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Leaked House GOP plan to replace Obamacare draws immediate fire

Protesters stand outside before New Jersey Rep. Leonard Lance's town hall meeting at Raritan Valley Community College, Wednesday, Feb. 22, 2017, in Branchburg, N.J.
Protesters stand outside before New Jersey Rep. Leonard Lance's town hall meeting at Raritan Valley Community College, Wednesday, Feb. 22, 2017, in Branchburg, N.J. AP

A leaked draft of the House Republican legislation to repeal the Affordable Care Act is drawing strong criticism from health care advocates and Democrats who say the proposal will irrevocably weaken the nation’s health care system.

The draft, first reported by Politico, provides more detail than the previous plan outlines released by House Speaker Paul Ryan.

Most of the proposal comes as no surprise: it calls for ending income-based federal subsidies to help purchase marketplace coverage and wipes out all taxes that paid for the subsidies.

The proposal also ends the individual mandate that requires all Americans to have health coverage, phases out federal funding for newly eligible Medicaid-expansion enrollees and provides more money for states to cover people with costly medical conditions through high-risk pools.

Senate Minority Leader Chuck Schumer said the plan would put insurance companies in charge, make health insurance more expensive and shift costs to the states. He said it would also restrict women's access to health care by defunding Planned Parenthood.

"Give me a break. This isn’t a replacement, it’s a recipe for disaster," Schumer said. "It’s no wonder Republicans are getting an earful back home from constituents who want them to turn back from their dangerous plan to make America sick again. The Republicans ought to rip this plan up and drop their reckless repeal effort.”

As expected, the draft also eliminates funding for the Prevention and Public Health Fund, which would blow a $3 billion hole in state and local public health funding over the next five years and cost the Centers for Disease Control and Prevention nearly $1 billion a year, or about 12 percent of its annual budget.

In a statement, John Auerbach, president and CEO, of Trust for America’s Health, said losing the fund "would threaten the health of American children, families and communities.

To pay for the replacement plan, the proposal would cap the amount of the tax exclusion that individuals receive on high-quality job-based health coverage - much like the ACA's so-called "Cadillac Tax" that Republicans have long opposed.

"This differs from the Cadillac tax in that it hits plan members directly rather than the employer or the plan," according to a blog on Friday by Mercer, a global consulting firm.

Although the draft calls for capping only high-cost plans, "It is easy to speculate that the threshold could come down if this provision alone must pay" for the entire replacement plan, Mercer wrote.

Premiums paid by employees for job-based health insurance aren’t taxed as income, which reduces the amount of payroll taxes and income taxes owed by workers.

Mercer has found that lower-income people would see their effective tax rates increae the most under any caps on the tax break for job-based coverage. Basing the caps on the cost of coverage would likely trigger the tax for older workers, women and those living in high-cost areas, Mercer reported.

In a statement, Tara Bradshaw, spokesman for Alliance to Fight the 40, which opposes the ACA’s Cadillac Tax, said the employer group “would be disappointed in any proposal that contemplates taxing the health benefits of workers.”

“We understand the leaked House document may be an old version so we will wait for the committee to officially release legislation before we comment,” Bradshaw wrote. “We are hopeful the Committee decides to protect the health benefits of 177 million workers who depend on employer-sponsored coverage.”

House Democratic Leader Nancy Pelosi said the tax plan allows "millionaires and billionaires get an enormous tax break" but workers would have to pay taxes on their employer-provided health coverage.

Sen. Ron Wyden, D-Ore., the ranking member on the Senate Finance Committee, said the Republican draft plan "would leave Americans with pre-existing conditions out in the cold and cause devastating cuts to Medicaid that would reduce the social safety net to tatters."

Leslie Dach, director of Protect Our Care Campaign, said in a statement that the proposal "threatens the health care of everyone, no matter where they get their insurance."

“This bill It breaks the promises Republicans have made that no one will lose their coverage or see their health care costs go up and it’s a slap in the face to the millions of people who see their health and family finances at risk. This bill contains the same warmed-over ideas, debunked theories and rejected proposals that Republican have talked about for years. They promised repeal and replace but this is repeal and destroy."

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