H.R.1628 – American Health Care Act of 2017

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Week ending March 24, 2017

H.R.1628 – American Health Care Act of 2017

Brief – Currently being debated. Vote expected after 3 p.m.

This report reviews sections of the American Healthcare Act and includes very recent changes proposed as the ‘Manager’s Amendments’.

Insurers

Health Savings Plans

Essential Benefits

Taxes and Revenues

High risk pools, Patient Relief, and Health Insurance Market Stability.

Paying for Insurance

Medicaid

Lottery Winnings

Planned Parenthood –

The bill does not name Planned Parenthood, Inc. (PP) as the target of the spending cuts but based on the criteria governing such spending the cuts would affect Planned Parenthood as a ‘prohibited entity’; no Federal funds provided from a program referred to in this subsection that is considered direct spending for any year may be made available to a State for payments to a prohibited entity. The bill would increase spending by $422 million for community health centers presumably to counter the argument that PP provides women’s health services that would disappear if the company’s funding is cut.

Lottery Winnings –

In the case of an individual who is the recipient of qualified lottery winnings (pursuant to lotteries occurring on or after January 1, 2020) or qualified lump sum income and whose eligibility for medical assistance is determined based on the application of modified adjusted gross income … a State shall, in determining such eligibility, include such winnings or income as income received.

Medicaid –

The per-beneficiary Medicaid payments are modified such that States would not receive payments to cover part of medical bills but rather a flat rate per beneficiary. States can also elect to receive a lump sum based on the Medicaid population in the State and other factors. That option would come to States as a block grant that would allow the States to spend the money on Medicaid obligations as they see fit to meet the needs of those under 65 who do not have disabilities.  It would be difficult for States to expand Medicaid to cover more beneficiaries who are poor and childless adults. States would be penalized, lose funding, if covering adults in the higher income categories.

A provision in a manager’s amendment to the bill released by House leaders on Monday, would prevent states from expanding their Medicaid programs if they didn’t already do so by March 1. .

The Medicaid payments provided by the Affordable Care Act are scheduled to end December 31, 2019. States that accepted the Medicaid expansion will see no changes until then. Non-expansion States would receive some increases before then. States that did not expand Medicaid would receive $2 billion in funding in each year from 2018 to 2021. Those states could use the funding, within limits, to supplement payments to providers that treat Medicaid enrollees.

For the purpose of providing allocations for States … there is appropriated—

2018, $15,000,000,000; for 2019, $15,000,000,000;  for 2020, $10,000,000,000;  for 2021, $10,000,000,000;  for 2022, 10,000,000,000;  for 2023, $10,000,000,000;  for 2024, $10,000,000,000;  for 2025, $10,000,000,000; and  for 2026, $10,000,000,000.

The bill allows for States to make some Medicaid recipients who are non disabled, non-elderly, non-pregnant adults prove they are working or looking for work. Job training programs meet the requirement of work or looking for work. No waivers are offered as in the ACA.

Medicaid expansion State enrollees who were enrolled in Medicaid expansion prior to December 31, 2019 receive “grandfathered” status.

Any new State that might expand Medicaid to cover low non-disabled, non-elderly, non-pregnant, able-bodied adults up to 133% FPL would receive that State’s regular FMAP and would not receive the enhanced FMAP. (Federal Medical Assistance Percentage)

Paying for Insurance-

“In 2018 and 2019, according to CBO and JCT ’s estimates, average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher than under current law mainly because of the elimination of the individual mandate penalties. Eliminating those penalties would markedly reduce enrollment in the nongroup market and increase the share of enrollees who would be less healthy.” cbo

The bill offers a flat tax credit based on age for those buying their own health insurance. When it became clear that beneficiaries between the ages of 50 and 64 would face enormous premium increases due to that provision in the American Healthcare Act the manager’s amendment provided an additional $85 billion for deductions of healthcare expenses from personal income taxes.

“…the most significant budgetary effects include an increase in the Hospital Insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, and annual fees imposed on health insurers.”

High risk pools, Patient Relief, and Health Insurance Market Stability.

The bill establishes the ‘Patient and State Stability Fund’ to provide funding during the period beginning on January 1, 2018, and ending on December 31, 2026. The money may be used for providing financial assistance to high-risk individuals who do not have access to health insurance coverage offered through an employer;  to provide incentives to appropriate entities to enter into arrangements with the State to help stabilize premiums for health insurance coverage in the individual market, as such markets are defined by the State; to reduce the cost for providing health insurance coverage in the individual market and small group market to individuals who have, or are projected to have, a high rate of utilization of health services; to promote participation in the individual market and small group market in the State and increasing health insurance options available through such market; to promote access to preventive services; dental care services, vision care services (whether preventive or medically necessary), prevention, treatment, or recovery support services for individuals with mental or substance use disorders; or any combination of such services; to provide payments, directly or indirectly, to health care providers for the provision of such health care services as are specified by the Administrator and to provide assistance to reduce out-of-pocket costs, such as copayments, coinsurance, premiums, and deductibles, of individuals enrolled in health insurance coverage in the State.

“…beginning in 2020, states would be required to provide matching funds, which would generally increase from 7 percent of the federal funds provided in 2020 to 50 percent of the federal funds provided in 2026.” – cbo

If a person seeking insurance had a lapse in coverage for three months in the previous year insurers can charge them five times the rate charged for healthier customers.

Taxes and Revenues –

All but one revenue source from the Affordable Care Act would be repealed. Originally the repeal would happen after 2020 but the manager’s amendment would repeal them in 2018 thereby reducing revenues by $880 billion over ten years. The remaining ACA tax is the tax on expensive employer health plans commonly called Cadillac plans. That repeal is postponed until 2026.

“The new tax credits would vary on the basis of age by a factor of 2 to 1: Someone age 60 or older would be eligible for a tax credit of $4,000, while someone younger than age 30 would be eligible for a tax credit of $2,000. People would generally be eligible for the full amount of the tax credit if their adjusted gross income was below $75,000 for a single tax filer and below $150,000 for joint filers and if they were not eligible for certain other types of insurance coverage. The credits would phase out for people with income above those thresholds.

“The tax credits would be refundable if the size of the credit exceeded a person’s tax liability. They (the tax credits) could also be advanced to insurers on a monthly basis throughout the year on behalf of an enrollee. Finally, tax credits could be used for most health insurance plans purchased through a marketplace or directly from an insurer.” – cbo

“In an illustrative example, CBO and JCT estimate that a 21-year-old with income at 175 percent of the FPL in 2026 would be eligible for a premium tax credit of about $3,400 under current law; the tax credit would fall to about $2,450 under the legislation” – cbo

Health Savings Plans –

The bill makes changes to the provision as it relates to tax credits; if your tax credit is more than the cost of your premium, you lose the difference the difference will not be deposited in a Healthcare Savings Account as previously provided for.

Essential Coverage –

The ACA required that all health insurance programs cover essential benefits;

  • Ambulatory patient services (outpatient care you get without being admitted to a hospital)
  • Emergency services
  • Hospitalization (like surgery and overnight stays)
  • Pregnancy, maternity, and newborn care (both before and after birth)
  • Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
  • Prescription drugs
  • Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)

Additional benefits

Plans must also include the following benefits:

  • Birth control coverage
  • Breastfeeding coverage

Insurers –

Changes to Actuarial Value Requirements. Actuarial value is the percentage of total costs for covered benefits that the plan pays when covering a standard population. Under current law, most plans in the nongroup and small-group markets must have an actuarial value that is in one of four tiers: about 60 percent, (lowest anticipated cost) 70 percent, 80 percent, or 90 percent- (Highest estimated cost) . Beginning in 2020, the legislation would repeal those requirements, potentially allowing plans to have an actuarial value below 60 percent. However, plans would still be required to cover 10 categories of health benefits that are defined as ‘‘essential’’ under current law, and the total annual out-of-pocket costs for an enrollee would remain capped. In CBO and JCT’s estimation, complying with those two requirements would significantly limit the ability of insurers to design plans with an actuarial value much below 60 percent. – cbo.

CBO and JCT estimate that repealing the actuarial value requirements would lower the actuarial value of plans in the nongroup market on average. The requirement that insurers offer both a plan with an actuarial value of 70 percent and one with an actuarial value of 80 percent in order to participate in the marketplace would no longer apply under the legislation. As a result, an insurer could choose to sell only plans with lower actuarial values. Many insurers would find that option attractive because they could offer a plan priced closer to the amount of the premium tax credit so that a younger person would have low out-of-pocket costs for premiums and would be more likely to enroll. Insurers might be less likely to offer plans with high actuarial values out of a fear of attracting a greater proportion of less healthy enrollees to those plans, although the availability of the Patient and State Stability Fund grants in most states would reduce that risk. The continuation of the risk adjustment program could also help limit insurers’ costs from high-risk enrollees. –cbo.

Federal funds spent on insurance prohibit the insurer from covering abortion but the insurers can offer separate policies but they must be out-of-pocket for the buyer.

 (Dissenting views)

(Full text of H.R. 1648 at congress.gov)

Sponsor:  Rep. Black, Diane [R-TN-6] (Introduced 03/20/2017)

Status: Vote scheduled for March 23 posponed

VOTES and FLOOR ACTION

HOUSE

On Passage:

House Amendments:

Motion to recommit:

Text of the motion:

SENATE

On Passage:

Procedural Actions:

Senate Amendments:

COST AND IMPACT

Cost to the taxpayersCBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017–2026 period. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance. The largest costs would come from repealing many of the changes the ACA made to the Internal Revenue Code—including an increase in the Hospital Insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, and annual fees imposed on health insurers—and from the establishment of a new tax credit for health insurance.

Pay-as-you-go requirements:  Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues. CBO and JCT estimate that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2027.

Regulatory and Other Impact: JCT and CBO have reviewed the provisions of the legislation and determined that they would impose no intergovernmental mandates as defined in the Unfunded Mandates Reform Act

Dynamic Scoring: CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2027.

Tax Complexity:  Not applicable to this bill.

Earmark Certification:  Data not available

Duplication of programs: Pursuant to clause 3(c)(5) of rule XIII, no provision of the Committee Print is known to be duplicative of another Federal program.

Direct Rule-Making:  Data not available

Advisory Committee Statement: Data not available

Budget Authority: Data not available

Constitutional Authority:   Assumed.

More Bill Information:

  1. DISSENTING VIEWS

 

DISSENTING VIEWS ON RECOMMENDATION TO REPEAL THE HEALTH INSURANCE FEE

AND PHARMACEUTICAL FEE, COMMITTEE PRINT 3

 

  1. Donald Trump promised that “we’re going to have insurance for everybody . . . [but it will be] much less expensive and much better.” This bill reveals those promises for what they always were: empty campaign rhetoric.”–Families
  2. “We cannot support the AHCA as drafted because of the expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations.”–American Medical Association\2\
  3. “Repeal-and-replace is a gigantic transfer of wealth from the lowest-income Americans to the highest-income Americans.”–Edward D. Kleinbard, former chief of staff for the Joint Committee on Taxation and professor, University of Southern California School of Law.\3\

The five reconciliation legislative recommendations considered by the Committee on Ways and Means (the “Committee”) and referred to the Committee on Budget (collectively, the Ways and Means reconciliation package or the “reconciliation package”) was a far-reaching attempt to undermine our health systems from Medicare to employer sponsored health insurance in order to give tax cuts to the wealthiest and corporations. After almost 18 hours of debate, the Committee mark-up ended with a party-line vote on the reconciliation package, which is likely to take health insurance away from millions of Americans. This reconciliation package, coupled with what was passed out of the Energy and Commerce Committee, would harm access to health care for middle-class Americans and undermine Medicare’s long-term viability while cutting taxes for corporations and the wealthiest Americans.

The Committee moved forward irresponsibly, without any official accounting about the estimated effect of the reconciliation package on health insurance coverage, out-of-pocket costs, or premium increases. While the Joint Committee on Taxation (JCT) estimated that the reconciliation package includes nearly $600 billion worth of tax breaks, as of the mark-up, the Congressional Budget Office (CBO) was unable to provide estimates about the package’s effect on American families. Additionally the JCT score was incomplete as of the mark-up and did not provide an official accounting of all of the provisions considered by the Committee. Both the Ways and Means and Energy and Commerce Committees moved forward to pass recommendations out of each Committee without any sense from CBO of coverage losses due to the severe cuts to Medicaid, the repeal of the individual and employer-shared responsibility provisions of current law, or the changes in the tax credits available to help purchase health insurance on the individual market.

CBO provided the Committee an estimate of the effects after the reconciliation package was reported to the Committee on Budget from the Ways and Means and Energy and Commerce Committees. This estimate showed that 24 million Americans would lose coverage, with 14 million Americans losing coverage in the first year alone.    The Committee’s reconciliation package provided generous tax cuts to the wealthiest, while reducing health insurance assistance for middle-class Americans. The tax breaks considered by the Committee are focused on the wealthy individuals and corporations, instead on middle-class Americans. About $275 billion in tax breaks would benefit high-income earners; about 62% of the tax breaks would go to millionaires in 2020. Businesses and corporations are receive nearly $192 billion in tax cuts. These and other tax breaks add up to nearly $600 billion in lost revenue.

Democrats objected strenuously to the Republican approach and instead believe the Committee should focus on policies that matter to middle-class Americans under the jurisdiction of this Committee, including financing long-term infrastructure, reforming the tax system to address income inequality, and further building on President Obama’s record of job creation. Democrats believe that the reconciliation package will destabilize the health insurance market, which represents 18 percent of our gross domestic product.

The reconciliation package continues Republican efforts to undermine and destabilize the health insurance market. It undermines current law and the stability of both the individual and group health insurance markets by gutting individual and employer-shared responsibility provisions. The reconciliation package would reduce the uptake of the premium tax credits and the Medicaid expansion established in the Affordable Care Act (ACA), which have made health care affordable for millions ofindividuals. Reduced uptake of the Medicaid expansion and the tax credits disproportionately impacts low- and middle-income Americans and places them at risk for health insecurity and unexpected medical expenses. Based on independent estimates, roughly 24 million Americans would lose their insurance coverage because of this reconciliation package when taken together with the reconciliation recommendations passed by the Energy and Commerce Committee.\4\ Further, this reconciliation package reduces the life of the Medicare Trust Fund by three years by reducing $170 billion from the Medicare Trust Fund, which puts Medicare at risk for 57 million seniors and individuals with disabilities.

Individual and employer-shared responsibility provisions are key to maintaining the robust and healthy risk pools that allow the ACA health insurance reforms to improve consumer protections while controlling health care costs. This is because well-functioning insurance markets rely on participation of both healthy and sick individuals to spread risk across the pool. The reconciliation package effectively would repeal the individual and employer-shared responsibility penalty, leading to premium increases of an estimated 20 percent in the individual market alone. In spite of President Trump and Congressional Republicans’ efforts to sabotage the ACA, millions of Americans have enrolled in the health insurance Marketplaces, many using the available financial assistance, and millions more have enrolled in expanded

Medicaid programs.

Despite promises made by President Trump, the reconciliation package would not cover more people or offer more affordable coverage with comparable benefits. Instead, this package leads to an estimated coverage loss of 24 million people while gutting benefits and consumer protections as a mechanism for affordability. When coupled with the legislation passed out of the Energy and Commerce Committee, the reconciliation package would return to a time when the market once again discriminates against those with pre-existing conditions and leaves those that might need medical care in the future without meaningful coverage. The reconciliation package provides for tax credits less generous than current law with no assistance with out-of-pocket expenses. Instead, the reconciliation package enshrines high deductible health plans that would increase out-of-pocket expenses. However, these plans do not address the underlying issues of access to quality services and the cost of care.

Since January of 2009, the Republicans voted to repeal or undermine the ACA more than 65 times. Democrats offered a number of amendments in Committee to point out serious flaws with the reconciliation package. For example, at the beginning of the mark up, Democrats asked Republicans to postpone mark up until CBO could provide a comprehensive report on costs, coverage losses, and premium effects of the reconciliation package.

In that regard, Congressman Lloyd Doggett (D-TX) offered a motion to postpone the markup for one week to allow time for review of the bill and the CBO estimate that was not available prior to or during the mark up. For over four decades, CBO has been recognized as the official referee of costs and effects of legislation passed in the House and Senate. Congress relies on CBO‘s non-partisan estimates to evaluate legislative proposals.

Democrats were concerned that Republicans deliberately moved forward with the reconciliation package without a CBO score in an effort to conceal the harmful effects of the reconciliation package on nearly all Americans.

The contrast of this rushed process versus the lengthy and transparent process of enacting the ACA is striking. In 2009, House Committees posted a draft of the ACA legislation for review and comment a month before the mark-up process began, holding multiple hearings and providing the public with two preliminary CBO estimates on July 8th and July 14th Democrats maintain that there is no reason to rush to mark-up this reconciliation package without a CBO score, or without a hearing to consider the implications of the package.

Congressman Doggett’s amendment was tabled on a party line vote.

This Committee print provided $169.5 billion in tax breaks to prescription drug and insurance companies. At the same time, Republicans cut Medicaid by more than $370 billion\5\ to help pay for this giveaway which would result in millions of low-

income working families to lose their health insurance coverage, forcing them to rely on emergency room care that Americans all end up paying for in higher health insurance premiums.

Congressman Blumenauer (D-OR) offered an amendment to retain current law with respect to taxation of brand pharmaceutical companies and invest those tax revenues in lowering seniors’ drug costs by filling the Medicare Part D donut hole. Medicare beneficiaries, even with Medicare Part D coverage, still struggle to pay for medications when they reach the coverage gap, known as the donut hole. While the ACA filled in part of this gap and saved America’s seniors and people with disabilities an average of $1,200 each year, it should remain a priority to continue to reduce the financial burdens for seniors and people with disabilities rather than providing pharmaceutical companies huge tax breaks. Democrats unanimously supported the amendment, but all Committee Republicans voted against improving drug coverage under Part D and lowering costs for seniors.

Congresswoman Suzan DelBene (D-WA) offered an amendment striking provisions that would restrict women’s choice of health care providers. Her amendment sought to protect access to women’s health care, including access to Planned Parenthood. Every year, 2.5 million people rely on Planned Parenthood health centers for essential health services, and studies consistently show that proposals to “defund” Planned Parenthood would result in people losing access to quality health care.\6\ The American Medical Association raised concerns with these provisions, saying, “The AMA cannot support provisions that prevent Americans from choosing to receive care from physicians and other qualified providers, in

this specific case, those associated with Planned Parenthood affiliates, for otherwise covered services.”\7\ Democrats unanimously supported the amendment, but all Committee Republicans voted against supporting women’s access to health care services.

Richard E. Neal,

Ranking Member

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