Does the AHCA achieve the Republicans seven-year promise of “Repeal and Replace?” Not quite. Essentially, the Republicans are unable to repeal and replace the entire Affordable Care Act (ACA) because they chose the path of budget resolution. Back in early January, to avoid a filibuster from the Democrats, the House approved a budget resolution allowing Congress to repeal certain key provisions of the ACA. This same resolution passed the U.S. Senate on January 12, 2017. Because the Republicans are utilizing the budget resolution process for repeal, only certain provisions of the ACA can repealed, including provisions with respect to the insurance marketplaces, Medicaid-expansion, and the employer and individual mandates, among others. The provisions that may be repealed under budget resolution must be fiscally relevant and reduce the deficit, i.e., tied to budget issues — such as federal spending and taxation. We’ll be hearing quite a bit about this process as this bill moves to the Senate, and then back to the House for approval after the Senate more than likely makes its own revisions to the AHCA. However, until this process is complete, and the final bill makes it to the President’s desk, the ACA is still the law of the land.
So What Provisions of the ACA Have Been Impacted By the AHCA?
The AHCA primarily targets Article I of the ACA — Affordable and Available Coverage – which includes the individual mandate, the employer mandate, the premium and cost sharing subsidies, and the insurance exchanges. The AHCA also targets Article II of the ACA – Medicaid, and Article IX of the ACA – the revenue or tax provisions.
So what are some of the key provisions that have changed? Here are some of the highlights:
· Retroactively effective to 2016, the AHCA repealed the penalties under both the individual and employer mandates.
· Beginning with open enrollment for 2019, for any individual who has had a lapse of coverage of more than 63 days in the previous 12 months, the insurer may impose a 30 percent surcharge to the premium cost for that individual for the next 12-month period.
· Individual and small group market plans no longer will have to fit into the actuarial tiers of bronze, silver, gold, and platinum.
· The AHCA created a Patient and State Stability Fund where over the next eight years, $40 million will be appropriated to help fund high-risk pools, reinsurance, maternity, mental health, and substance abuse care.
· Beginning in 2020, age-based tax credits will become available to individuals who are not eligible for insurance through their employer or a government program. These credits are refundable and advanceable. Additionally, these credits will be phased out for those individuals with incomes above $75,000, or joint filers with incomes above $150,000.
· Age restrictions would continue to apply. However, the age ratio limit would be increased from 3:1, as it is now established, to 5:1.
· The AHCA rescinded any remaining funds in the Prevention and Public Health Fund.
· The AHCA barred for one year any funding to Planned Parenthood.
· The AHCA added liberal rules for both health flexible spending accounts and health savings accounts.
· The Cadillac tax is delayed from a 2020 effective date to taxable periods beginning after December 31, 2025.
· The 3.8 percent tax on investment income for those individuals making over $200,000 yearly (or couples making $250,000 yearly) has been eliminated.
· The 0.9 percent payroll tax for individuals making over $200,000 yearly (or couples making $250,000 yearly) will be eliminated after 2023.
· States may opt for a block grant rather than a per capita grant with respect to Medicaid funds.
Please see previous Blog: The AHCA Passes By A Narrow Margin: What Does the Bill NOT Repeal and Replace? And Who’s MacArthur? for more information about the AHCA and changes to the ACA.