The House Republican ObamaCare Alternative Just Moved to the Left

The House Rules Committee posted a manager’s amendment to the American Health Care Act, H.R. 1628, late Monday evening that contains changes to the bill that were negotiated separately with some House conservatives and moderates to attract more support. The bill is currently scheduled to go to the floor for a vote Thursday.

It’s unlikely that Speaker Paul Ryan (R-Wis.) and House Republican leaders have the votes they need to get to 216, but there’s still plenty of time for arm-twisting. The sense right now is that it’s close — really close. Unfortunately, most of the substantive changes needed to get House Republicans to support the American Health Care Act are being given to moderate members of the conference, not conservatives.

The Good in the Manager’s Amendment

• The American Health Care Act, as it was marked up by three committees, allowed states to continue to expand Medicaid under ObamaCare during the transition period through January 1, 2020. This was concerning because it incentivized states to expand the program, creating a very real scenario that the effective date for the repeal of Medicaid expansion would be extended, much like the Medicare "doc fix." Under the manager’s amendment, states that haven’t expanded Medicaid through ObamaCare won’t have the ability to do so after December 31, 2017. While the extension of the effective date of repeal remains a concern, this change does mitigate it, though not much.

• The manager’s amendment, beginning October 1, 2017, allows states the option to establish work requirements for able-bodied adults who are on Medicaid. While some states will take advantage of the work requirement, others, probably larger and more left-leaning states like California and New York, likely won’t.

• The American Health Care Act reforms Medicaid by providing states with per capita allotments. The manager’s amendment would give states the option to receive a block grant of Medicaid funds. Any block grant plan would be subject to the approval of the Department of Health and Human Services. This gives states more flexibility over Medicaid dollars.

• The effective dates for the ObamaCare taxes targeted for repeal under the American Health Care Act are moved up to January 1, 2017 from January 1, 2018 in the manager’s amendment. The effective date of ObamaCare’s Cadillac tax, which is delayed, not repealed, is moved back from January 1, 2025 to January 1, 2026.

The Bad in the Manager’s Amendment

• New enrollees in Medicaid expansion will be grandfathered, allowing states to receive expansion funding for these enrollees under ObamaCare as long as they remain in the system.

• The American Health Care Act ties annual inflation growth of Medicaid to CPI-U Medical, but the inflation rate for certain recipients will be tied CPI-U Medical plus 1 percent. This will reduce overall savings from the repeal of Medicaid expansion.

• The bill creates the American Health Care Implementation Fund and gives it $1 billion to implement various parts of the bill, including the cost-sharing subsidies and refundable tax credit. Reports are that this ostensibly creates a $75 billion to $80 billion reserve fund, funded by a reduction in the deduction of medical expenses to 5.8 percent of their income from 10 percent. The Senate will use the reserve fund to create larger tax subsidies for Americans between the ages of 50 and 64 who purchase coverage on the nongroup market.

• New York Republicans are getting a carve-out in the bill that shifts Medicaid costs from counties to the state. While this isn’t necessarily on par with the infamous "Cornhusker Kickback," which got then-Sen. Ben Nelson (D-Neb.) onboard with ObamaCare, it does carry the same backroom deal making that help Democrats ram ObamaCare through the Senate.

There are some positive changes in the manager’s On net, though, the American Health Care Act has moved to the left. It’s unclear that there will be another score from the Congressional Budget Office before the Thursday’s planned vote, but if there is one, the deficit reduction in the original score will undoubtedly decline.