(Photo: Reuters/Mike Segar)
If Republicans are successful at replacing the Affordable Care Act, or "Obamacare," what would they replace it with? Two bills introduced in the U.S. House provide clues to what health care reform might look like under Republican government.
One of the bills was developed the Republican Study Committee, a group of House Republicans that tends to represent the more conservative wing of the Republican Party. That bill, H.R. 3121, American Health Care Reform Act of 2013 (AHCRA), was introduced last September by Rep. Phil Roe (R-Tenn.). The other bill, H.R. 2300, Empowering Patients First Act of 2013 (EPFA), was introduced by Rep. Tom Price last June. Both Price and Roe are former doctors.
The bills have many aspects in common, and Price is a cosponsor of Roe's bill. Both bills begin by repealing the ACA, then replace the current law with alternatives aimed at expanding health coverage and lowering health costs.
The central feature of the EPFA is a refundable tax credit for low income Americans to purchase health insurance and a tax deduction for health insurance for others.
The credit or deduction is for those not already receiving some other form of government provided health care, such as Medicaid, Medicare, or a Veteran's Administration plan.
Those earning up to 200% of the poverty level would get a full credit equal to the average insurance rate and tied to inflation. The credit would then be on a sliding scale up to 300% of the poverty level. Insurance companies can get an advance payment so the credit can be used right away.
Those above 300% of the poverty level and not on some other government health plan would not have to pay taxes on their insurance premiums. The deduction would be capped at an amount equal to the average for employer health plans.
The EPFA provides the tax deduction to the individual, rather than, as in current law, through an employer. This means that all Americans would get the same tax deduction, regardless of whether or not they get their insurance through their employer. Additionally, health plans would stay with the individual. So, health insurance purchased through an employer would stay with an individual even if they left their job or moved to another state.
The bill's efforts to reduce health care costs would mostly come from increased competition in the health insurance marketplace. Companies would be able to sell policies across state lines. Small businesses and other associations would be able to enter insurance pools across state lines. And, states would be provided grants to establish high-risk pools to keep insurance costs lower for everyone else.
The EPFA also seeks to save money by reforming lawsuits in the health care industry and eliminating certain types of waste and fraud in Medicare and Medicaid.
Douglas Holtz-Eakin, a conservative economist and former head of the Congressional Budget Office, estimates that Price's bill would lower federal spending by $479 billion over 10 years.
Like the EPFA, the AHCRA would include tort reform, state grants for high-risk pools, allow insurance to be sold across state lines, and provide support for health insurance premiums through the tax code.
The AHCRA would provide a single deduction, $7,500 for individuals or $20,000 for families, to purchase health insurance. That deduction would be the same for everyone, regardless of how much they spend. So, if a family spends $15,000 on health insurance, they still get a $20,000 deduction. (This is to eliminate an incentive to spend more on health insurance.)
The deduction would also be applied to both the income tax and payroll taxes. This means that lower income workers, who usually do not pay income tax but do pay payroll taxes, would still benefit.
The amount that individuals can contribute to a health savings account would also be increased.
Both bills would prohibit federal funds for abortion coverage, except in cases of rape, incest and the life of the mother.
To learn more about the Affordable Care Act, check out "Obamacare 101: What You Need to Know About the Complex Law."