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GOP Draft Health Care Bill Cuts Medicaid, Insurance Subsidies

A draft bill detailing Republican plans to begin repealing and replacing many facets of the Affordable Care Act would provide expanded tax credits and health savings accounts for individuals while reducing federal spending on tax subsidies and Medicaid and practically eliminating both the current employer and individual mandate to provide and carry health insurance.

The 105-page draft legislation, obtained by NBC News, repeals much of the current law, also known as Obamacare, within the next few years and sets in place a Republican vision of healthcare.

Obamacare: Draft Proposal Shows Potential GOP Obamacare Replacement Plan 2:08

The draft, dated February 10, is circulating among health care lobbyists and, while changes are possible, it is believed to be a legitimate effort at health care reform.

"This is the bones of what’s going to happen," said an aide to a House Republican.

The legislation, which also cuts funding to Planned Parenthood, still has to be scored by the non-partisan Congressional Budget Office, for a full accounting of how much it would cost, but the largest funding mechanism is a tax on the most expensive employer-provided health insurance plans.

What isn’t included is a guarantee that people with pre-existing conditions are able to obtain coverage. Members of the House, however, introduced a bill last week to preserve the pre-existing condition ban, signaling that it would have to be passed separately.

The bill dismantles some major components of the ACA, including the expansion of Medicaid and the subsidies to purchase health insurance.

In its place, Americans who need assistance to purchase health care will receive a tax credit – able to be received in advanced on a monthly basis - based on age. A person under 30 is eligible for a $2000 tax credit while a person over 60 is eligible for a $4000 credit.

As for Medicaid, Republicans propose placing a cap on the number of Medicaid recipients in each state based on population, which would likely largely reduce the 72 million Americans currently receiving the benefit for low-income people. The current Medicaid expansion allows coverage for people based on income. The transition begins in 2020 and then instates a multi-year phase out - a timeline that might be problematic for some conservative members.

They have also carved out exceptions for some medicaid recipients with pre-existing conditions to ensure they keep their medicaid coverage, including cervical and breast cancer or are blind, which are specifically noted.

The measure also also creates state-based high risk pools for people who don't have access to insurance. The federal government would start in 2018 providing $15 billion to help fund the high risk pools, but the number decreases to $10 billion by 2020 and beyond.

And the legislation would greatly expand the use of Health Savings Accounts, a tax deductible way to purchase health insurance, which has become a top Republican priority.

The measure does not directly get rid of the individual and employer mandate to purchase and provide health care, but it zeroes out the penalty, making violation of the mandate non-enforceable.

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Republicans, struggling to figure out a way to pay for their health insurance plan, puts in place a tax on the most expensive employer-based health insurance plans, which is an expanded version of the so-called Cadillac tax to the most expensive employer based plans.

"We’re cointinuing to work toward a defecit neutral replacement plan along with repeal and I’m confident we’ll deliver on that," said Rep. Kevin Brady, chair of the House Ways and Means Committee, said.

The measure repeals unpopular taxes opposed by the business community and health field, including the medical device tax and the tax on health insurance, also known as the HIT tax, that helped to pay for the ACA.

The plan is already being panned by some.

Ron Pollack, head of the Families USA, which advocates for health consumers, said the draft “buys less care — or no coverage at all.”

“This leaked Republican proposal, if enacted, would put us on a destructive path that would decimate the safety-net Medicaid program for over 72 million people; drastically reduce premium subsidies for working families; and cause out-of-pocket health costs to soar,” Pollack said.

House Speaker Paul Ryan said that the House is working to bring a bill to the House floor for a vote the first week of March. Members return from a one-week recess Monday.