Former Obamacare Adviser: House GOP Plan A 'Major Step Backward' For Health Coverage

The long-expected Republican House plan to "repeal and replace" the Affordable Care Act was unveiled late Monday. Voting on the bill is expected to begin Wednesday.

John McDonough, professor of public health at Harvard's T.H. Chan School of Public Health and a former director of the group Health Care For All, joined Morning Edition to discuss the plan. McDonough was also a Senate adviser in drafting the Affordable Care Act, or Obamacare.

Bob Oakes: Good morning, John, and thanks for being on Morning Edition.

John McDonough: Nice to be here with you, Bob.

BO: The new plan replaces Obamacare subsidies and mandates given to health care policyholders with tax credits — tax credits phased out for higher income individuals or households. What do you make of that?

JD: Well, the bottom line is that to achieve some major tax cuts, the legislation that's moving will result in loss of health insurance coverage for somewhere between 10 and 20 million lower- and lower-moderate income Americans. And so it represents a major step backward in terms of moving toward everybody in the United States having full access to decent and quality health insurance coverage.

BO: I want to know how you come by that number — 10 to 20 million fewer people having health care coverage, because Republicans haven't put out that number yet, of course. Is it because in order to get a tax credit you have to lay out money first in order to buy a health care plan — money that it might be tough for some low income people to come up with?

JD: The big difference is that the tax credits — and they are tax credits in Obamacare that are called subsidies but they are tax credits — are based on people's income. So the lower your income, the less money you have, the deeper your subsidy.

The Republicans are proposing to create just a flat tax credit. That's the same for everybody whether you're more affluent or whether you're lower income. The main reason that people don't have health insurance is because they don't have the money to be able to purchase it. And so when you replace income-based subsidies with a flat only-age-adjusted tax credit, you're going to leave out the lion's share of people who are getting insurance through Obamacare, who need help because they don't have enough money.

BO: The GOP plan eliminates a provision that has become unpopular with a lot of people — the penalty for not buying health insurance — but it also at the same time creates a mandate: if you let your health insurance lapse, you pay a stiff penalty in terms of higher premiums when you buy a new policy — could be 30 percent higher. What do you make of that?

JD: So the most unpopular part of the Affordable Care Act is what's called the individual mandate. It's not a mandate it's a tax penalty when you don't have health insurance. The new penalty that the Republicans are proposing to create in this new bill is actually a larger penalty: the maximum penalty under the ACA this year is $695 for not having coverage. And if you want to buy a policy at $7,500 then their penalty if you've had a lapse in coverage would equal about $2,200. So it's actually they're saying, ‘like us because we're repealing the mandate,’ but they're putting in place a much more significant financial block for people who are trying to get back into having coverage.

BO: What might this mean for people with preexisting conditions that the new plan supposedly covers insurance companies will not.

JD: Insurance companies will not under this proposal be able to deny you coverage because of a preexisting condition. However, the coverage that you get is likely to have much more significant cost-sharing, as an example, and will also have far fewer required benefits that Obamacare requires you to have — things like, for example, prescription drugs, coverage for mental health and substance abuse. All of those things will be eliminated as requirements to be included in health insurance coverage under the Republican plan, which will be a real problem for Americans who have chronic illnesses.

BO: You were deeply involved in the health care debate in Massachusetts years ago, before we crafted Romneycare, which eventually on a federal level became Obamacare. How will this new GOP plan, if it passes on Capitol Hill, impact health care coverage here in this state?

JD: So most of what we did in Massachusetts in 2006 had to be changed to conform with the Affordable Care Act when it took effect. So the risks that people are facing the other 49 states are also very much at risk and at play here in Massachusetts. And so if this were to get through — and that's a big question mark if this will get through — but if this were to get through then there will be some substantial and vitally important political decisions that will be need to be made by Governor Baker and the Legislature here in Massachusetts.

BO: Partly because this plan will cut federal Medicaid aid to states such as Massachusetts, which is what officials here fear — a cut in federal subsidies?

JD: Well this plan would over time create massive reductions in the federal commitment to low income coverage through the Medicaid program. So that is a huge risk for the state financially; the state’s already feeling pressure on the Medicaid budget. And this would certainly both increase the financial pressure and increase the risks to low-income people who require that program for their very important coverage.

BO: You hinted at it: Do you think this plan is going to be a tough sell on Capitol Hill?

JD: I think it already is. If I had to bet money, I'd say it probably will get through the House and then it will face very, very tough selling in the U.S. Senate. And that's really the place to watch in terms of what's going to happen to this.

BO: John McDonough, professor of Public Health at Harvard's T.H. Chan School of Public Health, thanks a lot for speaking to us on Morning Edition.

JD: Thank you, Bob.