On May 4, 2017, the U.S. House of Representatives went to the floor for a second time for a vote on the American Health Care Act (AHCA) – just six weeks after House Speaker Paul Ryan pulled the AHCA for not having enough Republican support and conceding that “[w]e’re going to be living with Obamacare for the foreseeable future.” Since March, the AHCA has undergone some revisions to cure the Republican divide in the House. To pass the House, the Republicans needed 216 votes. The revisions worked, narrowly, and the bill passed the House, achieving a party-line vote of 217-213. The bill is now off to the Senate, where a simple majority will be needed, before the bill goes to the President’s desk for signature.
What Does the AHCA Not Repeal and Replace?
In its present form, at the time this article went to press, the AHCA only repeals and replaces about 10 percent of the ACA. The AHCA only amends, repeals, and/or replaces a few of the ACA’s titles, focusing primarily on Title I, which includes the individual mandate, the employer mandate, the premium and cost sharing subsidies, and the insurance exchanges, along with Article II (Medicaid) and Article IX (the revenue or tax provisions).
The AHCA does not target many of the ACA’s market reforms, such as:
- Cost-sharing limits on essential health benefits for non-grandfathered plans (see MacArthur Amendments below)
- Coverage for adult children up to age 26
- Prohibition on lifetime and annual limits for essential health benefits (see MacArthur Amendments below)
- Prohibition on health status underwriting (see MacArthur Amendments below)
- Nondiscrimination rules based on race, nationality, disability, sex or age
- Guaranteed availability and renewability of coverage
- Pre-existing conditions (see MacArthur Amendments below)
What are the MacArthur Amendments?
On April 23, 2017, after the AHCA was put to rest after a disappointing March showing, Tom MacArthur (R-NJ) breathed new life into the bill with what are now known as the MacArthur amendments. The MacArthur amendments address the ability for states to waive certain provisions of the AHCA to lower premiums and to expand the number of the insured within their state. States may apply for waivers from the AHCA’s essential health benefits requirements. Under the essential health benefits, insurers are required to cover ten categories of benefits, including – for example – prescription drugs, maternity and newborn care, emergency services and laboratory services. By applying for these waivers, states may establish less generous minimum essential benefits than the federal law requires. This will not only affect the benefits offered, but also could affect the dollar limits tied to these benefits.
Additionally, states may request waivers for the community rating rules, which only apply to those individuals who do not maintain continuous coverage. However, states are not allowed to rate based on the following:
· Age (except for reductions in the 5:1 ratio, which is the new ratio established by the AHCA)
· Health status (unless the state has established a high-risk pool or is participating in a federally-established high-risk pool)
Thus, for states who are granted a waiver for community rating, insurers in those states may underwrite based upon health status for one year for individuals who have not maintained continuous coverage, but only if that state has established a high-risk pool or participates in a federally-sponsored high-risk pool. Insurers cannot exclude those with pre-existing conditions, but they can charge much higher premiums that could essentially exclude these individuals, based on high-risk underwriting.
On May 3, 2017, Fred Upton (R-MI) and Bill Long (R-MO) drafted the Upton-Long Amendment, which adds financial support to the MacArthur waivers. This amendment creates an $8 million fund over the next five years for community rating waiver states. This fund will be used to offset the higher premium costs for those individuals with pre-existing conditions who have had a lapse in coverage and who may be charged higher premiums based on health status underwriting.
The AHCA is now off to the Senate, and will more than likely face additional amendments. If it passes the Senate in a revised form, it will return to the House for additional discussion and debate. We have some volleying back and forth before the bill makes it to the President’s desk for signature. Until then, the ACA is still the law of the land. As as businesses, we must conduct ourselves accordingly.