It will be difficult to count how many people would get coverage under congressional Republicans’ Obamacare replacement because new tax credits may not be enough to prevent catastrophic medical events, according to the nonpartisan Congressional Budget Office.
The CBO statement Tuesday comes as the GOP plans to quickly draft a replacement for Obamacare early next year after moving to repeal the controversial healthcare law. But the budget office was worried about what types of plans a state could offer since protections under Obamacare would be repealed.
Obamacare created tax credits for people on the individual market, which is for those who don’t get health insurance through their jobs. The credits are pegged to income, with lower-income individuals getting more money to pay down premiums.
In addition to the tax credits, the administration mandated what types of plans could be offered by insurers on the law’s individual market exchanges. Any GOP plan, therefore, would need to define what types of insurance products people can buy with their tax credits, which likely would be pegged to age instead of income.
Without such a definition, “everyone who received the tax credit would have access to some limited set of healthcare services, at a minimum, but not everyone would have insurance coverage that offered financial protection against a high-cost or catastrophic medical event,” the CBO said.
The agency added it would not count people with limited health benefits as having coverage.
States traditionally have regulated the types of plans that must be offered on the individual market. Before Obamacare, regulations of individual market plans varied widely, the budget office said.
However, starting in 2014 Obamacare dictated what insurers could offer on the individual market. Plans had to meet “essential health benefits nor could they deny coverage to people with pre-existing conditions” such as cancer.
If Obamacare is repealed, those types of regulations would disappear with it and states would return to deciding what types of plans should be offered in the individual market in their state.
Returning that power to the states could cause problems, the CBO said.
“Without a federal standard, some states might not impose any regulations that would govern the depth and extent of coverage and that would define what insurance products qualify for tax credits,” it said.
While the GOP hasn’t coalesced around one plan, several proposed plans would replace Obamacare’s tax credits with refundable credits tied to age. Under this approach, an older person would get more money to pay down premiums than a younger person.
