In a first step toward repealing and replacing
the Affordable Care Act (ACA), the U.S. House of Representatives passed the
American Health Care Act (AHCA) May 4, 2017. On Thursday, June 22, 2017 Republican
Senate leadership released a discussion draft bill, “Better Care Reconciliation Act (BCRA) of 2017”. To date the Senate has not been able to pass a health care bill or a bill that would repeal the Affordable Care Act without replacing it. Until final legislation is passed by Congress
and signed into law by President Trump, all existing ACA requirements remain in
effect, including penalties for noncompliance.
The budget reconciliation process in the Senate allows
Republicans to repeal only parts of the ACA that affect federal spending. They
are taking this approach because if they instead took a traditional legislative
path, the 52 Senate seats held by Republicans would not fulfill the 60 votes
necessary to overcome a filibuster.
With the current individual market collapsing, the Senate bill would
provide support to stabilize the individual market. The draft bill proposes billions of dollars
in funding, creation of high risk pools and could potentially create more
health plan options. However the Congressional Budget Office, (CBO), is projecting that millions of individuals would become uninsured due to potential changes, in particular to Medicaid.
Below is a summary of the highlights of the House and Senate
bills and how the changes compare to the ACA.
This is a fluid process where amendments and changes could alter the
final bill significantly.
ACA
| House Republican- AHCA
| Senate Republican- BCRA
|
Individual Mandate
Under current law, most individuals are required to purchase health insurance or pay a penalty.
| Repeal
This section would reduce the penalty to zero for failure to maintain minimum essential coverage; effectively repealing the individual mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
| Repeal
This section would reduce the penalty to zero for failure to maintain minimum essential coverage; effectively repealing the individual mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
|
Employer Mandate
Under current law, large employers are required to provide health insurance or pay a penalty.
| Repeal
This section would reduce the penalty to zero for failure to provide minimum essential coverage; effectively repealing the employer mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
| Repeal
This section would reduce the penalty to zero for failure to provide minimum essential coverage; effectively repealing the employer mandate. The effective date would apply for months beginning after December 31, 2015, providing retroactive relief to those impacted by the penalty in 2016.
|
HSAs and FSAs
Under the current law the maximum contribution for an individual is $3,400 and for a family is $6,750 for 2017.
The current law limits the amount an employer or individual may contribute to a Health Flexible Spending Account (FSA) to $2,500, indexed for cost-of-living adjustments.
Excludes over-the-counter medications from the definition of qualified medical expenses without a prescription.
| Expands
Maximum contribution limit to Health Savings Account increased to out-of-pocket limits: $6,550 in the case of self-only coverage and $13,100 in the case of family coverage beginning in 2018.
Allows both spouses to make catch-up contributions.
The increased excise tax on non-eligible HSA purchases would be reduced back to 10%.
Repeals the Health FSA annual limits defined by the ACA beginning January 1, 2018.
The prescription requirement for purchasing over-the-counter items using HSA/FSA funds would be repealed as of 2018.
| Expands
Maximum contribution limit to Health Savings Account increased to out-of-pocket limits: $6,550 in the case of self-only coverage and $13,100 in the case of family coverage beginning in 2018.
Allows both spouses to make catch-up contributions.
The increased excise tax on non-eligible HSA purchases would be reduced back to 10%.
Repeals the Health FSA annual limits defined by the ACA beginning January 1, 2018.
The prescription requirement for purchasing over-the-counter items using HSA/FSA funds would be repealed as of 2017.
|
Cadillac Tax
Current law imposes a 40 percent excise tax on high cost employer-sponsored health coverage. Under current law, the tax will go into effect in 2020.
| Delayed until 2026
| Delayed until 2026
|
| ||
Health Insurance Premium Tax
Taxes on health plans: $13.9 billion in 2017; $14.3 billion in 2018, indexed in later years by the rate of premium growth.
| Repealed effective 2017
| Repealed effective 2017
|
Individual Premium Subsidies
Tax credits are provided to qualified individuals on a sliding scale based on income to help offset the cost of premiums. The cap to determine eligibility for credits is up to 400% of the federal poverty level.
Tax credits are tied to the second lowest cost silver plan with an actuarial value roughly 70% actuarial value.
| Changed
Replaces the ACA's premium tax credits for individual market coverage with advanced, refundable tax credits adjusted for both age and income.
Tax credits would be available to individuals earning less than $75,000 and households earning less than $150,000, but capped for higher earners. They would be available to individuals applying both inside and outside the exchanges.
| Some Change
Keeps the ACA structure in place, factoring in age, income and geography but reduces the cap to determine eligibility for credits to 350% of the federal poverty level ($41,580 for individuals and $85,050 for a family of four).
Tax credits would be available for those below 100% of the poverty level who currently are not able to access ACA tax credits but are currently eligible for Medicaid.
The proposed tax credits are less than ACA tax credits and would be tied to plans with an actuarial value of 58%.
|
Individual Exchange “Cost-Share” Subsidies
Tax credits are provided to some individuals to help pay deductibles and co-payments
| Repealed
| Includes funding to continue cost-sharing reduction payments through 2019.
|
Medicaid expansion
Allows states to expand Medicaid
| Rolls back expansion
Allows states to keep Medicaid expansion and continue to get federal funding until 2020. Federal funding for individuals who become newly eligible starting in 2020 or who leave the program would be reduced. Federal funds would be capped to states based on per enrollee.
Add state option to require work as a condition of eligibility for nonelderly Medicaid adults who are not disabled or pregnant.
| Rolls back expansion
Begins phasing out the ACA enhanced funds starting in 2021 and restoring it to pre-Affordable Care Act levels by 2024.
Cap on Medicaid payments would grow at a slower rate starting in 2025.
Add state option to require work as a condition of eligibility for nonelderly Medicaid adults who are not disabled or pregnant.
|
Insurance Market Rules:
Pre-existing conditions policy requires guarantee issue and no exclusions for pre-existing conditions
Community rates for individual and fully insured small group
Age Based Rates– law currently permits a 3-to-1 ratio.
Dependent coverage until 26
| Retain market rules but states may waive requirements including rules to guarantee issue coverage and pre-existing condition exclusions.
Beginning in open enrollment for 2019, there would be a 12-month look-back period to determine if the applicant went longer than 63 days without continuous health coverage. If they had a lapse for greater than 63 days, they would be charged an additional 30 percent late-enrollment surcharge. Starting in 2019 states may apply for waiver of the ACA community rating requirement.
Modify age rating limit to permit variation of 5:1, unless states adopt different ratios, effective 2018. Retain prohibition on health status rating with state option to waive for individual market applicants who have not maintained continuous coverage. Dependent coverage to age 26
| States would have leeway to roll back the ACA’s insurance regulations and consumer protections. However states cannot opt out of regulations governing pre-existing conditions.
Individuals who had a break in continuous coverage for 63 days or more in a prior year would have to wait six months before coverage begins, however they wouldn’t have to pay premiums during that time.
Community rates for individual and fully insured small group remain.
Modify age rating limit to permit variation of 5:1, unless states adopt different ratios, effective 2018.
Dependent coverage to age 26
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Essential health benefits: including ambulatory, emergency, hospitalization, prescriptions, maternity and childbirth, mental health and substance abuse, rehabilitation, laboratory, preventive, and pediatric services
| In 2020 State waivers can be used to waive essential health benefits.
| In 2020 State waivers can be used to waive essential health benefits.
|
Prohibitions on annual and lifetime limits
| Prohibition on lifetime and annual dollar limits is not changed; however limits on essential health benefits can be changed under state waiver authority.
| Prohibition on lifetime and annual dollar limits is not changed; however limits on essential health benefits can be changed under state waiver authority.
|
Medical Loss Ratio (MLR) Rebates
Sets minimum medical loss ratio standards for all health plans. Insurers must provide rebates to consumers for the amount of the premium revenue spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets.
| Minimum MLR standards for all health plans are not changed.
| Federal MLR limitations shall not apply for plan years beginning on or after January 1, 2019. At that time MLR will be determined by the state.
|
For more details and information:
AHCA – House bill
BCRA – Senate bill