May 05, 2017

House Passes Obamacare Repeal and Replace Bill

After numerous delays and intensive backroom negotiations, on May 4 the U.S. House of Representatives finally passed H.R. 1628, the American Health Care Act (AHCA), legislation that repeals major elements of the Patient Protection and Affordable Care Act (PPACA), commonly referred to as “Obamacare,” and implements numerous new conservative health care policies.

The measure was adopted by a vote of 217-213, with no House Democrats voting in favor of the legislation. The bill will now be considered in the Senate under budget reconciliation, an arcane parliamentary procedure that prohibits a Senate filibuster and allows select bills to be passed with a simple majority vote.

H.R. 1628 consists of five major policy components, specifically the elimination of many existing PPACA taxes, the creation of new health care tax credits to help individuals purchase health insurance, expanded access to health savings accounts (HSAs), state innovation grants to help cover beneficiaries with pre-existing conditions and Medicaid reform. For a more in-depth review of these key policy provisions in the legislation, review the ACR legislative summary.

The American College of Radiology (ACR) is pleased the AHCA does not repeal PPACA provisions, specifically Section 2713, requiring private insurance companies to cover the cost of life-saving cancer screening services, such as mammograms, low-dose lung cancer CT screenings and CT colonography for colon cancer, without any form of patient cost sharing, including co-payments, co-insurance or deductibles.

A series of last-minute amendments proposed by various House Republicans enabled the passage of H.R. 1628. The first amendment was negotiated in April primarily by Reps. Tom MacArthur (R-NJ), one of the three co-chairs of the Tuesday Group, a 50-member bloc of moderate GOP House members, and Mark Meadows (R-NC), chair of the Freedom Caucus, a collection of approximately 30 ultra-conservatives. The MacArthur-Meadows amendment provides states with the ability to seek waivers from existing PPACA requirements pertaining to community rating and essential health benefits (EHBs) as long as certain conditions are met.

Despite the addition of the MacArthur-Meadows amendment, numerous moderate Republicans, especially Reps. Fred Upton (R-MI) and Billy Long (R-MO), continued to withhold their support for the legislation due to concerns that the changes to the bill still did not provide enough protection to individuals with pre-existing conditions. Both congressmen are prominent members of the Energy and Commerce Committee, with Upton serving as the committee’s immediate past chair.

According to the MacArthur-Meadows amendment, individuals who live in states that received a waiver and successfully established a high-risk pool, either on their own or through the federal government via the AHCA created “Patient and State Stability Fund,” may be charged higher premiums for pre-existing conditions. In addition, individuals, who are subjected to higher premiums because of pre-existing conditions, must show they are seeking replacement health insurance following a 63-day or longer break in their previous coverage.

Upton and Long felt that the MacArthur-Meadows amendment provided insufficient funding solely dedicated to helping individuals with pre-existing conditions that are placed in high-risk pools offset the cost of potentially rising premiums stemming from their health status. As a result, the two members of Congress negotiated directly with the Trump Administration on an amendment that would add an addition $8 billion over five years to the state high-risk pools which presumably will be devoted to lowering premiums for beneficiaries with pre-existing conditions. The addition of this amendment finally placated enough moderate GOP Congressmen to pass the legislation.

Passage of the AHCA marks a major victory for President Donald Trump, House Speaker Paul Ryan (R-WI) and the Freedom Caucus, all of whom worked diligently to enact a series of last-minute policy changes to ensure the legislation retained the support of both the moderate and more conservative wings of the Republican Party.

H.R. 1628 implements extensive Medicaid reforms, especially ending the traditional practice of providing states with open-ended monetary resources to cover the cost of all beneficiaries and implementing a policy that only grants states fixed amounts of federal funding regardless of enrollment volume.

The legislation grants the states the option to pursue Medicaid block grants or per capita funding caps to cover Medicaid costs starting in 2020. Under block grants, states are provided a lump-sum payment with minimal restrictions on how the funding should be used. H.R. 1628, however, stipulates that block grants would only apply to adults and children and will explicitly exclude the elderly, blind, disabled and able-bodied populations. Medicare is not affected. With per capita caps, specific dollar amounts are calculated from mathematical formulas for each Medicaid beneficiary, and this amount is paid to a state on an annual basis.

AHCA also grants states the option of imposing limited work requirements on "non-disabled, non-elderly, non-pregnant” Medicaid beneficiaries. States are authorized to determine the length of the work requirements. In turn, the federal government provides a five percent increase in Medicaid matching funds to help implement the new policy. Finally, the legislation immediately ends the increased federal matching funding for states that extended Medicaid to "able-bodied" Americans as permitted under PPACA.

Other provisions added to the AHCA would establish a reserve fund of at least $75 billion for more generous tax credits that would be given to Americans between the ages of 50 and 64 to assist them with purchasing health insurance. In a peculiar legislative maneuver, H.R. 1628 does not outline the specifics of this higher tax credit. Instead, the legislation instructs the Senate to outline the structure of this expanded tax credit for this age bracket.

The AHCA also repeals numerous targeted PPACA taxes in 2017, a year earlier than required by previous versions of the legislation. The House successfully delayed the controversial Cadillac tax, a 40 percent excise tax on high-cost employer-sponsored health coverage, for an additional year until 2026. Financial penalties associated with the individual and employer mandates are immediately zeroed out retrospective to 2015.

It is unlikely that H.R. 1628 will pass the Senate in its current form, and it is largely unclear when this chamber will consider the bill. Numerous moderate Republican senators have expressed strong reservations regarding the AHCA’s Medicaid reforms and its potential impact on the number of Americans who will lose access to health insurance coverage made possible by PPACA provisions. Senate Majority Leader Mitch McConnell (R-KY) will likely aim at passing the legislation in June.

ACR members are encouraged to monitor the ACR Advocacy in Action eNews for the latest developments surrounding the AHCA.