GOP ACA Repeal-and-Replace Plan

March 10, 2017

On Monday, March 6, Republican leaders unveiled their 3-phase plan for repealing and replacing the Affordable Care Act (ACA). House Speaker Paul Ryan (R-WI) outlined the approach in a news conference with House Majority Leader Kevin McCarthy (R-CA) and House Energy and Commerce Committee Chairman Greg Walden (R-OR):
  1. Introduction of the American Health Care Act (AHCA), the reconciliation bill that House committees marked up Wednesday that would fulfill the promise to repeal and replace the ACA
  2. Deregulation by Tom Price, Secretary of Health and Human Services (HHS), “to lower the costs and stabilize the market”
  3. Further legislation to advance policies that cannot be considered in reconciliation
The AHCA is a revamp of the leaked draft from February 24 and was immediately disparaged by conservative Republicans, who believe there is still too much government involvement in the new plan and see it as a new entitlement program. The cost of the plan will not be known until the Congressional Budget Office (CBO) scores it, which is expected next week.

The following is a very brief summary of AHCA’s provisions compared to the ACA’s.

ACA Provisions That Remain in AHCA. The AHCA retains the most popular elements of the ACA:
  • Prohibitions on pre-existing condition exclusions
  • People can remain on their parents’ health plan until age 26
  • Ban on annual and lifetime limits
  • Medicaid expansion. The AHCA would continue Medicaid expansion through January 1, 2020; at that point, enrollment would “freeze”
ACA Provisions the AHCA Removes. The AHCA removes the most unpopular provisions of the ACA:
  • Individual mandate. Under the AHCA, if an insured person decides to discontinue their policy for longer than 2 months, when they re-enroll, they have a 30% premium surcharge for 1 year
  • Medicare Part A payroll tax on high earners, beginning after December 31, 2017
  • Annual fee paid by branded prescription drug manufacturers, beginning after December 31, 2017
  • “Cadillac Tax” for tax years 2020 through 2024
  • Tax on health insurers
  • Excise tax on sales of medical devices
Other Differences Between the ACA and AHCA:
  • The AHCA would convert Medicaid to a “per capita cap” system, where states would get a lump sum from the federal government for each enrollee
  • The AHCA would allow insurers to charge their oldest enrollees 5 times as much as their youngest enrollees (vs the 3-times ratio under the ACA)
  • Tax credits to purchase health insurance are based on age under the AHCA, vs on income under the ACA
The AHCA has faced opposition by many lawmakers, including Democrats, conservative House Republicans, and many Senate Republicans, as well as stakeholders, including the American Hospital Association, the American College of Physicians, the Medicare Rights Center, America’s Essential Hospitals, the Club for Growth, and Heritage Action for America.

Yesterday, after a combined 20+ hours in mark-up sessions, 2 House committees (Ways and Means, Energy and Commerce) voted along party lines to advance the AHCA despite not having a CBO score. The measure’s next stop is the House Budget Committee—expected next week—at which time a CBO score is also expected before moving on for a full House vote, which could be perilous for Ryan, as he can lose only 21 Republican votes if the AHCA is to pass. Should the bill pass the House, Republican Senators have already expressed many concerns with the bill, and they will also use the CBO’s score to help guide their votes. With plans deciding on their 2018 participation in the Exchanges, timing is tight to get legislative changes in place for the 2018 plan year.

Health Policy Weekly is written by Xcenda, a consultancy and business unit of AmerisourceBergen Specialty Group. Visit Xcenda’s online archive to access more health policy news.

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