Republican Health Care Bill Moves Forward to the Senate

08 May 2017 Health Care Law Today Blog
Authors: Anil Shankar Jennifer F. Walsh

In a surprising reversal, last week the U.S. House of Representatives passed legislation that would significantly modify the Affordable Care Act. The legislation, known as the American Health Care Act (the “AHCA”, H.R. 1628), passed on Thursday with a 217-213 party line vote.  After cancelling an expected vote on AHCA in March, the House Republicans developed additional amendments to the AHCA which ultimately led enough House Republicans to support the bill. While the AHCA would not fully repeal the Affordable Care Act, it does make significant changes to the insurance markets developed under the Affordable Care Act, and also includes numerous tax provisions and significant modifications to the Medicaid program. A summary of the initial AHCA legislation from early March is available here. The version of the legislation approved by the House of Representatives last week also includes key amendments that were introduced to help secure the votes to move the bill forward:

Amendments that Impact the Insurance Markets

  • Beginning January 1, 2018, would allow states to waive the ACA’s “community rating” (or medical underwriting) prohibitions, thereby permitting insurance companies to charge higher premiums for more complex health conditions.
  • Beginning January 1, 2020, would allow states to modify the ACA’s essential health benefits for plans offered in the state on the individual or group market, allowing such plans to offer more limited benefits, and potentially allowing all plans (including employer-sponsored insurance) to impose lifetime caps on benefits that are not essential health benefits.
  • Modifies the AHCA’s required premium increases for individuals who do not maintain continuous health insurance coverage (defined as all but 63 days in the last twelve months) to allow plans to instead consider the health status of such individuals when setting premiums for one year, but only if the state establishes a high-risk pool or other program to stabilize individual health market insurance premiums.
  • Additional funding for the Patient and State Stability Fund, including $8 billion per year from 2018 to 2023 to states who have applied for and been granted a waiver from the ACA’s community rating requirements. These funds must be used to provide assistance to reduce premiums or other out-of-pocket costs to individuals that:
    • reside in states with an approved waiver,
    • have a pre-existing condition,
    • are uninsured due to not maintaining continuous coverage, and
    • have purchased health care in the individual market

Medicaid Amendments

  • New option for states to be paid a block grant for adult beneficiaries with dependents and child beneficiaries. The block grant would allow states to draw down the federal block grant funds at an enhanced rate, and would allow the state increased flexibility to reduce eligibility standards, benefits, and other Medicaid requirements.
  • New options for states to condition availability of Medicaid beneficiaries on satisfaction of a work requirement.
  • In addition to phasing out the enhanced federal matching funds for the Medicaid expansion for all states beginning in 2020, would include language prohibiting states that elect to expand after January 1, 2017 from receiving the enhanced matching funds.

Looking Forward

Now that the House has passed the AHCA attention turns to the U.S. Senate. Early Senate reactions indicate they will take some time to decide the best path forward and will write their own bill, rather than work off of the House bill.  While the House and Senate Republicans were working closely together on legislative language when the earlier version of the AHCA was released, that effort was abandoned in recent weeks once the House began to include changes to the ACA’s essential health benefits package and provisions related to coverage for people with pre-existing conditions. Those provisions have been met with opposition from some Republican Senators and are unlikely to be included in a Senate bill, in part because they do not have a federal budgetary impact, which is required when moving a bill under the chamber’s reconciliation rules. Moreover, Republican Senators have publicly stated their opposition to the AHCA’s changes to the Medicaid program and repealing funding for Planned Parenthood. To complicate matters further, Congress loses the ability to use the FY17 reconciliation vehicle once they pass a conferenced FY18 budget resolution. Just this week they have turned their attention to the FY18 budget so the clock is ticking.

Last week’s vote puts many House Republicans in districts which were won by Secretary Clinton on the hot seat for their re-election in 2018.  The dynamic is eerily similar to what occurred in 2009 and 2010 when Democrats passed the Affordable Care Act.

Stay tuned for further updates as we watch the Senate to see what happens to the AHCA and to the ACA.

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