Better Care Reconciliation Act of 2017: U.S. Senate ACA Repeal and Replace Legislation June 23, 2017 Health Care Reform, Politics and Medicine, Public Health ACA, Affordable Care Act, Better Care Reconciliation Act 0 On June 22, 2017, Senate Majority Leader Mitch McConnell released draft legislation to repeal and replace the Affordable Care Act (ACA). The bill is titled “The Better Care Reconciliation Act of 2017.” A Congressional Budget Office (CBO) impact analysis of the bill is expected early next week. Senator McConnell has stated that his goal is to vote on the bill next week before the July 4 recess. He has a razor-thin majority and can only lose two votes to gain passage. Therefore, changes are expected as Senators continue to negotiate on the final legislation. The overall framework of the bill is similar to the House-passed bill, the American Health Care Act (AHCA). But in the long-term, it is less generous than the House bill on Medicaid spending, tax credits and subsidies to help low- to moderate-income families afford coverage, and funding for states. However, it does provide reinsurance funding for the individual market, reinstates the ACA income-based tax credits to help low-income individuals afford insurance, and extends the Medicaid expansion program until 2021 instead of 2019. The California Medical Association (CMA) has urged the House and Senate to reform our health care system by improving access to physicians, protecting the Medicaid safety net and ensuring that no one loses access to affordable coverage under the legislation. CMA also called for the legislation to protect those with pre-existing conditions and to provide more reinsurance funding to stabilize the individual market and bring down premiums for all. Unfortunately, the Senate bill does not meet these basic CMA principles to protect our most vulnerable patients – low-income children, pregnant women, the elderly and disabled. We urge the Senate to continue working on a bill that will expand access to care and coverage. Brief Summary Repeals the individual mandate penalties; repeals the mandate for mid-size to large employers. The House bill replaced the individual mandate with the continuous coverage penalty. However, the Senate bill does not include such a penalty. Senate leaders said they are still working on a continuous coverage penalty that will meet the parliamentarian’s rules for reconciliation legislation. Insurers have said that such penalties are important if the guaranteed issue mandates remains. Otherwise, healthy individuals may not purchase coverage which would drive up costs for everyone. Medicaid Current law remains in effect until 2021. Medicaid expansion enhanced 100% federal match is phased-out 2021-2024. States may continue coverage for Medicaid expansion for low-income adults, but only at California’s 50% federal matching rate. (House version ends Medicaid expansion in 2019.) Repeals state option to cover non-elderly individuals above 133% of FPL. Ends the Medicaid funding entitlement for low-income children, pregnant women, the elderly and disabled. States may choose a per capita cap or a block grant. However, the elderly, disabled and children are exempt from the block grant. Children with complex medical conditions, dual-eligibles and CHIP eligible children, among others, are also exempt from the per capita cap. The funding base is calculated based on state spending over eight consecutive quarters between January 2014 and September 2017. States may choose the timeline. Medicaid spending growth is set at the House level of CPI-Medical Inflation until 2025. Afterward, it’s set at CPI for urban areas, which is less. The inflation rate for the elderly and disabled is set at CPI urban plus 1%. States that spend less than the caps are eligible for bonus pool payments. Special funding for non-expansion states: Funding for safety net providers and a Disproportionate Share Hospital payment for states spending less than national average. Hospital provider tax reduced by 0.1% each year ending in 2025. States incentivized to apply for Medicaid 1332 waivers - $2 billion. Allows states to require Medicaid beneficiaries to work. Eliminates presumptive eligibility. Sunsets the Essential Health Benefits. Optional coverage for some inpatient psychiatric services for individuals ages 21-65. Tax Credits Current ACA law income-based tax credits continue through 2019. Beginning in 2020, advanceable, refundable, income-based tax credits continue for those individuals with incomes between 0-350% of the federal poverty level. Current law is 100-400% of FPL. This tax credit could help many of those low-income adults who were previously enrolled in the Medicaid expansion. (Awaiting CBO analysis) Benchmark plan for determining the level of subsidies is less than current law (58% of actuarial value). House-passed age-based tax credits are not included in this bill. Individual Market Changes Current law cost-sharing subsidies that help low-income individuals afford co-pays and deductibles will continue for two years through 2019. Older individuals may be charged five times more for insurance. (ACA limit was 3:1). Sunsets the Essential Health Benefits package. Individuals selecting health plans that offer abortion-related services are not eligible for tax subsidies. Repeals the health plan medical loss ratio requirements. Maintains current ACA guaranteed issue requirement for patients with pre-existing conditions. Insurers must continue to accept all patients and charge the same rates with a few exceptions. State Stabilization Fund/Reinsurance Establishes a $112 billion Stabilization Fund $50 billion Short-Term Reinsurance funding: o 2018-2019: $15 billion o 2020-2021: $10 billion Long-term grant funding for states to implement their own programs: 2019-2026 Such funding can be used to help lower premiums and out-of-pocket costs or establish programs to incent insurers to sell insurance in the individual market. There are state matching requirements that increase each year.Any unspent state allotments will be redistributed to other states within three years. (The House bill provided $123 billion to the states) o 2019: $8 billion o 2020-2021: $14 billion o 2022-2023: $6 billion o 2024-2025: $5 billion o 2026: $4 billion (Conservative economists have opined that at least $300 billion is needed to adequately fund reinsurance.) Health Savings Accounts Incentivizes health savings accounts (HSA) by lifting the limit on contributions to HSAs and reducing the tax penalty for using HSAs to purchase ineligible products. Public Health and Prevention Fund Eliminates current ACA public health fund in 2018. (House Version cuts start in 2019.) Planned Parenthood Eliminates Planned Parenthood Medicaid funding for one year. Repeals ACA Taxes and Cuts Medicaid Trust Fund by $75 billion Repeals the taxes on high-income earners, including investment income. Eliminates the Cadillac tax on high-end health benefits offered by health plans to 2025. Repeals the taxes on medical device manufacturers and tanning salons. Opioid Substance Abuse Treatment and Mental Health Funding Provides $2 billion vs. the House-passed $15 billion CMA Staff Contact: Elizabeth McNeil, VP, Federal Government Relations, emcneil@cmanet.org; Comments are closed.
