Gov. Scott Walker’s health care plan could help Americans buy cheaper insurance and give states more power to manage Medicaid, but poorer people might be less able to afford private coverage and less likely to qualify for Medicaid, which might offer fewer benefits, health care experts said Wednesday.
Under Walker’s plan, released Tuesday, tax credits for people without employer insurance to help buy private coverage would be based on age instead of income. Block grants to cover needy families on Medicaid would replace states getting more federal money if they spend more.
Consumers could also shop for insurance across state lines, among other changes from what is allowed under the Affordable Care Act, which Walker vowed to repeal.
The tax credits based on age — $1,200 a year for people ages 18 to 34 and $3,000 a year for those 50 to 64, for example – would be easier to administer than the income-based subsidies under Obamacare, said Tom Miller, a health care policy fellow at the American Enterprise Institute.
Such credits would also encourage people to seek cheaper coverage, Miller said.
“People with fixed tax credits are spending their own money, so they pay attention to the trade off of more expensive insurance versus less,” he said.
But while Walker’s proposed tax credit amounts are comparable to those in the Affordable Care Act overall, they wouldn’t help lower-income people as much and could make insurance less affordable for them, said Larry Levitt, a senior vice president at the Kaiser Family Foundation.
“They’re less generous for the poor and quite a bit more generous for middle-income and higher-income people,” Levitt said.
Walker said a 35-year-old woman with no children who makes $35,000 a year gets no subsidy under Obamacare and would get $2,100 a year under his plan. Levitt said a 49-year-old woman with no children who makes $20,000 gets about $3,420 today plus help paying medical bills, compared to $2,100 under Walker’s plan.
Using block grants for Medicaid would let states become more efficient and save money, helping pay for Walker’s plan, Miller said.
“Some of the perverse incentives of spending federal money, whether or not it delivers the goods, would be muted,” he said.
Levitt agreed such grants would give states more flexibility. “But it would likely lead to fewer people covered and less comprehensive coverage in Medicaid,” he said.
People generally can’t buy insurance plans in other states today. By repealing the Affordable Care Act and letting states resume having different rules for who and what must be covered, Walker would let consumers who don’t want a lot of coverage buy cheaper plans in other states, Miller said.
“It’s really a form of regulatory competition to move regulation in a direction that makes more products at a lower price,” he said.
But that could make insurance more expensive for people with medical conditions who require more coverage, and jeopardize the private insurance market, Levitt said.
“Stable insurance markets depend on the pooling of risk,” he said. “Premiums would rise for the sicker people who don’t have that option.”
Another hurdle is that plans would need to have networks of hospitals and doctors in each state, Miller and Levitt said.
Still, Donna Friedsam, health policy program director for the UW Population Health Institute, said that if networks could be established and Walker’s plan ensured similar insurance regulations across states, the provision could be helpful.
“Why not let people shop across state lines?” she said.
The act of scrapping the Affordable Care Act could be tricky, but not impossible, said Geoffrey Skelley of the University of Virginia Center for Politics.
“With control of all political levers — the presidency, Senate, and House — Republicans could feasibly repeal the law,” said Skelley. “If a Republican wins the White House, there’s a high likelihood that the GOP will also hold onto the Senate, while the House is fairly likely to remain in GOP hands even if a Democrat wins the presidency.”
He said while Republicans wouldn’t have the 60 votes needed to repeal, GOP lawmakers could deploy a legislative method called the reconciliation process, which only requires a majority in the upper chamber, that Democratic members used to pass the law in the first place.
But Skelley said any move to repeal the law could be met with opposition from insurers and health care providers who “have spent years adjusting to meet the requirements” of the law.
“Moreover, what about the millions who would lose their coverage should the law be overturned? Republicans will need to have a thorough plan that can be immediately implemented to deal with this,” said Skelley. “Otherwise, the GOP could get slammed in the 2018 midterm elections as Democrats attack them for taking away people’s health care.”
Walker campaign spokeswoman AshLee Strong said in an email in response to questions about what would happen to individuals’ coverage if a repeal were approved that “Gov. Walker’s plan would allow for an easy transition out of Obamacare into a better health care system.”