In leaked ACA replacement Republicans would drop tax credits for the wealthy

The latest draft would phase out Medicaid expansion for low-income adults and convert to block grants for the states.
By Bill Siwicki
03:29 PM
leaked ACA replacement

House Republicans plan to halt premium tax credits for wealthier Americans in their secretive healthcare plan to replace the Affordable Care Act, according to a revised draft of their plan obtained by Politico.

The revised draft is dated February 24, coming after another draft, dated February 10, that was leaked last week. In that draft, the Republicans focused on refundable premium tax credits starting in 2020 based on age. That differs from the Affordable Care Act’s income-based credits. In the Republican plan, according to the leaked draft, people under 30 would receive $2,000, while people over 60 would get $4,000. The amount of the credit would not vary based on income.

However, according to the newly leaked revised draft, there would be a higher-end cutoff of the tax credits. The Republican plan, under this revised draft, still would phase out the Medicaid expansion to low-income adults that is a highlight of the ACA. Further, the plan would change Medicaid from an open-ended entitlement to block grants of funds from the federal government to individual states. 

All of the ACA taxes that finance premium subsidies would be repealed under both leaked versions of the draft bill, as would the aforementioned Medicaid expansion as well as the ACA’s Medicare benefit enhancements. To replace these elements of the ACA, the Republican bill, according to the leaked drafts, would create a new tax on employees for the value of top employer health benefits. The tax would come in for plans at and above the 90th percentile of current premiums.

Very conservative congressional Republicans oppose refundable tax credits that exceed what people have paid in income tax; they decry these as a new entitlement. However, cutting off credits at the high end may soften them when it comes to tax subsidies going to the wealthy who do not need them.


House Speaker Paul Ryan wants an ACA repeal bill passed as early as next week and eyes having Congress pass it through the expedited budget reconciliation process on a party-line vote before Congress adjourns for the Easter holiday.


However, all of these details come from leaked drafts and Democrats and industry organizations have not yet had a chance to review any formal House Republican bill. Republicans promised an open, inclusive process with lots of time for input. To pass the ACA, Democrats held dozens of committee hearings and required nearly 14 months. And there were many Republican amendments.

Yesterday, House Republicans did not let Republican Sen. Rand Paul or House Democrats see the latest version of their bill.

Twitter: @SiwickiHealthIT
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