The American Health Care Act of 2017 (AHCA), H.R. 1628, was the House Republicans' leading proposal to "repeal and replace" the Affordable Care Act (aka Obamacare, but we'll abbreviate it ACA) and "defund" Planned Parenthood.
After a fast-paced few weeks, the vote scheduled for March 24, 2017 was cancelled after the House Freedom Caucus, a band of some of the most conservative members of the House, pledged in block to oppose the AHCA because it did not go far enough to repeal the ACA.
What would stay the same
The bill would keep intact much of the ACA. In fact, it wouldn't formally repeal any significant parts of the ACA.
As the Republican website readthebill.gop explains, the AHCA would "preserve vital patient protections" created by the ACA:
- The AHCA would still "prohibit health insurers from denying coverage or charging more money to patients based on pre-existing conditions."
- The AHCA would keep the ACA's requirement that dependents can stay "on their parents' plan until they are 26."
- The exchanges (aka marketplaces) run by the federal government and states, which listed individual and small business health insurance plans, would continue as under the ACA.
- The AHCA would also continue to provide subsidies for premiums that are based on income, although the formula would be completely different and the subsidy would likely be much less for young, low-income Americans.
And according to this summary from USA Today:
- The AHCA would keep some Medicaid benefits for those that enroll prior to 2020 (more on that below).
- The AHCA would keep the requirement that health plans coveressential benefits --- but not for those on Medicaid.
- The AHCA would keep the restriction that subsidies can't pay for health insurance that covers abortion.
The individual mandate stays too, but by any other name
The AHCA even includes a penalty for individuals who don't get coverage, referred to as the "individual mandate" in the ACA. While the ACA imposes a roughly $700 per year penalty for not holding health insurance, the AHCA would instead impose a surcharge of up to 30% the next time you get insurance after a lapse in coverage.
Depending on your premiums and how long you go without insurance, the ACHA's penalty could be more or less than the ACA's current penalty. In many cases, it might be about the same.
What would be expanded
What would go away
Some parts of the ACA would end:
If you're on Medicaid...
If you're covered through your employer...
If you're on an individual plan...
"Defunding" Planned Parenthood
The AHCA would also prohibit federal funding from going to Planned Parenthood, mostly through Medicaid, for one year.
This would pause federal reimbursements for Planned Parenthood's reproductive health, maternal health, and child health services --- but not its abortion services because federal funds are already prohibited from being used for abortion.
What's the bottom line?
How the AHCA would affect you depends on your income, how you get your health insurance, and what kinds of health care you need.
- For older, low-income Americans with health insurance from the individual market: Premiums could increase by $3,600 for a 55-year-old earning $25,000 a year and $8,400 for a 64-year-old earning $15,000 a year. AARP
- For low-income Americans covered by Medicaid, the federal cap on support would likely lead to fewer benefits and higher out-of-pocket costs. AARP 5--18 million individuals are predicted to lose Medicaid coverage entirely. NYTimes
- If you are covered through your employer, your employer would be allowed to stop providing coverage --- and that's made more likely because tax credits and the tax advantage for employer-provided coverage would be eliminated. But experts are split on whether the AHCA will affect employer coverage --- and even whether the ACA ever had any effect on employer coverage to begin with. NYTimes
- Americans with income around $40,000-$75,000 who purchase an individual plan may be better off because the ACA's subsidies for low-income Americans would be spread out to income up to $75,000. USA Today (Unless premiums go up too.) If your income is below that, some of your subsidies are now going to go to other people with higher income.
- If you have an income of $200,000 or more, or investment income, you can expect your tax bill to go down --- those making $1 million or morecan expect around $50,000 less in taxes each year.
Major changes to the health insurance market like the ACA and AHCA have far-reaching effects on federal spending and the economy. But experts polled by The New York Times are split on whether the AHCA will save the government or cost more because the AHCA lowers both government spending and tax revenue.
Odds of passage
Despite now controlling both the legislative and executive branches, and having previously voted successfully 45 times in the House to repeal the ACA, the Republicans' AHCA is not a done deal.
On the one hand, both the House Energy & Commerce and Ways and Means Committees passed their respective sections of legislation on March 9 with party line votes. On the other hand, the House Freedom Caucus, some high profile senators like Mike Lee (R-UT) and Rand Paul (R-KY), and industry groups like the American Medical Association and American Hospital Association have all spoken publicly against the legislation --- some for the reason that it does not repeal enough of Obamacare. No Democrats will likely support it. The ACA also has all-time high support from the American public, with support reaching 54 percent last month.
Usage of the budget reconciliation process
The Republicans don't have the votes to pass the AHCA the normal way. Knowing that it would be filibustered by Senate Democrats, Republicans are using the "budget reconciliation" process to move their bill forward. Budget reconciliation makes one bill each year immune to a filibuster (in the Senate), and the AHCA is this year's bill. The Democrats used budget reconciliation to enact parts of the ACA originally, so the use of reconciliation to modify the ACA (but not repeal it) is fitting.
Reconciliation can only be used on some types of bills that affect the federal budget, limiting the sorts of provisions that can be included in the AHCA --- a full repeal of the ACA wouldn't be permitted under reconciliation rules. The reconciliation process also requires the House Budget committee to formally introduce the bill after it goes through committee --- that's why the AHCA was revealed to the public on March 6 as a draft at readthebill.gop and only formally introduced as a bill in Congress on March 20.
Although there are procedural similarities between how the ACA was enacted and what is happening now with the AHCA, there are also significant differences. The ACA was enacted after vigorous debate on competing and substantive policy proposals for nearly a year, with most of the final text available for several months before it was signed by President Obama. The AHCA is on track to going from draft to law within a matter of weeks and with hearings occurring when America is asleep.
For More Information
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Mar 20, 2017.
(This measure has not been amended since it was introduced. The summary has been expanded because action occurred on the measure.)
American Health Care Act of 2017
TITLE I--ENERGY AND COMMERCE
Subtitle A--Patient Access to Public Health Programs
(Sec. 101) This bill amends the Patient Protection and Affordable Care Act to eliminate funding after FY2018 for the Prevention and Public Health Fund, which provides for investment in prevention and public health programs to improve health and restrain the rate of growth in health care costs. Funds that are unobligated at the end of FY2018 are rescinded.
(Sec. 102) The bill amends the Medicare Access and CHIP Reauthorization Act of 2015 to increase funding for community health centers.
(Sec. 103) For one year, certain federal funds may not be made available to states for payments to certain family planning providers (e.g., Planned Parenthood Federation of America).
Subtitle B--Medicaid Program Enhancement
(Sec. 111) The bill amends title XIX (Medicaid) of the Social Security Act (SSAct) to limit the state option for a participating-provider hospital to preliminarily determine an individual's Medicaid eligibility for purposes of providing the individual with medical assistance during a presumptive eligibility period. The bill lowers, from 133% to 100% of the official poverty line, the minimum family-income threshold that a state may use to determine the Medicaid eligibility of children between the ages of 6 and 19. In addition, the bill reduces the Federal Medical Assistance Percentage (FMAP) for Medicaid home- and community-based attendant services and supports.
(Sec. 112) Beginning in 2020, the bill eliminates: (1) the enhanced FMAP for Medicaid services furnished to adult enrollees made newly eligible for Medicaid by PPACA; and (2) the expansion of Medicaid, under PPACA, to cover such enrollees. However, a state Medicaid program may continue to provide coverage, with the enhanced FMAP, to such enrollees who were enrolled prior to 2020 and do not subsequently have any break in eligibility exceeding one month. With respect to states that expanded Medicaid under PPACA, current law provides for transitional FMAP increases through 2019. The bill eliminates these increases after 2017, capping the FMAP at the 2017 level. Under current law, any alternative benefit plan offered by a state Medicaid program is required to provide specified essential health benefits. The bill eliminates this requirement beginning in 2020. ("Essential health benefits" include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services, laboratory services, preventative and wellness services, and pediatric services.)
(Sec. 113) The bill eliminates Medicaid Disproportionate Share Hospital (DSH) payment reductions: (1) with respect to states that did not implement Medicaid expansion under PPACA, beginning in FY2018; and (2) with respect to other states, beginning in FY2020. (DSH hospitals receive additional payment under Medicaid for treating a large share of low-income patients.)
(Sec. 114) The bill specifies how a state must treat qualified lottery winnings and lump sum income, beginning in 2020, for purposes of determining an individual's income-based eligibility for a state Medicaid program. Specifically, a state shall include such winnings or income as income received: (1) in the month in which it was received, if the amount is less than $80,000; (2) over a period of two months, if the amount is at least $80,000 but less than $90,000; (3) over a period of three months, if the amount is at least $90,000 but less than $100,000; and (4) over an additional one-month period for each increment of $10,000 received, not to exceed 120 months. An individual whose income exceeds the applicable eligibility threshold due to qualified lump sum income may continue to be eligible for medical assistance to the extent that the state determines that denial of eligibility would cause undue medical or financial hardship. Qualified lump sum income includes: (1) monetary winnings from gambling, and (2) income received as liquid assets from the estate of a deceased individual. In addition, the bill eliminates the requirement for up to three months of retroactive coverage under Medicaid. Under current law, a state Medicaid program must provide coverage for up to three months prior to an individual's application for benefits if the individual would have been eligible for benefits during that period. The bill eliminates this requirement and instead specifies that coverage begins in the month during which the individual applies for benefits. The bill allows a state to delay or deny an individual's initial eligibility for Medicaid benefits without providing a reasonable opportunity to submit evidence of a satisfactory immigration status or pending official verification of such status. A state that elects to provide a reasonable period for an individual to provide such evidence may not receive payment for amounts expended on the individual's medical assistance during that period. In addition, the bill disallows a state from using, for purposes of determining Medicaid eligibility for long-term care assistance, a home equity limit that exceeds the statutory minimum.
(Sec. 115) With respect to states that did not expand Medicaid coverage under PPACA, the bill: (1) with specified limitations, provides for additional federal funding for certain health care services; and (2) through 2022, increases the applicable FMAP. A non-expansion state that subsequently expands Medicaid coverage under PPACA shall become ineligible for this funding.
(Sec. 116) No less frequently than every six months, states must redetermine the eligibility of adult enrollees made newly eligible for Medicaid by PPACA. The bill temporarily increases by 5% the FMAP for expenditures that are attributable to meeting this requirement. In addition, the bill increases the civil penalty for improperly filing certain Medicaid claims related to Medicaid expansion under PPACA.
Subtitle C--Per Capita Allotment For Medical Assistance
(Sec. 121) Under current law, state Medicaid programs are guaranteed federal matching funds for qualifying expenditures. The bill establishes limits on federal funding for state Medicaid programs beginning in FY2020. Specifically, the bill establishes targeted spending caps for each state, using a formula based on the state's FY2016 medical assistance expenditures in each enrollee category: (1) the elderly, (2) the blind and disabled, (3) children, (4) adults made newly eligible for Medicaid by PPACA, and (5) all other enrollees. With respect to a state that exceeds its targeted spending cap in a given fiscal year, the bill provides for reduced federal funding in the following fiscal year. In addition, the bill: (1) requires additional reporting and auditing of state data on medical assistance expenditures, and (2) temporarily increases the FMAP with respect to certain data reporting expenditures.
Subtitle D--Patient Relief and Health Insurance Market Stability
(Sec. 131) After 2019, the bill eliminates cost sharing reductions for low-income individuals with certain health insurance.
(Sec. 132) The bill amends the SSAct to establish and make appropriations for the Patient and State Stability Fund to provide funding to states through 2026, including to: provide financial assistance to high-risk individuals so they may enroll in health insurance, stabilize health insurance premiums, promote participation and increase options in the health insurance market, pay providers for services, and provide financial assistance to enrollees to reduce out-of-pocket costs. Funding is allocated to states based on each state's share of incurred claims and uninsured individuals below the poverty line. To receive funding, states must provide matching funds at a rate that grows from 7% in 2020 to 50% in 2026.
(Sec. 133) Health insurers must increase premiums by 30% for one year for enrollees in the individual or small group market who had a break in coverage of more than 62 days in the previous year.
(Sec. 134) Beginning in 2020, health insurance benefits no longer must conform to actuarial tiers (e.g., silver level benefits).
(Sec. 135) The bill increases the ratio by which health insurance premiums may vary by age, from a three to one ratio to a five to one ratio. This ratio may be preempted by states.
TITLE II--COMMITTEE ON WAYS AND MEANS
Subtitle A--Repeal and Replace of Health-Related Tax Policy
Sections 201-203 of the bill make several modifications to the premium assistance tax credit for a transition period and repeal the credit after 2019. (The credit is currently provided to eligible individuals and families to subsidize the purchase of health insurance plans on an exchange.)
(Sec. 201) This section makes taxpayers liable for the full amount of excess advance payments of the credit. (Under current law, liability for certain low-income households is limited to an applicable dollar amount.)
(Sec. 202) This section modifies the premium assistance tax credit to: make the credit available for catastrophic qualified health plans and plans that are not offered through an exchange, but otherwise meet the requirements for qualified health plans; prohibit the credit from being used for grandfathered or grandmothered health plans; prohibit the credit from being used for health plans that cover abortions (other than abortions necessary to save the life of the mother or abortions with respect to a pregnancy that is the result of an act of rape or incest); and revise the formula used to calculate the credit using a schedule that varies with household income and the age of individuals or family members.
(Sec. 203) This section repeals the premium assistance tax credit for health coverage that begins after December 31, 2019.
(Sec. 204) This section modifies the small employer tax credit for employee health insurance expenses to: (1) prohibit the credit from being used for health plans that include coverage for abortions (other than any abortion necessary to save the life of the mother or any abortion with respect to a pregnancy that is the result of an act of rape or incest) for taxable years beginning after December 31, 2017; and (2) repeal the credit for taxable years beginning after December 31, 2019.
(Sec. 205) This section repeals the penalties for individuals who are not covered by a health plan that provides at least minimum essential coverage (commonly referred to as the individual mandate). The repeal is effective for months beginning after December 31, 2015.
(Sec. 206) This section repeals the penalties for certain large employers who do not offer full-time employees and their dependents minimum essential health coverage under an employer-sponsored health plan (commonly referred to as the employer mandate). The repeal is effective for months beginning after December 31, 2015.
(Sec. 207) This section delays the implementation of the excise tax on high cost employer-sponsored health coverage (commonly referred to as the Cadillac tax) until 2025. (Under current law, the tax goes into effect in 2020.)
(Sec. 208) This section permits tax-favored health savings accounts (HSAs), Archer Medical Savings Accounts (MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements to be used to purchase over-the-counter medicine that is not prescribed by a physician.
(Sec. 209) This section repeals the increase in the tax on distributions from HSAs and Archer MSAs that are not used for qualified medical expenses. The bill reduces the tax on HSA distributions from 20% to 10% and reduces the tax for Archer MSA's from 20% to 15% to return the taxes to the levels that existed prior to the enactment of PPACA.
(Sec. 210) This section repeals the limitation on FSA salary reduction contributions.
(Sec. 211) This section repeals the medical device excise tax for sales in calendar years beginning after December 31, 2017.
(Sec. 212) The provision permits employers who provide Medicare-eligible retirees with qualified prescription drug coverage and receive federal subsidies for prescription drug plans to claim a deduction for the expenses without reducing the deduction by the amount of the subsidy.
(Sec. 213) This section repeals the increase in the income threshold used to determine whether an individual may claim an itemized deduction for unreimbursed medical expenses. The bill allows all taxpayers to claim an itemized deduction for unreimbursed expenses medical expenses that exceed 7.5% (10% under current law) of adjusted gross income.
(Sec. 214) This section repeals the additional Medicare tax that is imposed on certain employees and self-employed individuals with wages or self-employment income above specified thresholds.
(Sec. 215) The section establishes a refundable, advanceable tax credit beginning in 2020 for certain taxpayers who purchase health insurance and who are not eligible for other sources of coverage. The credit applies for health insurance coverage that: is offered in the individual health insurance market within a state or is unsubsidized COBRA continuation coverage; is not a grandfathered or grandmothered plan; substantially all of which is not for excepted benefits providing only limited coverage, such as dental, vision, or long-term care; does not include coverage for abortions (other than any abortion necessary to save the life of the mother or any abortion with respect to a pregnancy that is the result of an act of rape or incest); does not consist of short-term limited duration insurance; and is certified by the state in which the insurance is offered as meeting the requirement of this bill. The bill specifies credit amounts which are based on age and adjusted gross income. It also limits the annual credit amount to $14,000 per family. If the amount paid for the insurance is less than the credit amount, Treasury may deposit the excess into an HSA of the individual or a qualifying family member as designated by the individual. The Department of the Treasury must establish a program not later than January 1, 2020, for making advance payments to providers of eligible health insurance on behalf of individuals eligible for the credit. The bill specifies reporting requirements for health insurance providers who provide eligible health insurance coverage to individuals.
(Sec. 216) This section increases the limits on HSA contributions to match the sum of the annual deductible and out-of-pocket expenses permitted under a high deductible health plan.
(Sec. 217) This section permits both spouses of a married couple who are eligible for HSA catch-up contributions to make the contributions to the same HSA account.
(Sec. 218) This section permits an HSA to be used to pay certain medical expenses that were incurred before the HSA was established. If the HSA is established during the 60-day period beginning on the date that an individual's coverage under a high deductible health plan begins, the HSA is treated as having been established on the date coverage under the high deductible health plan begins to determine whether an amount paid is used for a qualified medical expense.
Subtitle B--Repeal of Certain Consumer Taxes
(Sec. 221) This section repeals the annual fee on branded prescription pharmaceutical manufacturers and importers.
(Sec. 222) This section repeals the annual fee imposed on certain health insurance providers based on market share.
Subtitle C--Repeal of Tanning Tax
(Sec. 231) This section repeals the 10% excise tax on the price of indoor tanning services.
Subtitle D--Remuneration From Certain Insurers
(Sec. 241) The section repeals a provision that prohibits certain health insurance providers from deducting remuneration paid to an officer, director, or employee in excess of $500,000.
Subtitle E--Repeal of Net Investment Income Tax
(Sec. 251) This section repeals the 3.8% tax on the net investment income of individuals, estates, and trusts with incomes above specified amounts.