BUSINESS

GOP lawmakers to propose tax credits to encourage purchase of health coverage

02/04/2015 01:10 EST | Updated 04/06/2015 05:59 EDT
WASHINGTON - A small, influential group of Republicans in search of a replacement health care law intends to propose tax credits to help lower-income individuals and families purchase insurance, while simultaneously jettisoning the controversial coverage requirement in the current law, officials said Wednesday.

The proposal is part of an outline that Sen. Orrin Hatch, Sen. Richard Burr and Rep. Fred Upton plan to make public on Thursday, and will be an early marker in a series of competing recommendations likely to be floated in advance of an expected Supreme Court ruling in June on the constitutionality of a key part of the law known as "Obamacare."

Hatch, from Utah, is chairman of the Senate Finance Committee, which has jurisdiction over much of the current law. Burr, R-N.C. is a member of the panel. Upton, R-Michigan, chairs the House Committee on Energy and Commerce, which has significant authority over the law in the House.

Aides to Hatch and Burr declined comment. Upton declined to provide any details of the plan, but said on Tuesday the effort is aimed at "being prepared to talk about something we could support" if the court strikes down a part of the law that provides subsidies for millions who purchase coverage under the current arrangement.

Like other alternatives expected to follow, the starting point for the three lawmakers is repeal of the current law, which Republicans voted against unanimously when it passed in 2010 and have tried repeatedly to uproot since then.

Officials familiar with the emerging proposal said it is based in large part on an outline that Hatch, Burr and former Sen. Tom Coburn, R-Oklahoma, outlined a year ago. These officials spoke on condition of anonymity because they were not authorized to speak on the record before a formal announcement.

By repealing President Barack Obama's health care law, the plan would eliminate the government requirement for individuals to purchase coverage and the penalty for noncompliance — a key irritant to Republicans — and a companion mandate for businesses to provide it for their workforce. It also is expected to scrap a requirement for all plans to provide coverage in specific areas, including inpatient settings, hospitalization, maternal and newborn coverage, pediatric care and more.

Their plan will call for tax credits to individuals and families up to 300 per cent of the poverty line to encourage them to purchase coverage, officials said. For a family of four, that translates to annual income of up to $71,400, according to the Department of Health and Human Services website.

To help finance the program, Hatch, Burr and Upton are expected to recommend taxing the value of health insurance plans above $30,000 a year as regular income, the officials added.

In their proposal of a year ago, Hatch, Burr and Coburn proposed retaining a politically popular requirement in the current law that bans insurance companies from imposing caps on lifetime benefit limits. That is expected to be repeated in the revised recommendations, officials said.

As was the case a year ago, the proposal will require insurance companies to permit children up to the age of 26 to remain on their parent's plan, although individual states could opt out of that rule.

Officials also said the alternative will include permission for insurers to sell plans across state lines as we as steps to limit the size of monetary damages that can be awarded in medical malpractice suits. Republicans say both provisions would hold down the cost of health care.

In addition to Hatch, Burr and Upton, at least two other Republican groups are studying possible replacement legislation.

The House voted on Tuesday to require Upton and other committee chairmen to propose alternatives, although it is not clear when they will do so, or even if they will if the court upholds the current law.

A group of Republican senators led by Sens. John Barrasso of Wyoming, Lamar Alexander of Tennessee and Hatch is also studying the issue in anticipation of a court ruling.