On March 6, 2017, House Republican leadership proposed the American Health Care Act, which repeals and replaces certain provisions of the Affordable Care Act.  The American Health Care Act emerges from budget reconciliation bills from the House Ways and Means Committee and the Energy and Commerce Committee, resulting from the budget resolution passed by both houses of Congress in mid-January 2017.

The committees shall begin review and revision of the proposed bill on March 8, 2017.  Then, the bill will proceed to both the House Budget Committee and the House Rules Committee, and then to the House for a vote.  Thereafter, the bill will proceed to the Senate for a vote.  If the Senate makes any amendments to the bill, it will return to the House.  After House conference on the amendments, the bill will make its way to the President’s desk for signature.

Some key provisions in the American Health Care Act are:

(1)    Under the new bill, health plans must still:

a.      Cover preexisting conditions

b.      Cover adult children up to age 26

c.       Cap out-of-pocket expenses

d.      Guarantee availability and renewability of coverage

e.      Prohibit health status underwriting

f.       Prohibit lifetime and annual limits

g.       Prohibit discrimination on the basis of race, nationality, disability, age, or sex

(2)    The Individual Mandate is replaced with continuous coverage:

With limited exception for certain enrollments in 2018, beginning in 2019, individuals must prove that they did not have a gap in creditable coverage of over 63 continuous days to avoid a 30% premium surcharge.

(3)    The Individual Mandate and the Employer Mandate are eliminated retroactively for years beginning with 2016.

(4)    The Cadillac tax is no longer effective after December 31, 2019, and before January 1, 2025, but will apply for taxable periods beginning after December 31, 2024.

(5)    The legislation provides for tax credits for health insurance, which are advanceable, refundable tax credits available for the purchase of state-approved, major medical health insurance and unsubsidized COBRA coverage.  The credits are adjusted by age, not income.

(6)    The legislation essentially doubles contribution limits to Health Savings Accounts beginning in 2018.

(7)    The legislation repeals limitations on contributions to flexible savings accounts beginning in 2018.

(8)    Medicaid expansion is restructured, if not halted, by 2020.  States will continue to receive extra federal funding until 2020, through a per-capita cap basis.

The Congressional Budget Office has not yet released cost estimates of the American Health Care Act, and it appears as if the legislation will proceed without the cost estimate.  Much has to occur before this proposed legislation becomes law.  However, like all else, it deserves our attention.