ACA Update – Phase 1 of 3 Toward Change

On May 4, 2017, the U.S. House of Representatives passed an amended version of the “American Health Care Act” or AHCA, on a 217-213 vote tally.  In and of itself, this vote DOES NOT ALTER THE HEALTHCARE/HEALTH INSURANCE LANDSCAPE!  There are a number of phases (at least 3, but likely several more procedural steps) that must be completed in order for the Affordable Care Act (ACA) to be partially repealed.  And to be clear, the AHCA would represent a partial, piecemeal repeal of the ACA, and would in fact, retain much of the ACA.  So here’s where we are and what we know, as of today… 

First and foremost, the AHCA is most definitely NOT a full repeal and replacement of the ACA.  If it (or a replacement/amended version) passes in the Senate, and is signed by the President, it would make fundamental changes to the ACA, but also retain a fair amount of the insurance and healthcare delivery reforms that have been implemented over the last seven years.  Here are the highlights of what the House passed today, and what the AHCA seeks to accomplish.  Note: items in red are amendments to the original version of the AHCA that never made it to a floor vote:

•   Eliminates the EMPLOYER and INDIVIDUAL coverage mandates.
•   Ends Medicaid expansion funding.
•   Changes Medicaid from an open-ended program to one that gives states fixed amounts of money per person.
•   Replaces the ACA’s cost sharing and premium cost subsidies based mostly on consumers’ incomes, with tax credits that are age based.
•   Repeals many of the ACA taxes including the medical device tax, the health insurance sector tax, and the increased Medicare payroll withholding amount affecting high wage earners. (Note: the controversial “Cadillac tax” remains in the AHCA, but is deferred to 2026.)
•   Consumers who let their coverage lapse for more than 63 days in a year would be charged 30% surcharges to regain insurance. This would include people with pre-existing medical conditions.
•   State waivers would allow insurers to alter ACA provisions such as essential health benefits, community rating, and benefit limitations, if approved.
•    $8 billion allocated to States, over five years, to finance high-risk pools that cover those with pre-existing conditions.
•   $130 billion allocated to States, over a decade, to help those that can’t afford coverage.

The House of Representatives has chosen the strategy of what is known as “budget reconciliation” to accomplish the objective of a partial repeal of the ACA.  In short, this means the provisions (see above) included in the AHCA are limited only to items that are deemed to have a “direct impact on spending”.  As such, the ACA’s “market reforms” are not affected by the AHCA.  Using this tactic, the AHCA only requires a simple majority vote from the Senate to make it to the President’s desk for signature.

Stay tuned as there is much more to come in the days, weeks, months that follow.  In the meantime, the ACA is the law of the land, and must be complied with in every respect!