Latest GOP alternative to ACA caps federal subsidies, overhauls Medicaid

It appears Republicans have a backup plan should the Supreme Court strike down federal subsidies in states that did not establish their own health insurance exchanges.

The proposal would cap subsidies at 300 percent of the federal poverty level, down from the Affordable Care Act's 400 percent, reported Employee Benefit News. Those involved in the plan include Senate Committee on Finance Chairman Orrin Hatch (Utah), Sen. Richard Burr (N.C.) and House Energy and Commerce Committee Chairman Fred Upton (Mich.).  

The expected legislation also would limit tax exclusions on employer-sponsored health plans to $12,000 for individual coverage and $30,000 for family coverage, propose state grants in lieu of Medicaid expansion and let consumers purchase coverage across state lines, the Washington Times pointed out.

Additionally, the plan would not penalize individuals with pre-existing medical conditions who switch plans as long as they've been insured for at least 18 months. Uninsured individuals would be eligible for a one-time enrollment period and would be protected from soaring premiums associated with medical underwriting, reported the Times.

This alternative is somewhat similar to another hotly debated provision in the ACA that many want to repeal: The Cadillac tax. Many Republican proposals mimic the Cadillac tax, which hits costly insurance plans, by making benefits above a certain threshold taxable income reported the National Journal

The similarities between the Cadillac tax and the recent GOP proposals may explain why a number of Republicans "privately wouldn't want to or at least have strong reservations" about repealing the tax, Loren Adler, research director for the Committee for a Responsible Federal Budget, told the National Journal in an email. 

Hatch, Burr and Upton are no strangers to ACA alternative proposals. The trio crafted a proposal in April known as the Patient Choice, Affordability, Responsibility and Empowerment Act that is very similar to their recent pitch. Both plans aim to completely restructure Medicaid by eliminating all federal funding for expanding the program. However, the New England Journal of Medicine pointed out, such a maneuver could be troublesome for beneficiaries.

For more:
- here's the EBN story
- check out the National Journal article