On May 4, the House of Representatives passed the controversial American Health Care Act (HR 1628) by a 217-213 margin. The AHCA is touted by President Trump and House GOP leadership as the bill that will repeal and replace the Affordable Care Act, which was enacted in March 2010. The AHCA now moves to the Senate where its future is uncertain.
Introduced March 6, the original bill faced opposition from conservative and moderate House Republicans in addition to the Democrat caucus, the AMA, AARP, and other interest groups. Although amended in Committee to address some GOP concerns, Speaker Ryan pulled the bill from a scheduled vote March 24 when it became clear there were not enough votes to pass it.
The bill gained new life in late April when leaders of the moderate Tuesday Group and the conservative Freedom Caucus came up with a waiver process that appealed to conservatives. The amendment allows states to obtain waivers of the ACA's essential health benefit requirements. In addition, the amendment lets states obtain waivers that allow insurers to charge higher premiums to those with pre-existing conditions and older individuals.
Key Features of HR 1628
- Eliminates ACA individual and employer mandate penalties after 12/31/2015
- Imposes a 30% premium penalty on individuals who do not maintain continuous coverage
- Eliminates ACA cost-sharing subsidies for out-of-pocket expenses after 12/31/2020
- Eliminates ACA income-based premium tax credits after 12/31/2019
- Implements age-based premium tax credits 1/1/2020. Credits phase-out for higher wage earners ($75,000 single; $150,000 joint). Credits may be used for policies purchased on or off an Exchange. No credits if offered employer coverage.
- Health Savings Accounts - Increases contribution limits 1/1/2018 to $6,550 single/$13,300 family
- Medicaid - No additional states can expand Medicaid after 12/31/2017. Medicaid funding frozen at 2016 level with per enrollee capped payments, but a state option to receive block grants instead.
- Eliminates ACA taxes on high wage earners ($200,000 single/$250,000 joint):
- The 0.9% increase in Medicare payroll tax as of 1/1/2023
- The 3.8% tax on investment income as of 1/1/2018
- Eliminates other ACA taxes after 12/31/2016
- Higher premiums for older individuals - Allows insurers to charge premiums for older individuals up to five times as much as for younger ones (individual and small group markets)
- State waivers - States may seek waivers from the ACA's essential health benefit requirements and the premium rating age requirements. Waivers may also be obtained to allow insurers to charge higher premiums for those with pre-existing conditions because of their health status.
- Appropriates $130 billion over 9 years to fund state high-risk pools and $8 billion over 5 years to provide financial assistance to those charged high premiums due to pre-existing conditions
- Retains ACA notice and recordkeeping requirements
- Retains certain ACA insurance market reforms - prohibition on pre-existing condition exclusions, guarantee issue requirement, dependent coverage to age 26, essential health benefits requirement (subject to state option to waive), maximum waiting period limitation of 90 days, prohibitions on annual and lifetime limits (subject to state option to waive as to essential health benefits)
Congressional Budget Office Score
The Congressional Budget Office issued its analysis of the initial AHCA bill March 13 and updated its report March 23 as to amendments made to the bill through March 20. It projected the bill would save $337 billion over 10 years primarily because of Medicaid cuts and reduction in both premium tax credit assistance and cost-sharing subsidies to low-income Americans. However, the CBO projected that the bill would result in 14 million people dropping or losing coverage by 2018 and up to 24 million by 2026. The CBO projected that under the AHCA premiums would increase 15 to 20% in the near term, but decrease by 10% by 2026.
The CBO has not yet issued an updated report that takes into consideration amendments to the bill that were made in April and that are included in the version passed by the House. It is difficult to project how many states will obtain waivers to allow insurers to offer minimal coverage plans by waiving one or more of the ACA essential health benefits and to charge higher premiums to those with pre-existing conditions as well as older Americans and potentially impose annual and lifetime limits. Because of the likely effect of the waiver provisions, the new CBO analysis will presumably project more people will drop or lose healthcare coverage plus an overall reduction in the amount of projected budget savings over the next 10 years.
On to the Senate
HR 1628 now goes to the Senate where it faces several hurdles. First, the Senate parliamentarian may determine that some of the bill's provisions do not qualify as reconciliation legislation because they do not directly impact the federal budget. Substantive non-budget policy revisions to the ACA would be subject to the Senate's 60 vote cloture or filibuster rule rather than the 51 vote reconciliation process. Second, some conservative GOP Senators have voiced opposition to HR 1628 because it does not go far enough to repeal the ACA. Third, moderate GOP senators and Democrats have expressed concerns about the proposed elimination of cost-sharing subsidies for low-income individuals, the replacement of the current income-based premium tax credits with an age-based approach, and the significant remake of the Medicaid program including the elimination of Medicaid expansion and revamping Medicaid's needs-based funding program to individually capped Medicaid payments or block grants that result in fewer Medicaid recipients and a loss of over $880 billion of funding. Thus, it is likely that the Senate will consider its own bill rather than pass HR 1628 as written.
The Senate is not expected to rush its consideration of HR 1628. It may be late summer or early fall before ACA replacement comes up for a vote in the Senate. For now, it is important for employers to remember that compliance with all current provisions of the Affordable Care Act is required.
If you have questions about HR 1628, please contact Brent Gambill (937-449-5539) or Edie Crump (937-449-5530).