Washington Watch

American Health Care Act Passed by House

The American Health Care Act (AHCA) passed the House of Representatives by a narrow 217-216 vote. While the vote was along party lines, a slim minority of Republicans defied Leadership and opposed the bill. The AHCA is the first step in repealing and replacing the Affordable Care Act. The bill is now with the Senate. Early reports are showing that the Senate will either provide major amendments to the AHCA or completely rewrite the bill. The final bill is expected to be completed by the summer recess in July.

The following is a breakdown of the components of the Patient Protection and Affordable Care Act (ACA) and changes the AHCA will make should it become law.

• Pre-existing conditions
  • ACA:
    People get health insurance coverage on their own can no longer be turned for coverage because of pre-existing conditions. Insurers cannot charge them higher premiums because of their health
  • AHCA:
    Insurers would still be required to cover people with pre-existing conditions. However, states may apply for waivers to allow insurers to charge them higher premiums, starting in 2019, if the states have backup programs, high-risk pools, to cover sick people. The state run high-risk pools is referred to as the MacArthur Amendment.  The Upton Amendment increased funding for these pools by $8 billion.
• Exchanges
  • ACA:
    The ACA established exchanges or market places to offer health plans and determine eligibility for tax credits. Twelve states operate their own exchanges, while the remaining states use the federal marketplace, HealthCare.gov.
  • AHCA:
    The AHCA does not eliminate the exchanges, however the Congressional Budget Office (CBO) predicts that fewer insurers would participate due to the fact that they would not have to offer plans through these exchanges for people to get subsidies.
• Young Adult Coverage
  • ACA:
    Young adults can stay on their parents’ health insurance plans until age 26.
  • AHCA:
    No changes
• Individual Mandate
  • ACA:
    Americans are required health insurance or there is a tax penalty. This was used to attract healthy individuals to the marketplace to balance the risk pools and pay for sicker individuals.
  • AHCA:
    The AHCA repeals this provision and applies it retroactively beginning in 2016.
• Subsidies
  • ACA:
    Individuals who do not have insurance through employers will receive premium tax credits to assist with purchasing health insurance through the exchanges. The subsidies are available to people with incomes up to 400% of the poverty line. There are also cost-sharing subsidies for low income people.
  • AHCA:
    The AHCA repeals the subsidies. The AHCA replaces these with refundable, age based tax credits. The credits start at $2,000 a year for people under 30, with a maximum of $4,000 a year for people over 60.
• Medicare “Doughnut Hole”
  • ACA:
    Closes the gap in Medicare Part D prescription drug coverage by 2020.
  • AHCA:
    No changes
• Essential Health Benefits (EHBs)
  • ACA:
    All health plans in individual and small group markets must cover 10 categorical benefits.
  • AHCA:
    States would be able to get waivers to set their own minimum benefits, starting in 2020.
• Lifetime Limits
  • ACA:
    Health insurance companies can no longer limit how much they will pay in benefits over a customer’s lifetime.
  • AHCA:
    The AHCA keeps this provision, however since it is tied to EHBs it could prove to be repealed if states waive the EHBs rules.
• Employer Mandate
  • ACA:
    Employers with 50 or more full-time employees have to pay penalties if they do not cover their employees, or if their health insurance does not meet affordability standards.
  • AHCA:
     The AHCA repeals the mandate retroactively starting in 2016.
• Taxes
  • ACA:
    The ACA is funded through various taxes including annual fees for health insurers, a 2.3% tax on the sale of medical devices, and a 3.8% tax on net investment income from high income individuals. The ACA also created a 40% “Cadillac tax” on high-cost employer health insurance plans.
  • AHCA:
    The AHCA would repeal all the taxes.
• Medicaid Expansion
  • ACA:
    States that expanded their Medicaid programs to cover additional low income residents were given additional federal matching funds.
  • AHCA:
    The AHCA would end the Medicaid expansion in 2020. States would still be able to expand through 2019 and receive matching funds.
• Age Rating
  • ACA:
    Insurers in the individual and small group market can only charge premiums three times as high for older customers as for young adults.
  • AHCA:
    The AHCA will relax this rule, allowing insurers to charge up to 5 times for older customers as for young adults.
• Preventive Care
  • ACA:
    Requires most to cover preventive services without charging patients out-of-pocket payments like co-payments or co-insurance.
  • AHCA:
    No change
• Medicare Payment Cuts
  • ACA:
    Reduces payments to hospitals and providers producing about $800 billion in savings over 10 years to pay for the ACA.
  • AHCA:
    No changes, does not affect the payment cuts.