The House Just Passed a Bill to Rewrite Obamacare

Congress just took a major first step toward overhauling Obamacare. On a party-line vote of 217 to 213, House Republicans passed the American Health Care Act (AHCA).

The bill, which Republicans billed as a way of repealing and replacing Obamacare, leaves much of the core structure of Obamacare intact, albeit in an altered form. It replaces Obamacare’s insurance subsidies for lower income individuals with new subsidies, disbursed through the tax system, for individuals purchasing coverage on the individual market. The new subsidies would range from $2,000 to $4,000, and would increase with an individual’s age.

Obamacare’s major regulations, including rules prohibiting insurers from discriminating against people with preexisting conditions, would be left in place at the federal level. However, an amendment negotiated with the House Freedom Caucus would allow states to apply for a federal waiver to opt out of those rules, under some conditions.

States could also opt out of Obamacare’s essential health benefits requirements, which require insurers to offer certain categories of health coverage, such as maternity care. It’s not clear, however, whether any states would actually use the waivers, at least as they are currently understood. So far no governors, even from Republican states, have said they would apply for waivers.

The bill would also provide more than $130 billion in funding over the next decade for a state stability fund that states could draw on to fund high risk pools and other programs.

Under the AHCA, Obamacare’s Medicaid expansion would be converted into a system of per capita block grants starting in 2020, although the delay has left some observers skeptical that the rollback will ever happen.

At the time of the vote, there was no estimate of how much this version of the bill would cost, or its overall effect on the deficit. A previous version of the bill without the state opt-out amendment and several other provisions was scored by the Congressional Budget Office as reducing the deficit by $150 billion over a decade. The CBO also said that the earlier version of the bill would likely result in 14 million fewer people with insurance coverage next year, and 24 million fewer covered in a decade. (A leaked estimate produced internally by the White House found an even larger coverage decline.) Under the previous version of the bill, the CBO estimated that premiums would rise by 15 to 20 percent through the end of the decade, relative to current law. In the next decade, premiums would be lower than under current law by about 10 percent, but would still be higher than they are now.

Following passage in the House, the bill will go to the Senate, where it faces long odds in its current form. Republican senators have criticized the bill, with Sen. Rand Paul (R-Kentucky) saying that the changes won by the Freedom Caucus have merely made the bill “less bad.” Other GOP Senators have promised to rewrite the bill. If the Senate changes the bill and passes it, the House and the Senate would then have to renegotiate compromise legislation, which could prove tricky, since the changes that garnered support from House conservatives would likely turn off Senate moderates. It is unlikely, then, that this bill, in its current form, will ever become law.

But it allows House Republicans to claim that they have voted to repeal and replace Obamacare. In a floor speech today, Republican Speaker of the House Paul Ryan said that “A lot of us have been waiting seven years to cast this vote.” Ryan framed the vote as a fulfillment of the GOP’s promise to repeal and replace Obamacare. “This bill delivers on the promises that we have made to the American people,” he said.

Instead, what House Republicans have really done today is vote to keep Obamacare’s essential subsidy and regulations scheme in place, but in a form that is arguably worse than Obamacare itself.