Conservatives Pan GOP Obamacare Replace Plan as `Welfare'

(Bloomberg) -- An analysis written for an influential bloc of U.S. House conservatives derides a key component of a new Republican plan to replace Obamacare, faulting a provision offering tax credits to individuals who wouldn't otherwise have access to health insurance.

Prepared for the Republican Study Committee, a group of about 170 House conservatives, the staff report called the refundable tax credits “a Republican welfare entitlement.”

“Writing checks to individuals to purchase insurance is, in principle, Obamacare,” says the memo, which was obtained by Bloomberg News.

Republicans Monday unveiled their long-awaited legislation to replace former President Barack Obama's Affordable Care Act, proposing to phase out key parts of the health care law over several years as they try to break through a stalemate between moderates and conservatives in their party.

But conservative Senator Rand Paul of Kentucky also blasted GOP leaders' new draft on Tuesday morning. He wrote on Twitter that it is “Obamacare Lite. It will not pass.” Conservatives, he added “are not going to take it.”

Read more: How Wall Street sees Obamacare replacement plan

The Republican Study Committee's staff analysis of the proposal said there are "major concerns" with the legislation's continuation of Medicaid expansion, and a lack of clarity on how language preventing the use of the tax credit money for abortions can be guaranteed.

The Energy & Commerce and Ways & Means committees are scheduled to hold initial hearings on the legislation as early as Wednesday.

Fundamentally Grounded

The staff analysis says the legislation contains the same tax credits as a Feb. 10 draft criticized by many conservatives. However, it also includes a phase out of the credit for individuals earning more than $75,000 ($150,000 for joint filers). This would reduce the value of the credit by 10 percent of the amount by which an individual's income exceeds the income threshold, the evaluation says.

While that allows more choices for individuals, and is more patient-centered, it "is fundamentally grounded on the idea that the federal government should fund insurance purchases," the staff report says.

The review also notes the new plan maintains the expansion of Medicaid "as-is through the end of 2019." After that the federal government would start to reimburse states at a lower rate for new enrollees. That means the expansion would continue to grow for three years, then phase out over 5 years.

But such an ongoing expansion -- even for three years -- means the Republican proposal would "continue to contribute to the worsening of the federal and state budgets by incentivizing states to maintain expansion or to initiate new expansions and leaving the federal government picking up the majority of the bill," the staff memo says.

"It is doubtful that a future Congress will allow the reduction in enhanced payments to occur," the memo says.

The committee staff said the reason for the delay "is to avoid the political consequences and pain of unwinding expansion, especially in Republican-held states with upcoming gubernatorial contests," and "prevents state budgets from incurring major new costs with little runway."

"It is unlikely that any future Congress will have a stronger political will in terms of reforming Obamacare entitlements than the sitting Congress – thus it is unlikely that the expansion repeal will ever be implemented in reality," the evaluation warns.

The staff analysis also notes the bill attempts to provide "guardrails" intended to prevent the tax credits from being used to pay for abortions, though "it is unclear if the language can survive" reconciliation rules under Senate requirements.

There was no immediate comment on the evaluation from the chairman of the committee, Representative Mark Walker of North Carolina. He said earlier that he would be meeting with the group's steering committee on Tuesday about the bills.

To contact the reporter on this story: Billy House in Washington at bhouse5@bloomberg.net.

To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, John Voskuhl