The House of Representatives passed an amended
version of the American Health Care Act
(AHCA) by one vote yesterday, sending the controversial bill over to the Senate
where it is expected to undergo major changes.
measure (H.R. 1628) would eliminate funding for the ACA’s premium and cost-sharing
subsidies and Medicaid expansion, as well as penalties for the individual and
employer mandates, while removing most of the law’s new taxes on providers,
insurers, drugmakers, and wealthy Americans.
In its place, it offers tax credits based on age instead of income,
which are far more limited despite being available to a broader number of
The bill also would
allow insurers to charge those age 50-64 five times more than younger
consumers. While the Congressional
Budget Office (CBO) acknowledged last March that this would lower premiums for
younger groups, it warned that premiums would jump by roughly 66 percent for
older consumers while their out-of-pocket costs would skyrocket by up to 750
percent. The non-partisan scorekeeper
also predicted that the bill would slash coverage for up to 24 million
The adverse CBO score
initially caused moderate Republicans to largely oppose the bill. However, the ultra-conservative Freedom
Caucus also refused to support the first version, insisting that it was
“Obamacare lite” and did not go far enough in repealing the ACA. As a result, the AHCA was pulled in March
until additional amendments could garner sufficient support from both factions.
The most prominent
amendment would let states seek federal waivers allowing them to opt-out of the
mandated package of essential health benefits (EHB) and reduce premiums by resuming
the sale of “skinny” or “junk” coverage.
States could also again let insurers charge higher premiums based on
health status for those whose coverage lapses by more than 63 days. (As under the initial bill, persons with
coverage lapses would also face a 30 percent premium surcharge for one year.)
The Wall Street Journal also pointed to a
little-noticed provision that would effectively allow large employers to
default to the benefit standards of any state that opt-outs of ACA consumer
protections, even if they are not located in the state.
In an effort to
appeal to moderates, the amendments also boost the federal funding states can
use to cover persons with pre-existing conditions through high-risk pools or
reinsurance programs that compensate insurers for extraordinary claims (like
those pursued in Alaska and Minnesota).
The bill makes $130 billion available over nine years with another $8
billion over the first five for those subject to higher premiums based on
In the end, the
amendments garnered the support of all but two conservative House members and
70 percent of moderates. However, the
AHCA faces a very different landscape in the Senate, where Democratic support
would be required to advance any parts of the legislation that does not
directly impact the budget deficit.
None of the AHCA
amendments have previously been approved by the Senate parliamentarian for
budget reconciliation, meaning they could pass with a bare majority (51
votes). Provisions that waive essential
health benefit standards and allow insurers to again discriminate based on
pre-existing conditions are not likely to meet the reconciliation standard, but
even if they do Republicans could lose no more than two Senators and still
reach 51 votes.
However, at least
seven Senate Republicans opposed the AHCA before it was amended due to the loss
of Medicaid expansion funding and several others have come out against the loss
of key ACA consumer protections in the latest version. As a result, Senate leaders promptly
announced yesterday that they were likely to reject the AHCA and draft their
own repeal and replace bill, which would force another contentious vote in the
The AHCA also faces broad
opposition from nearly all provider and consumer groups (including AARP, the
American Hospital Association, and the National Organization for Rare
Disorders), as well as the nation’s largest insurers like Blue Shield of
California, whose claimed it would allow for “unconscionable discrimination.” The American Medical Association (AMA)
promptly warned that the AHCA would “result in millions of Americans losing
access to quality, affordable health insurance [while] those with pre-existing
health conditions face the possibility of going back to the time when insurers
could charge them premiums that made access to coverage out of the question.”
In addition to the
bill’s failure to preserve the protection against health status discrimination
(consistently the most popular provision of the ACA), critics largely focused
on its reliance on high-risk pools to segregate patients with pre-existing
conditions into separate marketplace.
High-risk pools operated in 33 states prior to the ACA and never covered
more than two percent of those eligible due to chronic underfunding. Studies from groups like the Kaiser Family
Foundation, the Urban Institute, RAND Corporation, and the University of
Chicago showed that high-risk pools would require $30-50 billion per year to be
adequately funded (or $7-10,000 per enrollee), an amount that more than doubles
the federal budget for the space program and is three times the amount
allocated by the AHCA.
The revised AHCA still includes more than $880
billion in cuts to Medicaid by converting it to a federal block-grant program
(via per capita spending caps). This
provision alone is responsible for most of the 24 million in coverage losses
predicted by CBO.