ACA to be Replaced with AHCA
Written by Editor   
Tuesday, March 21, 2017 07:33 AM

News bite:  Congressional Republicans have unveiled a bill to repeal and replace the Affordable Care Act (ACA) and plan to replace it with the American Health Care Act (AHCA).  Want to know what it proposes?  Here is a synopsis.

Congressional Republicans have unveiled a bill to repeal and replace the Affordable Care Act (ACA).  The bill proposes substantial changes for Medicaid, including a halt to the Medicaid expansion program started under the ACA, freezing new enrollment after 2 years while grandfathering in current enrollees.  It also would create a Patient and State Stability Fund, and replace the current federal Medicaid contribution with a “per-capita cap" system, under which states would be given a set per-capita amount of money for each Medicaid enrollee. Under the current Medicaid program, the federal government gives states matching funds based on each state’s Medicaid spending; poorer states receive a larger Medicaid match.  Other features of the bill include repealing the ACA’s Prevention and Public Health Fund beginning in fiscal year 2019.

After a marathon 27-hour session, the House Energy & Commerce Committee approved by a vote of 31-23 a GOP bill aimed at replacing many components of the Affordable Care Act, defeating all amendments proposed by the Democrats.  First debuted in a leaked draft dated Feb. 10, two committees are considering two separate bills that will be combined into one bill called the “American Health Care Act,” (AHCA)  
The House Ways and Means Committee also approved a mark-up of their aspect of AHCA in a predawn vote after more than 18 hours of work. With Republican majority holding sway, the committee voted to also repeal taxes on tanning salons, prescription drugs, and individuals making over $250,000, and to eliminate the ACA’s cap on tax deductions for healthcare executive pay.
House Democrats immediately denounced the bill. 

The Feb. 10 policy brief called the plan the Better Way proposal.  In it the Republican leadership  notes that “while we could simply allow the law to collapse, that would not be fair to the American families struggling under Obamacare. It purports to: 

  • Moves health care decisions to patients, their families, and their doctors.
  • Provides coverage protections for all Americans.
  • Gives patients the right tools, like Health Savings Accounts, to make their health insurance more portable and affordable.
  • Allows those who don’t receive insurance from an employer or government program to have access to quality coverage.
  • Breaks down barriers that restrict choice and prevent Americans from picking the plan that is best for them and their family.
  • Modernizes and strengthens Medicaid.

The brief notes that among the reasons to repeal and replace the ACA are that there has been a  25% average increase in premiums this year in Obamacare exchanges.  This year alone, seven states saw premium increases of more than 50 percent.  Nearly 1/3 of US counties have only one insurer offering exchange plans, and 4.7 million Americans were kicked off their health care plans by Obamacare, some $1 trillion in new taxes, mostly falling on families and job creators.

In addition, it reports that 18 Obamacare Co-Ops out of 23 have collapsed, costing taxpayers nearly $1.9 billion and forcing patients to find new insurance, and generated $53 billion in new regulations requiring more than 176,800,000 hours of paperwork.

The brief claims that the AHCA will:

  • Modernize Medicaid empowering states to design plans that will best meet their needs and put Medicaid on sustainable  financial footing.
  • Utilize State Innovation Grants to give states the ability to repair their health insurance markets.
  • Enhance Health Savings Accounts empowering individuals and families to spend their health care dollars the way they want and need by enhancing and expanding Health Savings Accounts, or HSAs by increasing the amount of money an individual or family can put into their HSA.  It will allow individuals and families to spend money from their HSA on “over-the-counter” health care items.
  • Provide Portable, Monthly Tax Credits providing all Americans access to a portable, monthly tax credit that they can use to buy a health insurance plan that’s right for them—not one tied to a job or a government-mandated program. But it is based on age, so as individuals’ health needs evolve over time, so will their monthly, portable tax credit. It can travel with them from job to job, state to state, home to start a business or raise a family, and even into retirement.

The inability of American families and individuals to receive a tax benefit for the purchase of health insurance stifled the growth of the private, individual health insurance market.  The evolution of the tax credit in the context of health reform in recent years has led to a focus on advanceable refundable tax credits.

A tax credit can be refundable or non-refundable. A refundable credit means a taxpayer can receive a payment—or “refund”—from the federal government if the amount of the credit exceeds an individual’s tax liability. In contrast, a non-refundable credit means the credit is limited to the amount of tax liability. When deciding between the two options, intent is critical: if the credit is to be valuable to the low-income then refundability is an important feature.

Advanceability is a key feature because many Americans cannot afford to wait until they file their taxes the following year to get assistance. As a result, a system that allows for the delivery of financial help in “advance” of tax filing is critical.

The legislation creates a new code section to do this. The credit is: 
  • Universal for all citizens or qualified aliens not offered other qualifying insurance 
  • Age-rated 
  • Available for dependent children up to age 26 
  • Portable 
  • Grows Over Time

The credit is not based on income. Older Americans will receive a higher credit amount than younger Americans, reflecting the higher cost of insurance for older Americans. Incarcerated individuals are not eligible for the credit. The credit is not available to individuals who are eligible for coverage through other sources, specifically through an employer or government program. The credit can be used to purchase any eligible plan approved by a State and sold in their individual insurance market, including catastrophic coverage. Additionally, if an employer does not subsidize COBRA coverage, the individual can use the credit to help pay unsubsidized COBRA premiums while he or she is between jobs. If the individual does not use the full value of the credit, he or she can deposit the excess amount into a health savings account. The portability of this credit will promote competition in the individual insurance market to create the types of plans Americans actually want to purchase. It will increase maximum HSA contribution limit from $3,400 for self and $6,750 for a family to $6,550 for self-only coverage and $13,100 for family coverage.

Medicaid currently covers nearly 72 million Americans—more than Medicare — and up to 98 million may be covered at any one point in a given year. But today Medicaid’s incentives often lead States to offer more benefits, but cut payments to health care providers, which means low-income patients have less and less access to quality care. The result is nationally, only a portion of primary health care providers accept Medicaid. On its current path, the Medicaid program is on unsustainable financial footing.  The program spends more general revenue than Medicare and is projected to cost more than defense spending next year.

In the future, a total federal Medicaid allotment will be available for each state to draw down based on its federal medical assistance percentage (FMAP). The amount of the federal allotment will be the product of the state’s per capita allotment for major beneficiary categories—aged, blind and disabled, children, and adults—multiplied by the number of enrollees in each group.  States also have the choice to receive federal Medicaid funding in the form of a block grant or global waiver. Block grant funding would be determined using a base year and would assume that states transition individuals currently enrolled in the Medicaid expansion out of the expansion population into other coverage. States would have flexibility in how Medicaid funds are spent, but would be required to provide required services to the most vulnerable elderly and disabled individuals who are mandatory populations under current law. States can use the grant to cut out-of-pocket costs, like premiums and deductibles. States may also use these resources to promote access to preventive services, like getting an annual checkup, as well as dental and vision care.

“The health insurance situation will greatly improve once the Republicans’ bill is passed,” President Trump said during a White House “listening session” that featured people whose health insurance bills have greatly increased under the ACA.  “We are working to unleash the power of the private marketplace to have insurers come in and compete for your business ... They’ll have plans that today, nobody has even thought about,” and although the bill will take a little while to kick in, “once it does it’s gonna be a thing of beauty."

However the Congressional Budget Office (CBO) said that approximately 14 million people would lose their health insurance in 2018 if the congressional Republicans’ proposal to replace the Affordable Care Act (ACA) becomes law.  The CBO also said the AHCA would reduce the deficit by $337 billion over the 2017-2026 period.

"The largest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA's subsidies for nongroup health insurance," the report noted. “The largest costs would come from repealing many of the changes the ACA made to the Internal Revenue Code…and from the establishment of a new tax credit for health insurance.”

Most of the increase in the number of uninsured people “would stem from repealing the penalties associated with the individual mandate,” the report said. “Some of those people would choose not to have insurance because they chose insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums. Later, following additional changes to subsidies for insurance purchased in the nongroup market and to the Medicaid program, the increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026.”

Health and Human Services (HHS) Secretary Tom Price, MD, claimed, however, that “The CBO looked at a portion of our plan but not the entire plan. In fact, the entire plan includes the regulatory apparatus at HHS … that we want to use to make sure patients are helped and their costs are decreased.  They also completely ignored the other legislative activities we’ll be putting into place to make sure we have an insurance market that actually works."

Organized medicine cited multiple concerns, “While we are initially encouraged by an acknowledgement in the draft of the importance of preserving critical, important patient protections including pre-existing conditions, the policy priority for the AHA remains the overall preservation of coverage for those Americans insured under Medicaid and the Affordable Care Act,” Nancy Brown, CEO of the American Heart Association, said in a statement. “We are not convinced, based on our initial analysis, that this goal will be accomplished by the proposed legislation.

Medical organizations charged that the new versions of healthcare reform do little to address a major deficiency in the ACA, which is controlling healthcare costs.  “Taking a step back, we are concerned the legislation does not include any changes needed to bend the cost curve, which is a more fundamental cause of our current difficulties in ensuring access to affordable, high-quality care to all Americans,” according to a statement from the American Osteopathic Association.

Jean Ross, RN, president of National Nurses United, said that because of the lack of controls on the “notorious price gouging by insurance companies, hospitals, pharmaceutical corporations, and other corporate interests in healthcare, more and more people will simply opt out of buying private insurance rather than endure the skyrocketing premiums, deductibles, co-pays, and other fees that are endemic to a wholly market based healthcare system.”

Hospitals are disheartened by the legislation.  Insurers, on the other hand, expressed relief that Congress is taking steps to bring more certainty to the health insurance market.  They offered a somewhat rosier view of the bill with certain caveats.

“We appreciate the work that the administration and Congress have undertaken so far to begin stabilizing the individual market, and we are very pleased that the House bill envisions providing a smooth transition for consumers in 2018 and 2019, including making coverage more affordable by eliminating the tax on health insurance policies," said Alissa Fox, senior vice president of the Office of Policy and Representation for Blue Cross Blue Shield.