House Releases ACA Repeal, Replace Bill That Transforms Medicaid


March 06, 2017

The Medicaid program, almost 52 years old, would undergo drastic changes in a much-anticipated House Republican bill to repeal and replace the Affordable Care Act (ACA) that was released today.

Called the American Health Care Act, the bill would repeal the ACA's expansion of Medicaid eligibility and the extra federal match dollars that come with it by December 31, 2019. But in a concession to the 31 states  that chose to expand their Medicaid programs, the bill would preserve the extra federal funding after 2019 for beneficiaries who had enrolled under ACA expansion beforehand, and who do not have a break in eligibility for  more than 1 month thereafter.

As revealed in a leaked draft last month, the bill also would convert open-ended federal contributions to state Medicaid programs into a fixed, per-capita cap.  Congressional Democrats oppose this new formula, saying that it would underfund state programs, forcing them to kick beneficiaries off the rolls, trim benefits, and cut reimbursement to physicians and hospitals.

Giving states more control of their Medicaid programs is another feature of the bill. It would erase the ACA requirement that state Medicaid plans provide the same essential benefits as those mandated for private health plans sold on the ACA exchanges.

Cadillac Tax Postponed Until 2025

The American Health Care Act makes one significant departure from the draft version leaked in February. That version called for taxing generous employer-sponsored health plans just as the ACA does with its so-called Cadillac tax, scheduled to take effect in 2020. The bill released today does not create a new tax on employer-sponsored health plans, but instead delays the ACA's Cadillac tax until 2025.

The rest of the bill largely preserves the provisions first revealed in the leaked draft. The American Health Care Act would:

  • Give Americans refundable tax credits ranging from $2000 to $4000 a  year per individual, based on age, to buy private health coverage.  They are capped at $14,000 for a family. In a change from the draft version, tax credits begin to shrink once annual income surpasses $75,000 ($150,000 for joint tax filers).

  • Repeal the penalty for individuals who do not obtain coverage.

  • Prohibit, as the ACA does, insurers from denying coverage to  individuals with pre-existing conditions, or charging them more.

  • Preserve the ACA provision that allows young adults to remain on their parents' plan until age 26.

  • Eliminate ACA taxes on such things as medical devices, prescription drugs, over-the-counter medications, and certain health insurers.

  • Allow individuals and families to almost double the amount they can contribute to health savings accounts, and give them more flexibility in spending those dollars.

  • Give states $100 billion worth of grants over 10 years to set up  high-risk insurance pools for individuals with costly, pre-existing  conditions; reduce out-of-pocket expenses; promote access to preventive       services; and otherwise make healthcare more affordable.

The House Energy and Commerce Committee has scheduled a so-called markup session this Wednesday to discuss portions of the bill under its jurisdiction, consider amendments, and vote on sending it to the House floor. The House Ways and Means Committee will mark up the rest of the bill the same day. In January, the House and Senate, both controlled by Republicans, passed legislation that would allow this ACA repeal-and-replace measure to sidestep a Democratic filibuster in the Senate and pass in  that chamber with only 51 votes.

Follow Robert Lowes on Twitter @LowesRobert


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