Repeal and Replace? A Look at American Health Care Act
"Every day is a winding road."
The long promised and much anticipated legislative effort to "repeal and replace" the Patient Protection and Affordable Care Act is underway. On March 6, House Republicans introduced the American Health Care Act (AHCA).
After a lengthy process, both the Ways & Means and Energy & Commerce committees approved the legislation on March 8 and 9, respectfully. The two committees considered more than 100 amendments, but no meaningful reforms were made to the proposal.
The next step in the legislative process calls for the House Budget Committee to compile the two committee bills into a single bill, approve it, and then send it for consideration by the full House of Representatives. We anticipate the Budget Committee will conduct its work this week, and the full House will consider it as early as the week of March 20.
The AAFP wrote letters to the Ways & Means and Energy & Commerce committees on March 7. In our letters, we shared our evaluation of the AHCA based on the health care reform criteria we outlined in a Dec. 28 letter to House and Senate leadership. We laid out several recommendations and summarized our comments as follows:
"The AAFP has significant concerns with the AHCA as drafted and is deeply troubled by the negative impact it would have on individuals, families, and our health care system writ large."
Those concerns were underscored this week when the Congressional Budget Office estimated that the number of uninsured would increase by 24 million people by 2026 as a result of the proposal.
The following is a summary of the proposal divided into two categories, provisions in current law that are maintained and those that are altered or repealed.
Consumer Protections and Insurance Reforms -- The AHCA maintains consumer protections under current law that prohibits insurance companies from discriminating against individuals and families based on age, gender, race and socioeconomic status in their underwriting activities.
Pre-existing Conditions -- The proposal maintains provisions in current law that protect individuals from being discriminated against in coverage and benefit determinations based on their current or historical health status or health conditions.
Essential Health Benefits -- The proposal leaves the essential health benefits in place for all commercial insurance plans. However, it is anticipated that the Trump Administration will attempt to repeal or modify the EHBs through the regulatory process.
Prevention Services -- The proposal maintains current law that requires all insurers (public and private) to provide preventive services and certain vaccines independent of patient cost-sharing.
Health Insurance Marketplaces -- The proposal maintains the Health Insurance Marketplaces, or exchanges as they are more commonly known. The presence of the exchange infrastructure will allow plans to be sold on the individual market and provide a framework for administering the tax credits created by the proposal.
Center for Medicare & Medicaid Innovation -- The proposal maintains CMMI. We anticipate that the Trump Administration will use its administrative authority to modify the CMMI scope of work, but we are pleased that CMMI will continue to provide a platform for delivery system and payment innovation.
Patient-Centered Outcomes Research Institute -- Similar to CMMI, PCORI survives the repeal effort -- at least for the time being.
CHANGES TO CURRENT LAW
Individual and Employer Mandates -- The proposal does not repeal the mandates. Instead, it rolls the penalties to $0, which is essentially the same as repealing them.
Premium and Cost-Sharing Subsidies -- The AHCA repeals ACA premium tax credits, cost-sharing subsidies and small-business tax credits, beginning Jan. 1, 2020. During interim period (2018-19), any excess tax credits will be recaptured, and use of tax credits expanded to some off-exchange coverage.
Tax Credits -- The proposal establishes a new system of advanceable tax credits to help individuals and families purchase health insurance, beginning Jan. 1, 2020. The tax credits will be available to all Americans, including qualified legal aliens, in the individual market. Tax credits range from $2,000 to $4,000 per year based on the age of the individual. Tax credits can be combined up to $14,000 per family. Individuals with incomes of $75,000 or less and families with joint income of $150,000 or less receive the full tax credit. The credits phase down gradually.
Consumer Protections & Insurance Reforms -- The AHCA provides $100 billion to states to establish "high-risk pools" to assist high-need, high-cost patients with their health coverage costs. The proposal expands the "rating bands" from 3:1 to 5:1, thus allowing older people to be charged more for their insurance and repeals the ACA metal-level plans actuarial value standards, meaning there is no minimal value placed on the benefits that must be offered.
Continuous Coverage -- The AHCA replaces the individual mandate with a continuous coverage provision. Under this proposal, individuals who had a lapse in coverage greater than 63 days would face a 30 percent surcharge penalty on their premium for 12 months.
Medicaid -- The AHCA proposes substantial structural changes to the Medicaid program and its financing. First, it repeals the current option for states to cover adults above 133 percent of the federal poverty level, effective Dec. 31, 2019. Individuals currently enrolled under the Medicaid expansion remain eligible so long as they maintain continuous enrollment. The proposal repeals the enhanced match rate for newly eligible Medicaid beneficiaries on Dec. 31, 2019. The proposal repeals the essential health benefits (EHBs) for state Medicaid plans and requires states to re-determine eligibility for their expansion population every six months. Starting in 2020, Medicaid is transitioned to a per-capita financing model.
The proposal provides $10 billion over 5 years (2018-22) to non-expansion states for safety-net funding and enhanced provider payments and restores some of the previously reduced Medicaid disproportionate share payments to hospitals.
Health Savings Accounts -- The proposal expands the availability and role of Health Savings Accounts (HSA). Effective Jan. 1, 2018, the proposal increases allowable contribution limits from $2,250 to $6,550 (self-only coverage) and $4,500 to $13,100 (family coverage). This allows HSA enrollees to use HSA dollars for all out-of-pocket expenses up to the limit of a high-deductible plan.
As the Sheryl Crow said, "Every day is a winding road." Please remember this is step one in a long legislative process. There are many miles left to travel. Please be assured that the AAFP will continue to advance recommendations that we believe would improve the proposal and our nation's health care system. I encourage you to engage with your legislators using our Speak Out tool. Your voice is important.
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