ACA Repeal-Replace Tweaks Pave Way for House Vote

March 21, 2017

House Republicans have officially proposed amendments to their bill that would repeal and replace the Affordable Care Act (ACA) in hopes they can win over critics from both ends of the political spectrum before a decisive vote set for Thursday.

The bill, called the American Health Care Act (AHCA), does not repeal the ACA in its entirety but instead removes its fundamental pillars while preserving some popular features, such the one that prevents health insurers from denying someone coverage because of preexisting conditions.

One major amendment to the AHCA would let the Senate increase health insurance premium subsidies for older Americans if and when it takes up the bill. Like the ACA, the AHCA provides tax credits that people can use to buy private coverage, but the AHCA tax credits, based on age, aren't as generous as the ACA's, based on income. At the same time, the AHCA allows insurers to charge older Americans more for individual coverage than the ACA.

As a result, a 64-year-old making $26,000 in 2016 would pay 760% more out of pocket for comparable coverage under the replacement bill, according to the Congressional Budget Office (CBO).

Higher tax credits for older Americans is just one change designed to satisfy lawmakers who see the AHCA as less generous than the ACA. Other changes target more conservative House Republicans who think the bill smacks too much of big government. For example, one amendment would allow state Medicaid programs to attach a work requirement for certain able-bodied adult recipients. Pregnant women, children under 19 years of age, and sole caretakers of children under 6 years of age are among those excluded from the requirement, which can be fulfilled by community service, job skills training, and similar activities.

The package of amendments also would prevent any more states from expanding Medicaid eligibility under the ACA before 2020, when extra federal funding for such expansion is cut off. It also moves up the elimination of ACA-imposed taxes from 2018 to 2017.

The CBO estimated that the original version of the AHCA would increase the number of uninsured by 24 million by 2026 as well as reduce the federal deficit by $337 billion over 10 years. House Republican leadership hopes that their amendments will keep more people insured without pushing the bill into the red.

The House Rules Committee is scheduled to meet Wednesday to prep the AHCA and the amendments for a vote by the full House set for Thursday. An updated CBO analysis of the legislation is expected before then.

Medicaid Block Grants Would Become an Option for States

The proposed AHCA amendment that would give older Americans bigger premium subsidies to buy health coverage has its origins, oddly enough, in Schedule A for itemized deductions, which is part of an individual's federal tax return.

It's on Schedule A that taxpayers can deduct medical expenses that exceed 10% of their income. That threshold used to be 7.5%; the ACA bumped it up to 10%. The AHCA undoes that increase. Under an amendment to the bill, the threshold would decrease to 5.8%. The House Energy and Commerce Committee said in a news release that this change "provides the Senate flexibility to potentially enhance the tax credit for those ages 50 to 64 who may need additional assistance."

Flexibility also is a key concept in another amendment involving federal contributions to state Medicaid programs, which constitute the lion's share of their funding, on average.

Right now, that federal contribution is open-ended, increasing when enrollment or costs go up in a particular state. Beginning in 2020, the AHCA would convert those federal dollars into a fixed sum per Medicaid enrollee, known as a per-capita cap. The cap is based on the average cost of medical services per enrollee in 2016 and adjusted for annual changes in the consumer price index for medical services.

The CBO stated in its analysis of the AHCA that the per-capita cap is one of several reasons why the bill would reduce federal spending on Medicaid by $880 billion over 10 years. The per-capita cap also would give state Medicaid programs greater leeway in how they spend the money.

Under the amendment before lawmakers, state Medicaid programs could choose to receive their federal dollars for their traditional adult and children populations in the form of either a per-capita cap or a block grant. As a kissing cousin of a per-capita cap, a block grant also would limit the federal contribution while giving a state more control of its Medicaid program.

Block grants would be calculated along the same lines as per-capita caps, and indexed to inflation, but not adjusted for changes in population. The block-grant option wouldn't be available for federal funding for elderly and disabled Medicaid enrollees, which would remain on a per-capita-cap basis.

Follow Robert Lowes on Twitter @LowesRobert


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