House Passes the American Health Care Act

Yesterday, House Republicans managed to pass the American Health Care Act with 217 ‘Yes’ votes and 213 ‘No’ votes and one member not present to vote. Events leading up to the House passage of the bill include:

March 6 – House Republicans released the first iteration of the AHCA language; key provisions included:

Medicaid Expansion. The Supreme Court ruling allowing states to opt into the Medicaid expansion is codified. However, the ability for states to opt into expansion expires December 31, 2019. After January 1, 2020, the enhanced match for newly eligible beneficiaries is repealed and the traditional matching rate (FMAP), which is currently 50%, is reinstated.  For new eligibles enrolled prior to January 1, 2020, the enhanced match only continues so long as the enrollee does not have a break in coverage for more than one month, otherwise, the enhanced match is no longer available for that enrollee and instead the traditional matching rate is applied.

Per Capita Cap. A per capita cap model (per enrollee limits on federal payments) is implemented beginning in FY 2020. State spending in FY 2016 is used as the base year to set targeted spending in enrollee categories (elderly, blind and disabled, children, non-expansion adults, and expansion adults) in FY 2019. The amount is adjusted annually based on the consumer price index. In FY 2020, states that spend higher than their targets will receive reductions to Medicaid funding in the following fiscal year.

Refundable Tax Credits. A refundable and advanceable tax credit for the purchase of health insurance is created. Credits are adjusted by age and cannot exceed $14,000. The credits are available to those making up to $75,000 and phases down by $100 for every $1,000 in income higher than that threshold.

Health Savings Accounts. The use of health savings accounts is encouraged through increasing the limit on aggregate health savings account contributions per year to cover the annual deductible and out-of-pocket expenses under a high deductible plan ($6,550 for an individual; $13,100 per family) beginning in 2018.

Essential Health Benefits. The requirement that plans provide the 10 essential health benefits is repealed and the decision regarding required benefits is deferred to states beginning December 31, 2019.

Changes to Current Eligibility Determinations. There are several changes to eligibility including:

  • Providing a temporary 5% FMAP increase for states that increase the frequency of their eligibility redeterminations to every 6 months.
  • Reverting the Medicaid income eligibility level for children back to 100% of the FPL from 133% of the FPL as the ACA allowed. States can continue to cover children at a higher FPL through the State Children’s Health Insurance Program (CHIP).
  • Eliminating the current retroactive eligibility coverage, which goes back three months and only limit retroactive coverage to the month the applicant applied.
  • Repealing expanded authority to make presumptive eligibility determinations beyond those for children, pregnant women, and cervical cancer patients. This includes eliminating hospital presumptive eligibility, which California implemented.
  • No longer allowing individuals to enroll and receive Medicaid benefits prior to providing documentation verifying citizenship or eligible immigration status.

DSH. The Disproportionate Share Hospital (DSH) cuts imposed by the ACA are eliminated for expansion states in 2020 and non-expansion states in 2018.

Safety Net Funding for non-expansion states. $10 billion over five years is provided to non-expansion states based on the number of individuals below 138% of the FPL, made available through increased matching rates through CY 2022.

Stability Funds. A Patient and State Stability Fund is created, that a state may access if their uninsured population for individuals below 100% FPL increased from FY 2013 to 2015 or if fewer than three plans offer coverage on the exchange individual market in 2017. $15 billion per year is appropriated in FY 2018 and FY 2019. From 2020-2026, $10 million is annually appropriated. A state match will be phased in.

Continuous coverage. The individual mandate is repealed after December 31, 2015, and instead a penalty is assessed for gaps in coverage. Beginning in open enrollment for FY 2019, a 30% late-enrollment surcharge is assessed on market entrants that had a lapse in coverage for greater than 63 days.

March 13 – Congressional Budget Office (CBO) Scores the AHCA

The CBO score estimated 14 million people would become uninsured in 2018, increasing to 21 million in 2020, and 24 million in 2026.

March 24 – House Republicans pull the AHCA from a vote

House Leadership intended to put the bill before the full House for a vote; however, were not able to attain the needed votes and as such pulled the bill. The Freedom Caucus – representing Conservative Republicans – didn’t believe the AHCA did enough to repeal the provisions of the Affordable Care Act and offered amendments to eliminate the essential health benefits and provisions prohibiting insurers from denying coverage for pre-existing conditions. However, these amendments lost the support of moderate Republicans.

April 6 – MacArthur Amendment is introduced

To address the concerns from moderate Republicans, the MacArthur Amendment was introduced which would:

  • Reinstate the essential health benefits;
  • Maintain key provisions of the AHCA including prohibiting denying coverage due to pre-existing conditions and maintaining the community rating rules.

However, an essential aspect of the MacArthur amendment is the ability for states to obtain limited waivers which would allow states to not require the essential health benefits or community rating rules.

May 4 – House Passage

This is the version of the AHCA the house passed yesterday with the addition of $8 billion in supplemental funding for high-risk pools, without conducting any hearings on the bill, and absent an updated CBO score.

Next Steps

The bill now moves to the Senate, which has significant policy concerns on impacts to Medicaid and individuals with pre-existing conditions, among others. Reports indicate the Senate will not support the AHCA in its current form. Senator Lamar Alexander (R-Tenn) publicly stated that the Senate is writing a Senate bill and are not passing the House bill.  Senator Lindsey Graham (R-S.C.) stated that any bill posted for less than 24 hours… needs to be viewed with suspicion.

What will be of interest is whether the Senate takes a more procedural approach and moves the bill through policy committees or whether the bill is moved directly to the Senate floor.

CHEAC will continue to provide updates as events progress.