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GOP candidate Walker offers few details on replacement for health care reform

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The health care reform replacement plan announced Tuesday by Republican presidential hopeful Scott Walker would offer premium tax credits based on age rather than income to help people without employer coverage buy health insurance.

But Wisconsin's governor, who wants to repeal the entire Affordable Care Act and all its taxes, offered no details about how he would finance those tax credits.

Gov. Walker's 10-page plan doesn't go deep into policy details but it's still more specific than proposals offered by the only two other Republican presidential candidates who have laid out health care reform blueprints so far — Louisiana Gov. Bobby Jindal and Sen. Marco Rubio, R-Fla. Its features are similar to many other Republican proposals in the past, including giving states greater flexibility on Medicaid, expanding health savings accounts, letting insurers sell health plans across state lines, and having states set up high-risk pools to cover people with pre-existing medical conditions.

Gov. Walker would guarantee that people who maintain continuous insurance could keep their coverage without being subject to medical underwriting by insurers. He also would eliminate the ACA's minimum essential benefits package, allowing insurers to sell less comprehensive plans. Gov. Walker's plan does not mention any changes in Medicare.

Gov. Walker, a second-term governor, gave a speech outlining his plan Tuesday morning at a machine parts shop outside of Minneapolis, which has a large medical-device industry. Minnesota is a state that has embraced the Affordable Care Act and expanded Medicaid; it has greatly reduced its uninsured rate since the law's coverage expansions took effect last year.

The proposal highlights the dilemma facing candidates in a GOP presidential primary contest where all are expected to declare their commitment to repealing the ACA but none want to suggest they're going to snatch away health coverage from millions of Americans who got it under that law. While the candidates are looking to offer some plan to help people get insurance, they are hemmed in by Republican ideology that opposes taxes to finance subsidies and government regulation to protect consumers.

James Capretta, a visiting fellow at the conservative American Enterprise Institute, said Gov. Walker's proposal covers the main issues that would need to be dealt with in an ACA replacement and appears palatable to most other conservatives. “If there's a movement away from the ACA, it's going to look like this,” he said.

The plan is similar to what Sen. Rubio sketched out in an op-ed piece in Politico on Monday. His plan also focuses on tax credits. Sen. Rubio proposed reforming insurance regulations to reduce costs, encourage innovation and “protect the vulnerable.” In addition, Sen. Rubio called for turning Medicaid into a capped state block grant program and converting Medicare into a voucher model, which he called premium support. Gov. Jindal has released a plan that would provide standard tax deductions to help people pay for coverage.

Tax deductions provide a greater benefit to people in higher-income categories, while tax credits tend to be more beneficial to people in lower-income categories.

Gov. Jindal released a written statement Tuesday slamming Gov. Walker's plan, calling it a new entitlement program. He dubbed it "Obamacare lite."

Gov. Walker's plan calls for repealing the ACA and giving states more control of insurance. It also allows people to buy insurance across state lines, promotes health savings accounts and retains the employer-based coverage system. People without employer-based coverage would receive tax credits to help them buy coverage. Unlike under the ACA, the value of the tax credits would be based on consumers' age. People 17 and younger would get a credit valued at $900, those 18-34 would get $1,200, those 35-49, would get $2,100, and those 50-64 would get $3,000.

Some critics said the value of those tax credits would not be sufficient to enable lower- and middle-income people to buy a decent health plan.

Gov. Walker advocates turning Medicaid into separate programs for low-income, nondisabled people, for disabled people, and for low-income seniors who need long-term care.

Even though he would repeal all ACA taxes, he said his plan would not add to the federal budget deficit. Critics noted that eliminating the ACA taxes would deprive the government of hundreds of billions of dollars in revenue used to finance coverage expansion.

Gov. Walker's proposal says the financing for his plan's tax credits would come from simplifying how the federal government helps people access coverage, allowing states to provide more efficient Medicaid programs, and reforming tax treatment of some high-value employer health plans. But changing the tax treatment of employer plans could make for tricky politics because congressional Republicans overwhelmingly favor repealing the ACA's so-called Cadillac tax on high-value employer plans.

Gov. Walker's plan offers some protection for people who have pre-existing conditions and maintain continuous coverage. But it would not offer protection for people with preexisting conditions who have not maintained continuous coverage. Instead, states would be allowed to set up high-risk pools for such people.

Under Gov. Walker's plan, the premium tax credits would be based on age, not income, so there would be “no intrusive oversight by the IRS and no accountant needed to determine the credit amount,” according to the plan.

Mr. Capretta, who has co-authored a comprehensive conservative health care reform proposal to replace the health care reform law, said Gov. Walker's tax credit plan could shift more costs to individuals but that it would offer more financial assistance to middle-class Americans since there is no mention in the plan of an upper-income eligibility threshold. “It's going to be massively, massively less expensive than the ACA,” he said.

Gary Claxton, a vice president at the Kaiser Family Foundation, said the tax credit system could leave lower-income people with less financial assistance to buy insurance. Gov. Walker's plan also does not include any mention of minimum essential benefits, which could lead insurers to offer less coverage.

In contrast, the ACA offers provides a much larger, income-based premium subsidy and a guarantee of certain benefits. Under the ACA, Mr. Claxton said, “you sort of know what you're buying.”

Analysts predicted that many conservatives would support a plan like Gov. Walker's but that many more details are needed on how he would finance his plan and how it would affect the nation's uninsured rate.

Last week, the Obama administration hailed a U.S. Centers for Disease Control and Prevention report showing that the U.S. uninsured rate dipped below 10% in the first few months of 2015. More than 15.5 million people have gained coverage since the implementation of the ACA began.

Democratic presidential candidate Hillary Clinton criticized Gov. Walker's plan via a Twitter message. “16 million Americans have gained health insurance from the Affordable Care Act,” she tweeted. “We need to protect it — not repeal it.”

Shannon Muchmore writes for Modern Healthcare, a sister publication of Business Insurance.