Senate Unveils Updated BCRA Draft – On July 13, 2017, the Senate released an updated version of the Better Care Reconciliation Act (“BCRA”). A motion to proceed with the revised bill and the Congressional Budget Office (“CBO”) financial projection of the bill is expected next week. The updated BCRA does not contain major changes affecting employers, but the most significant change was submitted by Senator Ted Cruz, which would allow insurers to sell minimum coverage options if at least one coverage option meets Affordable Care Act (“ACA”) requirements.
On June 22, 2017, the Senate introduced its version of the American Healthcare Act (“AHCA”). The Senate bill maintains some of the House bill provisions, but also provides some changes, as follows:
Insurance Market Stabilization
- Short-Term Stabilization Fund: Provides $15 billion per year in 2018 and 2019; $10 billion per year in 2020 and 2021.
- Cost-Sharing Reductions: Continues federal assistance – through 2019 – to help lower health care costs for low-income Americans in the individual market.
Reduces the Individual and Employer Mandates to $0
- Effective 1/1/2016
- Removes 30% Premium Surcharge for failure to maintain coverage for longer than 63 days per House bill
Improves the affordability of health insurance
- Long-Term State Innovation Fund: Dedicates $62 billion, over eight years, to encourage states to assist high-cost claimants and low-income individuals to purchase health insurance;
- Tax Credits: to help defray the cost of purchasing insurance; advanceable and refundable credits – adjusted for income, age and geography.
- Credits available 1/1/2018; language added to prevent those unlawfully present from receiving credits; increases penalty for improper credit receipt effective 1/1/2020
- Health Savings Accounts: increased contribution limits equal to the Maximum Out of Pocket in effect for High Deductible Health Plans; may be used to pay for over-the-counter medication; and permits spousal catch-up contributions
- Changes effective 1/1/2018 – the House bill would have retroactively permitted the changes to 1/1/2017
- Reduces the penalty for improper distributions from 20% to 15%
- House bill would have reduced the penalty to 10%; this item would be effective 1/1/2017
- Repeals Obamacare Taxes
- Unchanged from House bill
- Empowers states through state innovation waivers (Obamacare 1332 Waiver)
- Unchanged from House bill
- Maintains the following Affordable Care Act reforms: 1) coverage of dependent to the age of 26; and 2) prohibition on pre-existing conditions.
- House bill would have also maintained annual lifetime limit prohibitions
Changes to Medicaid
- Reductions: Beginning 2021, gradual reductions in the amount of federal Obamacare funds provided to expand Medicaid, restoring levels of federal support to preexisting law by 2024.
- House bill would have reduced funds beginning 2020
- New Protection for the Most Vulnerable: Guarantees children with medically complex disabilities will continue to be covered.
- Provides additional state flexibility to address the substance abuse and mental health crisis.
- Flexibilities for Governors: Allows states to choose between block grant and per-capita support for their Medicaid population beginning in 2020, with a flexibility in the calculation of the base year. Allows states to impose a work requirement on non-pregnant, non-disabled, non-elderly individuals receiving Medicaid.
- Unchanged from House bill
Congressional Budget Office Provides Updated Estimate
On May 24, 2017, the Congressional Budget Office (CBO) reviewed the American Health Care Act (AHCA), as passed by the House, and updated its cost estimate. Specifically, the CBO expects the number of uninsured individuals will rise to $14M in 2018; $19M in 2020; and $23M in 2026. In addition, the CBO estimates that a reduction in the national deficit of $119B would result from the passage of the AHCA from 2017-2026.
Bills Reviewed by House Ways and Means Committee
- VETERAN Act (H.R. 2372) Sponsored by Rep. Sam Johnson (R-TX) – Puts into law an existing regulation that ensures veterans who are not already enrolled in and receiving health insurance through the Veterans Administration have help to purchase coverage on the individual insurance market.
- Broader Options for Americans Act (H.R. 2579) Sponsored by Ways and Means Health Subcommittee Chairman Pat Tiberi (R-OH) – Expands options for certain Americans who have lost their jobs by allowing them to access the American Health Care Act’s tax credits. Additionally, it ensures that Americans in similar circumstances who work at churches or other houses of worship can access these tax credits.
- Verify First Act (H.R. 2581) Sponsored by Rep. Lou Barletta (R-PA) – Protects taxpayer dollars from waste, fraud, and abuse and tightens verification requirements to ensure the subsidies under current law and tax credits under the American Health Care Act aren’t dispensed until the legal status of an eligible recipient is verified.
House Narrowly Passes AHCA
On May 4, 2017, the House of Representatives passed an amended version of the AHCA by a vote of 217 to 213. The AHCA, aimed at repealing and replacing the Affordable Care Act (ACA), was originally released by House Republicans on March 6, but was pulled from the House floor on March 24, due to a shortage of votes needed to pass the legislation.
In working with the conservative Freedom Caucus and wavering moderates, House Republicans made a number of amendments to the AHCA including the MacArthur Amendment and the Upton Amendment. The MacArthur Amendment allows states to apply for a waiver from certain ACA requirements, including essential health benefits, continuous coverage penalty and community rating rules. The Upton Amendment provides an additional $8 billion in funding for states that “opt-out” of the ACA’s continuous coverage provision (and opts for health status underwriting) to support individuals with health conditions.
Now that the amended bill has passed the House, it will move to the Senate, where it faces an even tougher path given that Republicans only hold a 2-vote majority. Major revisions to the AHCA are expected in the Senate; some reports indicate that the Senate is working on its own healthcare bill.
The House voted on the revised bill without an updated accounting of its cost or impact from the Congressional Budget Office (CBO). In its original scoring of the AHCA, the CBO projected that the AHCA would reduce federal deficits by $337 billion over the next ten years, but approximately 24 million people currently insured by the ACA were projected to become uninsured over that same period of time. Senate rules require a CBO score for any bill passed through reconciliation and it is expected that the amended bill will be scored by the CBO in the coming weeks.
McArthur Amendment Introduced
On April 26, 2017, Republican Tom MacArthur introduced an amendment to the American Health Care Act (“AHCA”). A hearing or vote on the amendment has not been scheduled. The amendment provides the following:
- Establishes permissible state waivers to encourage fair health insurance premiums;
- Allows states to submit a waiver application to Health and Human Services (“HHS”) to 1) increase age rating ratio; 2) specify essential health benefits; and 3) replace the late enrollment penalty with health status rating if no continuous coverage is maintained:
- Waiver application:
- default approval of state waivers unless a denial is issued within 60 days;
- sets forth specific application requirements;
- waivers are effective for 10 years; and
- waiver is automatically void if state ends risk sharing program.
On April 13, 2017, ERISA Advisory Council submitted a recommendation to the Secretary of Labor to 1) eliminate the Summary Annual Report requirement for health and welfare plans not already exempt; 2) consolidate the annual notices into a single annual notice in a shortened format; and 3) change the Summary Plan Description requirements. The recommendation is a result of the January 30, 2017 Executive Order requesting the reduction and control of federal regulation.
AHCA Amendment Introduced by House Committee
On April 6, 2017, prior to breaking for recess, the House of Representatives House Rules Committee introduced an amendment to the American Health Care Act (“AHCA”). The new amendment would create a “Federal invisible Risk-Sharing Program,” a $15 billion reinsurance program, funded by the US Treasury, that would reimburse individual market insurers for high cost enrollees. However, the amendment fails to provide specifics on how the program would function. Instead, the specifics would be determined by Health and Human Services (“HHS”) and Centers for Medicare and Medicaid Services (“CMS”).
House Passes the Self-Insurance Protection Act
On April 5, 2017, the House passed the Self-Insurance Protection Act (“Act”) by a bipartisan vote of 400 to 16. The Act amends provisions of the Employee Retirement Income Security Act (“ERISA”), the Public Health Service Act (“PHSA”), and the Internal Revenue Code (“IRC”) to ensure stop-loss insurance is not treated as health insurance and therefore, is not required to meet provisions of the Affordable Care Act (“ACA”).
CHRONIC Re-Introduced by the Senate
On April 3, 2017, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act (“CHRONIC”) was re-introduced by the Senate. The Bill was initially introduced in December 2016 with little action. CHRONIC would improve management of chronic disease, streamline care coordination, and improve quality outcomes by implementing value based insurance design within Medicare Advantage and expanding access to tele-medicine programs.
On Friday, March 24, 2017, the House approved rules for debate of the American Health Care Act (“AHCA”) by 230 Republicans and 194 Democrats (a 2/3 vote). Passing the first hurdle allowed the House to debate the AHCA to vote later in the afternoon. At 4:00 PM, Speaker Paul Ryan decided to pull the AHCA from vote due to lack of consensus. Speaker Ryan held a press conference alluding to Affordable Care Act changes to come at a later date when sufficient support can be secured. For now other policies will take precedence (e.g., taxes, immigration, etc.), which may signify delay in health care reform.
At the last minute, the following amendments were included:
- Delaying the repeal of the additional 0.9 percent Medicare tax on high-income earners;
- Requiring states to establish their own essential health benefits standards for purposes of the premium tax credit; and
- Providing additional funding for the Patient and State Stability Fund for mental health and substance use disorders and maternity care.
House Passes the Small Business Health Fairness Act
On March 22, 2017, the House voted 236 to 175 to pass the Small Business Health Fairness Act (the “Act”), legislation that would allow small businesses to establish association health plans. Association health plans would allow business to gain greater bargaining power to secure lower costs (e.g., reducing administrative expenses) and greater choices (e.g., allowing small businesses to purchase insurance across state lines).
On March 20, 2017, the House Republicans announced a number of amendments to strengthen the AHCA prior to its house vote later this week. The amendments include the following:
- Accelerated Repeal of Taxes – Changes the effective date of tax repeals to January 1, 2017 rather than January 1, 2018;
- Cadillac Tax Delay – Additional delay from 2025 to 2026;
- Increased Medical Expense Tax Deduction – Reduces the medical expense threshold from 10% to 5.8% of income;
- Medicaid Flexibility – Allows states to receive federal funds through block grants, rather than per capita allotments;
- Flexible Reasonable Work Programs – Allows states to design work requirements for individuals receiving Medicaid funds; and
- Control Medicaid Expansion – Prevents new states from opting into Medicaid expansion and continue funding for those enrolled as of December 31, 2019. Thereafter, gradually reduce funding for those no longer enrolled in Medicaid.
On March 20, 2017, the Department of Health and Human Services (“HHS”) launched a new website that will reflect administrative and regulatory actions relating to healthcare reform. Per Secretary Tom Price, the Department is taking action to 1) improve patient choices; 2) stabilize the individual and small group insurance markets; and 3) expand access to affordable coverage.
House Budget Committee Votes on AHCA
On March 16, 2017, the House Budget Committee approved the AHCA by a 19-17 vote. Three Republicans joined Democrats in opposition of the AHCA. The AHCA will now move to the House Rules Committee, which may amend portions of the AHCA. There is no date set for the completion of the amendments, but House Speaker Ryan has alluded the AHCA would be reviewed on the House floor during the week of March 20th.
On March 13, 2017, the Congressional Budget Office, a federal non-partisan agency that provides budget and economic information to Congress released a report analyzing the cost and effect of the American Health Care Act.
On March 8, 2017, the House Committee on Education and Workforce introduced three separate legislative proposals that would affect wellness programs, association plans, and stop loss insurance. Specifically:
- HR 1101 – The Small Business Health Fairness Act
- HR 1304 – The Self-Insurance Protection Act
- HR 1313 – The Preserving Employee Wellness Programs Act
On March 6, 2017, the House Ways and Means Committee and the House Energy and Commerce Committee introduced the American Health Care Act (“AHCA”), composed of two Bills. The AHCA presents the initial design of the Republican efforts to repeal and replace the Affordable Care Act (“ACA”).
On February 16, 2017, internal documents outlining potential healthcare reform design circulated Congress.
On February 15, 2017, the Internal Revenue Service (“IRS”) updated its website to indicate actions it will take relating to the individual penalty following the President’s January 20th Executive Order. Individuals are subject to an individual tax penalty if the individual failed to enroll in health coverage during 2016. To assess the penalty, the individual must indicate on the individual tax return, the months he/she maintained health coverage. Following the Executive Order, the IRS has decided to reduce the burden of reporting by accepting paper and electronic returns that do not respond or otherwise indicate if the individual had health coverage during 2016. The IRS may contact the individual on a later date to request information related to coverage.
On January 20, 2017, the President signed an executive order entitled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.” The order asks the federal agencies to exercise discretion relating to the enforcement of the Affordable Care Act to halt, reduce, or delay economic burden on affected parties.