Trump backs health tax credits that have split Republicans

(Bloomberg) — During his first major address to Congress Tuesday, President Donald Trump backed a proposal that has split the Republican Party: giving Americans tax credits to buy coverage.

Trump’s health care remarks, midway through the hour-long speech, offered few new policy details but embraced a plan put forward by House Speaker Paul Ryan. A divided Republican Party, along with investors on Wall Street, had been looking for a clear explanation of his intentions for repealing and replacing “Obamacare.”

Republicans have been unclear about which components of the Affordable Care Act statutory package they include in the term Obamacare.

“President Trump demonstrated that he and the House are coalescing around a replacement plan, including a tax credit to help individuals buy a health plan that fits their needs,” Ryan said in a statement after the speech. The tax credits Ryan has proposed to help people buy coverage have drawn opposition from conservatives, who worry they would be a new entitlement.

In his remarks, Trump reiterated his call to repeal Obamacare — to which Republicans in the chamber stood and applauded. Additional health policy goals from Trump included bringing down drug prices and speeding the “slow and burdensome approval process at the Food and Drug Administration.”

“If we slash the restraints, not just at the FDA but across our government, then we will be blessed with far more miracles,” Trump said, without offering an explanation of what should be done. He has yet to name who will head the FDA.

Replacement principles

He said he would replace Obamacare with a program that would ensure access to coverage, lower costs and provide better health care — broad principles that Democrats and Republicans have both called for in the past. Specifically, he called for giving more control of the Medicaid program to states, limiting medical lawsuits, making sure people with pre-existing medical conditions can access coverage, and having insurers sell coverage across state lines.

“The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we are going to do,” Trump said.

Sen. Joe Manchin, a Democrat from West Virginia, has indicated a willingness to work with Republicans on changing the ACA. He said he liked Trump’s tone, though he wished Trump had called to “repair” the law, as some more moderate Republicans have.

Major Republican divisions have emerged on Obamacare. Conservatives have insisted they’ll vote only for a full repeal, void of replacement programs. More moderate GOP members have balked at not including some help for people to afford insurance and a fix to allow the 31 states that expanded Medicaid under the ACA to continue with a broader program. Trump said during the speech that any program should include a transition for those currently in Obamacare.

“It’s a good thing that there are a lot of different ideas,” because that’s how good public policy is made, Republican Sen. Marco Rubio of Florida said on Fox & Friends Wednesday morning. He applauded the range of proposals within the Republican party as part of the legislative process, and said Trump will eventually have to take a firmer position on the specifics of a replacement bill.

Sen. Mark Meadows, shown above, is one of the skeptics about Republican leaders’ current ACA change strategy. (Photo: Meadows’ office)

Tax credits

The refundable tax credits proposed by Ryan and backed by Trump Tuesday night have become a major sticking point in the party. At least two heads of conservative groups in Congress said in the last two days they won’t vote for legislation Republican leaders are crafting.

“Am I for Obamacare repeal? The answer is yes,” said Rep. Mark Meadows, head of a conservative wing known as the Freedom Caucus, said Tuesday before Trump’s speech. “Am I for this plan? The answer is no.” Rep. Mark Walker, who chairs the 170-member Republican Study Committee, also said he couldn’t support the most recent GOP draft plan and won’t recommend his colleagues do so, either.

While Trump’s mention of tax credits may help Republican leaders try to gain backing for their plan in their party, there was a sense that some would hear what they wanted.

“He didn’t say refundable tax credit, he said tax credit,” said Rep. Mark Sanford, a South Carolina Republican. “There’s a world of difference between the two.” Conservatives like Sanford oppose refundable credits, which can allow people to receive more money back than they pay in taxes — essentially creating a new entitlement.

Lofty goals

There are doubts about whether Trump’s lofty goals for a health program can be achieved. Former Sen. Max Baucus, the Montana Democrat who helped craft Obamacare in 2009 and 2010, said earlier Tuesday that it would be more than difficult to broaden coverage, lower costs and improve quality all at once.

“He’s Trump. He has the magic words,” Baucus said during an interview on Bloomberg Television. “But, practically, no.”

Trump’s administration has previously said it was working on its own health plan and would reveal it around mid-March.

“This is a plan that we are all working on together; the House, the Senate, the White House,” Ryan said Tuesday. “So there aren’t rival plans here. We’re all working on this together with the administration.” Top Republicans in Congress have said that they don’t anticipate Democratic help, and will need to reach consensus on their own.

“We expect no Democratic support,” Mitch McConnell, a Kentucky Republican who serves as the Senate majority leader, said in an interview on CNN after Trump’s speech.