House Approves American Health Care Act – First Step to ACA Repeal & Replace
Jim O’Connell – Senior Compliance Analyst, Ceridian
Deep in my heart I know it, but it’s so hard to show it, ‘Cause it’s easier—easier said than done. From the pop song #1 hit, “Easier Said Than Done,” by Essex.
On May 4 the House of Representatives approved the American Health Care Act (AHCA), Republican legislation to repeal and replace the Affordable Care Act, on a razor-thin vote of 217-213 and with Democrats unanimous in opposition.
Joining President Trump at the White House soon after, House Republicans claimed victory in their years-long campaign to repeal and replace the Affordable Care Act (ACA). Like the song that went to the top of the charts in 1963, however, the GOP is likely to find repealing and replacing Obamacare easier said than done.
Las Vegas odds makers would probably give the American Health Care Act a 50-50 chance of being signed into law this year by President Trump, but not before undergoing substantial modification. The bill now goes to the U.S. Senate, where its future is uncertain for several reasons.
Republicans hold a slim 52-48 seat majority in the upper chamber, far short of the 60-vote threshold they will need to overcome a likely Democratic filibuster.
Senate Republicans will need to resort to an expedited parliamentary procedure known as “reconciliation” to checkmate a filibuster, but that will mean stripping out sections of the House-passed legislation that do not directly affect the federal budget, possibly including controversial insurance reforms.
Republican Senate leaders, including Majority Leader Mitch McConnell (KY) and Senate Finance Committee chairman Orrin Hatch (UT), have no intention of rubber-stamping the House-passed bill. Senators have been working on healthcare reform legislative scenarios since long before President Obama signed ACA into law in 2010. They have their own ideas for expanding insurance coverage and slowing the growth of health costs and will seize this opportunity to enact reforms.
The House-passed measure is every bit as controversial as the healthcare reform law it was designed to replace. Putting aside the hyper-partisan politics, including a solid wall of Democratic “no” votes, authors of the American Health Care Act made at least three huge changes in the Affordable Care Act that will face strong headwinds in the Senate, even among the 52 Republicans:
- AHCA scales back ACA’s expansion in Medicaid eligibility that extended health coverage to some 10 million lower-income Americans. Over the next decade the bill would cut Medicaid by some $800 billion, according to the Washington Post, a big problem for state governors, many of whom are Republicans.
- The House bill restructures ACA premium assistance subsidies that help about 10 million lower and middle income households afford health insurance on the ACA exchanges. AHCA would convert ACA’s open-ended income-based subsides to flat, age-based premium tax credits, the idea being to “equalize” the tax treatment of employer-provided health coverage and individual market coverage. This change would produce winners and losers, with lower-middle income and older exchange enrollees probably having to pay higher premiums than they do under ACA.
- In an effort to give the states more control over health insurance, reduce premiums and encourage insurers to offer plans in the individual market, the House-passed bill contains a state opt-out mechanism from certain federal ACA insurance requirements. AHCA would allow states to seek waivers from rules mandating essential health benefits (i.e., ACA’s bronze, silver, gold, platinum-level plans) and “community rating” of premiums charged individuals with pre-existing medical conditions.
The latter is especially controversial as it affects perhaps the #1 most popular feature of ACA—that insurers not only cannot deny coverage to people with serious medical conditions but that people with chronic illnesses should not be discriminated against in the premiums they must pay.
House Republicans believe strongly that their bill actually strengthens protections for people with pre-existing medical conditions by requiring states that apply for waivers to set up alternative coverage arrangements, including so-called “high-risk pools,” and stipulating that higher premiums could be charged only to individuals for a year who allow their insurance to lapse for at least two months. The House bill includes an additional $8 billion over five years for state high-risk pools.
Nevertheless, Republican senators may view ACA’s ban on pre-existing condition exclusions as the electrified “third-rail” of healthcare reform—not worth risking their political lives for.
GOP senators are also likely to be impressed by the groups that have come out against the House-passed bill. The American Medical Association, the American Hospital Association and the seniors’ lobby, AARP, have issued public statements opposing the American Health Care Act. Physicians, hospitals and other healthcare providers have much at stake in how this legislation plays out, and they are among the most influential voices on health policy on Capitol Hill.
Finally, Republican senators cannot ignore the March Congressional Budget Office (CBO) report on an earlier version of AHCA that forecast that if the bill were to become law as is, 24 million more Americans would be without health insurance in 2026.
In the meantime, it remains a wait-and-see game for employers
A number of key provisions that affect employer-sponsored plans, outlined in the March 9 blog post, remain in the latest version of AHCA. These include: delay of the 40 percent “Cadillac Tax” on employer-sponsored coverage until 2026, elimination of the ACA’s employer and individual mandate penalties, repeal of the Medicare surcharge on high-earners and the expansion of health savings accounts (HSAs).
What will the Senate do and when?
Taking all this into account, expect the Senate, sometimes termed the “greatest deliberative body in the world,” to deliberate carefully and cautiously on the House-passed bill. This will start with extensive public hearings in at least two Senate committees to afford an opportunity for supporters and opponents to express their views.
Following these hearings, probably sometime in June or July, the committees will “mark-up,” or draft, legislative language—either working from the House-passed bill or starting from scratch. Assuming all Democratic senators oppose any legislation, Republicans will go the “reconciliation” route, which means the Parliamentarian of the Senate must rule on the eligibility of provisions for a simple majority vote on the Senate floor.
Complicating all this, of course, will be the state of ACA exchange marketplaces in 2017, themselves in precarious financial straits. Insurers continue to abandon the exchanges, leaving many counties with only one plan offering. And premiums continue to rise as insurers lose money because medical claims exceed premium revenue. The Wall Street Journal reports that CareFirst BlueCross BlueShield is proposing a 52 percent average premium increase for Maryland in 2018.
AHCA opponents may be hard-pressed to advocate for the ACA status quo if insurers continue to bail out, premiums escalate and enrollment slides. President Trump may be exaggerating when he claims ACA will “explode,” but at the same time not even the staunchest defender of ACA would say it’s not in need of major surgery.
At the very least, senators will need to consider legislation to shore up ACA and protect the 20 million Americans who have their health insurance as a result of the 2010 law. And they will adopt the most constructive features of the House-passed bill, probably including eliminating penalties associated with the individual and employer mandates. And they may break new ground in creating a “third way” in healthcare reform, somewhere between ACA and AHCA.
Which brings us back to Essex and the 1963 hit single. Repealing and replacing ACA surely will be easier said than done. But that doesn’t mean it’s impossible. With all the controversy around both ACA and AHCA, it’s easy to forget that healthcare reform 2017 will affect real people with serious illnesses. Americans will be looking to the U.S. Senate to put people first and politics last.
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With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and Payroll Policy Issues, keeping HCM professionals informed about fast-changing and complex compliance regulations and workforce trends.