House Votes to Dismantle the ACA – Now What?

COMMENTARY
May 10, 2017
Senior Vice President, Government and Public Affairs, CVS Health

The Republican-controlled House of Representatives narrowly approved the American Health Care Act (AHCA), the first move in Congress to “repeal and replace” the Affordable Care Act (ACA). However, it is likely to be months before we know how health care law might change as the U.S. Senate begins what’s expected to be a protracted debate.

Some senators have proposed starting from scratch in crafting the Senate version of a health care bill and it is unlikely the House version would pass in the upper chamber. Even after the Senate passes its own bill, the legislation will have to go back to the House of Representatives for approval, before a final bill can be sent to President Donald Trump for his signature.

Until that happens, the ACA remains the law of the land.

Key Elements of the AHCA

We are closely monitoring the debate over a new law to repeal and replace the ACA and will continue to engage with lawmakers to advocate on behalf of our clients and their plan members.

Notable in the House version of the new health care law are several significant changes to the ACA:

  • Mandates and Taxes: Eliminates individual- and employer-mandated coverage and associated tax penalties. Repeals nearly all of the ACA’s taxes.
  • Continuous Coverage: Encourages individuals to maintain continuous coverage by requiring insurers to penalize anyone purchasing a policy after forgoing coverage more than 63 continuous days in the previous year.
  • Tax Credits for Individual Coverage: Eliminates income-based tax credits and replaces them with tax credits based on age, beginning in 2020.
  • Age Band Ratings: Allows insurers to charge older enrollees up to five times more than young, healthy individuals. (5-to-1 ratio would replace the ACA’s 3-to-1 ratio limit).
  • Health Savings Accounts (HSAs): Increases the maximum contribution limit and allows consumers to use their HSAs to purchase over-the-counter medications.
  • Medicaid Reform: Halts the ACA’s Medicaid expansion and institutes a per-capita allotment beginning in 2020, although states would have the option of receiving a block grant instead.
  • Patient and State Stability Fund: Establishes a fund of $130 billion over a decade for states to use to help people afford coverage.

Also included are two amendments, which could allow states to opt out of many ACA provisions.

To receive waivers, states would need to explain how their proposal could do the following: Reduce average premiums; Increase enrollment; Stabilize the market; Stabilize premiums for individuals with pre-existing conditions; Increase the choice of health plans.

The MacArthur Amendment expands on the AHCA’s elimination of the essential health benefits (EHBs) included in the ACA, and allows states to apply for a waiver to opt out of EHB requirements in the commercial space. States that use this waiver would have to participate in risk-sharing programs and/or provide financial assistance to high-risk individuals.

The second amendment, added by Senator Fred Upton, adds $8 billion to the Patient and State Stability Fund from 2018 to 2023, for states that receive a community rating waiver, which would allow insurers to charge premiums based on health status. The amendment intends to provide assistance to those with pre-existing conditions whose premiums may increase.

Although the Congressional Budget Office (CBO) has not yet scored the bill, its previous analysis of a similar version of the bill without the two amendments estimated that the number of uninsured would increase by 24 million and, in many cases, would increase premiums. The CBO also estimated that Medicaid funding would be reduced by an estimated $880 billion through 2026.

To receive waivers, states would need to explain how their proposal could do the following: Reduce average premiums; Increase enrollment; Stabilize the market; Stabilize premiums for individuals with pre-existing conditions; Increase the choice of health plans.

What’s Next

Several Republican senators have voiced concern about the House bill, including the timing of cuts to Medicaid expansion, protections for people with pre-existing conditions, and the level of tax credits, especially for older enrollees. A working group of 13 Republican senators, including Senate Leader Mitch McConnell, Senate Finance Committee Chairman Orrin Hatch, and Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander has been formed to draft the Senate version. The Senate version is likely to differ significantly from the one the House passed as a number of Republican senators have said that they will be writing their own bill.

As the AHCA heads to the Senate, and policy discussions continue, we will share our analysis of what is to come. No matter what, we will continue to support our clients and their members with convenient, high-quality care.

Want to learn more about legislation we advocate for on behalf of our clients and their members? Ask Us
COMMENTARY
May 10, 2017
Senior Vice President, Government and Public Affairs, CVS Health

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