actually afford a [health] plan,” said Sen. John Hoeven (R-N.D.). “If you bring those income limits down for people who really need the help, you can give them more help.”

Though the senators are intensely divided on other issues in the repeal package, the tax subsidies are emerging as one of the few areas of agreement within the Senate GOP as they start to write their own Obamacare repeal bill. The goal is to provide more assistance to very low-income Americans than the House did, according to several Republican lawmakers and congressional aides.

Details haven’t been sketched out, but lawmakers are already downplaying any resemblances to Obamacare.

“Because we’re talking about a health care bill, virtually anything we do is going to have some elements of some sort of artifact of Obamacare,” said Sen. Thom Tillis (R-N.C.), who supports the emerging tax subsidies plan. “I keep telling people … don’t get caught up in appearances, let’s fix the problem.”

The House bill increased tax credits by age. Senators instead want to embrace Obamacare’s model of basing premium assistance on income. Fearing that the House plan punishes people just below Medicare eligibility, they would also boost support for people aged 50 to 64 who stand to see the largest price increases under Obamacare repeal.

Sen. John Thune (R-S.D.), the third-ranking Senate Republican and one of the members of a 13-person working group working on the health bill, floated the general framework of a plan in March. Thune’s idea has gained attention since the House bill passed.

An early draft of the proposal would phase out the tax credits — just like Obamacare and the House plan, these are all advanced refundable tax credits — at 621 percent of the federal poverty level.

The Senate is just getting started on its Obamacare repeal work. A Republican working group met Thursday to discuss insurance market reforms, one of the many areas of policy the GOP wants to address.

Tax credits are the first area where there is likely to be a significant difference between the House and Senate, but it is too early to know whether it will be the biggest divide. Thornier issues, including Medicaid expansion and insurance market reforms, lie ahead.

“The key is putting it all in a package that could get 51 votes,” said Tillis.

House Republicans have been concerned that the Senate would push the repeal bill so far to the center that it wouldn’t be able to get back through the House. Any differences between the House and Senate plans would have to be sorted out in a conference or by one chamber passing the other’s bill.

The House health care plan would provide financial assistance to a broader spectrum of people than the proposal being discussed by the Senate. The House tax credits wouldn’t start to phase out until an individual made $75,000, or a married couple, $115,000, or 800 percent of the federal poverty level. And older people got more help than younger people to account for their higher health costs.

In contrast, Thune’s proposal would phase out the tax credits at a lower income — 621 percent of the federal poverty level or $74,907 for a family of four — but those credits would be larger.

The details will matter here: providing tax credits cost money and will have to be set off by other savings.

Lawmaker such as Sen. Bob Corker (R-Tenn.) back the idea of making bigger payments to a smaller group of people.

“I very much support lowering” the subsidy eligibility, he said. “Instead of going to 800 percent, getting it to a level where people who are lower income, lower middle income can actually afford to purchase health insurance. To do health care reform and yet people may not have the means to actually purchase health insurance policy doesn’t seem to me to take us anywhere.”

The Senate plan would also provide additional assistance to people between the ages of 50 and 64, who stand to see significant premium hikes under repeal because insurers will be able to charge them more. It’s still unclear what the additional help will look like. But it will be important to the House.

The House included some funding in their bill that lawmakers hoped the Senate would use to add financial help for the pre-Medicare population.

“We added money to this bill, which the Senate will complete the job, of making sure that the tax credits for those people who are in their older cohorts, 50s and 60s, with a much larger tax credit to reflect those changes, the fact that their health care costs more,” House Speaker Paul Ryan said Sunday on ABC’s “This Week.”

Sen. Lamar Alexander (R-Tenn.), a key player in the Senate discussions, said there has been a “good deal of discussion” on the Thune proposal but it hasn’t been a working group topic yet. “We’re working on Medicaid and lowering premiums right now. Tax credits is coming up.”

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