Repeal and Replace

Repeal and Replace

The Latest – March 23, 2017

Republican leadership released an amendment to the American Health Care Act this week as they plan to vote on the House floor this evening. The amendment was meant to secure votes from both the conservative and moderate wings of the party to ensure passage in the House. Some of the provisions in the amendment include:

  • Freezing enhanced federal match rate for Medicaid expansion in 2017
  • Allowing states to implement work requirements for Medicaid enrollees
  • Sets up a $85 billion reserve fund and instructs the Senate to create new tax credits for individuals 50-64 years-old 
  • Increases annual inflation rate for elderly and disabled Medicaid enrollees from CPI-M to CPI-M + 1%
  • Creates an option for states to receive Medicaid block grants instead of per capita allotments for Medicaid funding

The changes were not enough, it seems, to pick up enough votes for passage this week. With a vote looming, the White House and Republican House leaders are still working out details with the House Freedom Caucus and some moderate members to find enough votes to pass the bill this week.

SCHA sent an Action Alert earlier this week to encourage hospital employees to contact their congressman and urge him to vote against this bill. To see the action alert and send a message to your representative before Thursday's vote, click here

March 17, 2017

The American Health Care Act continues to move through the U.S. House of Representatives, today receiving a favorable report from the House Budget Committee without amendments. The vote was 19-17, with three Republican Members voting against the bill, calling it 'Obamacare Lite.' The House hopes to make a few amendments to get the votes to pass the bill next week. House Republican Leadership faces the challenge of satisfying the far-right Freedom Caucus members without repelling the moderate Republicans from states that expanded Medicaid. The bill is scheduled for a vote on the House floor Thursday of next week.

Earlier this week the Congressional Budget Office (CBO) released their score of the American Health Care Act, confirming what many had already discovered - millions more individuals will be uninsured under this plan. 24 million by 2026, according to modeling done by the non-partison CBO. Other highlights of the score include:

  • Reduction of federal deficit by $337 Billion over 2017-2026 period
  • Increase in the number of uninsured Americans by 14 million in 2018
    • By 2026, an estimated 24 million fewer people would have health insurance coverage than under current law
  • Insurance premiums will increase an average of 15-20% in 2018 and 2019
  • Starting in 2020, premium increases would likely be offset by:
    • State grants from the Patient and State Stability Fund
    • Elimination of requirement for plans to cover a certain percentage of cost
    • Younger mix of insurance enrollees
  • By 2026, the average premium would be about 10% lower than under current law, but dramatically different for individuals of different ages
    • Substantially reduced premiums for young adults
    • Substantially increased premiums for older adults
  • Reduction in federal Medicaid spending by $880 billion over 2017-2026 period, mostly from:
    • Redesigning Medicaid to a capitated payment model
    • Phasing out the Medicaid Expansion enhanced match

Details of the score also point out that more financial risk will be placed on the states to pay for Medicaid services, or alternatively scale back benefits or eligibility requirements for their Medicaid programs to stay within the federal caps. 

The Kaiser Family Foundation (KFF) created an interactive tool for individuals to determine how they might be affected by the change from a means-tested premium subsidy to an age-based tax credit. The legislation disproportionately disadvantages the low-income of all ages and the aging population, 60 years and older. 

The AHA released an ad urging Congress to protect health insurance coverage for our most vulnerable citizens. See the ad here.

March 9, 2017

After many "leaked" plans from the House Republican leadership, the legislative language for a repeal and replacement of the ACA was revealed Monday evening. The bill, dubbed the "American Health Care Act," was produced by the House Ways and Means Committee and the House Energy and Commerce Committee. Both committees met late into Wednesday night and Thursday to mark up the legislation before transmitting it to the House Budget Committee, which will combine the legislation into one bill to be taken up on the House floor. 

The bill contains many of the provisions outlined in the drafts leaked throughout the past several weeks, including a repeal of the individual and employer mandates; age-based tax credits for purchasing health insurance in the individual market; per capita based caps on Medicaid funding; and State Innovation Grants for states to establish high-risk pools or other insurance alternatives aimed at lowering the cost of insurance. Things in the bill that were previously unknown were the ability for non-expansion states to expand Medicaid through 2020; a 'grandfather' provision for individuals in the expanded population to keep enhanced funding until they cycle off Medicaid; $10 billion over 5 years for non-expansion states to offset some of the uncompensated care costs for providers; and setting the base year for future Medicaid funding as 2016.

SCHA does not support the bill as written and has concerns over moving forward with legislation prior to receiving a score from the Congressional Budget Office (CBO). Several other groups, including the American Hospital Association, American Medical Association, American Nurses Association, and AARP, oppose the legislation as written because it appears coverage will decrease dramatically among the low-income and aging populations. The bill also exposes states like South Carolina which currently have conservative benefit packages and eligibility requirements for Medicaid services and makes it increasingly difficult for the state to offer more generous health benefits to Medicaid beneficiaries in future years.

March 3, 2017

The House GOP 'leaked' a healthcare plan toward the end of their President's Day recess in late February and has been working to gain consensus on the Hill. The plan contains many of the provisions consistenly discussed throughout the past several months on the topic, but outlines more working details for healthcare and hospitals.

The plan still includes advanceable, refundable tax credits based on age, but the latest considerations include an income cap to not allow wealthy Americans to qualify for the credit.

Medicaid expansion is rolled back under the GOP plan, reducing the federal match to states with expansion populations over a few years until it is in-line with the traditional Medicaid match for that state. Medicaid funding would be replaced by capped payments based on the number of Medicaid enrollees in each state. Non-expansion states would receive 'additional resources for safety-net providers' to level the playing field, though it is not immediately clear what those resources are. The plan does include a repeal of the Medicaid DSH cuts.

The new draft outlines a plan to use "State Innovation Grants" to expand the amount of flexibility states have in designing their Medicaid program, with the ultimate end goal of lower the cost of insurance for all. 

While the plan is not final, it is much closer to a working bill than previous proposals have been. 

Meanwhile, President Trump addressed Congress and outlined his ideas for healthcare, which include tax credits, health savings accounts, and increased competition by allowing insurers to sell across state lines. The Administration has not been publically involved in the healthcare debate on the Hill thus far, but could play a big role in the end product if the Congressional Republicans cannot coalesce around a single plan.

The Players


 
 President Donald Trump made repealing the ACA a centerpiece of his campaign and vowed to eliminate the law during his first days in office. He has called on Congress to repeal and replace the law and issued an executive order to ease the “unwarranted economic and regulatory burdens” of Obamacare.

 
 Tom Price is a former Republican Congressman and physician from Georgia who is now serving as Secretary of Health and Human Servives. As a member of Congress, Price was a chief critic of the ACA and sponsored several of the GOP plans to repeal the law. As the Secretary of Health and Human Services, he will play a vital role in the GOP's efforts to repeal and replace Obamacare.

 
  Speaker Paul Ryan currently serves as the 54th Speaker of the United States House of Representatives having represented Wisconsin’s 1st congressional district since 1999. Even before ascending to the position of Speaker in 2015, Ryan was a vocal opponent of the ACA and has put forth his own plan to replace Obamacare. He is the face of the GOP in the House and will likely lead efforts to reform the ACA in the chamber.
 

 
  Seema Verna is a health policy consultant and President Trump’s selection to lead the Centers for Medicare and Medicaid services (CMS). She is credited with designing the Medicaid expansion plan implemented in Vice President Mike Pence’s home state of Indiana. Verna will likely play a major role in advising the Administration and Congress on a potential repeal and replacement to the ACA.

 
 Senator Mitch McConnell is the senior United States Senator from Kentucky who has served as the Majority Leader of the chamber since January 3, 2015. McConnell is charged with leading efforts to repeal the ACA in the Senate, although his home state of Kentucky has benefited greatly from the ACA through the health insurance marketplace and Medicaid expansion.

Alternative Plans

Patient Freedom Act (S.191) – Republican Senators Bill Cassidy of Louisiana and Susan Collins of Maine sponsored the first major legislative proposal to replace the ACA since President Trump has taken office. The Patient Freedom act of 2017 is considered compromise legislation that would preserve the ACA in some states while giving other states the opportunity to try something new. The bill is currently awaiting action in the Senate Committee on Finance.

Better Way for Healthcare – Speaker Paul Ryan introduced his Better Way for Health Care in June 2016. The plan maintains some of the popular provisions of the ACA like ensuring coverage for those with pre-existing conditions and allowing young adults to stay on their parents’ plan up to age 26, but also proposes Medicaid reform via block grants or a per capita allotment approach.

Empowering Patients First Act of 2015 (H.R. 2300) – Introduced by health secretary nominee Rep. Tom Price in 2015, the proposal is considered the basis for Price’s intentions to reform the ACA. Price’s previously proposed plan would offer tax credits for the purchase of individual and family health insurance policies and eliminate the ACA’s Medicaid expansion and federal health insurance exchange.

The Obamacare Replacement Act - Sponsored by Senator Rand Paul in the Senate (S.222) and Representative Mark Sanford in the House (H.R. 1072), the Obamacare Replacement Act eliminates the ACA's indiviudal mandate and minimums on coverage standards, and would present a two-year window for people with preexisitng conditions to sign up for care. The proposal would also provide a $5,000 tax credit for contributions to health savings accounts.

American Health Care Act - Legislation introduced by the House Ways and Means Committee and Energy and Committee in March 2017 to repeal and replace the ACA. The legislation is subject to the reconcilation process and rules. Allowable content will be determined by the Senate parliamentarian when the bill is received in that body. The plan is similar to the outline provided in House GOP Leadership's A Better Way policy brief and provides a clearer understanding of the details of implementation.

The New Lexicon

With a new plan comes a new language including some familiar terms that conservative GOP leaders have been promoting for many years:

Block Grants –  States receive a set amount of federal funds annually, typically allocated by reference to a base year. The amount could be frozen or tied to an inflationary factor. GDP and CPI are being floated around as a national trend rate that may be used in this case. Each state may or may not have a spending requirement to receive funds.

Per Capita Allotment – States receive a fixed amount of federal funds per Medicaid enrollee based on per-enrollee spending in a base year tied to a national growth rate trend. The caps vary based on eligibility category, so a child would receive different funding than a disabled enrollee. A state spending match is likely required.

Work Requirements – Including some type of job, training, or job referral requirement in the eligibility criteria for Medicaid. Work requirements as a condition of Medicaid are not generally allowed under the current law, with the exception of some Medicaid waiver states. The Trump administration seems likely to expand opportunities for work requirements as a condition of Medicaid coverage.

Health Savings Accounts (HSAs) – A tax-advantaged medical savings account available to taxpayers who are enrolled in high-deductible health plans. Funds contributed to a health savings account are not subject to federal income tax at the time of deposit. Health savings accounts are a common tool among healthcare plans to replace the Affordable Care Act, with the intent to encourage consumers to “shop around” for value in healthcare services.

Advanceable Premium Tax Credit -  A credit to an individual’s tax obligation provided in advance to help with the purchase of health insurance in an individual market. Referred to repeatedly in Republican health plans, tax credits would replace means-tested financial subsidies provided through the Affordable Care Act. Proposals include age-adjusted premium support through “refundable” tax credits to provide more assistance to older individuals and less assistance to younger individuals.

The Process

Budget reconciliation is a process in the annual budget resolution that allows Congress to make changes to spending and revenues without the normal procedural hurdles. To trigger the reconciliation process, Congress must pass a resolution on the budget including instructions to applicable committees to report changes in law affecting the budget by a certain date. The instructed committees send their recommendations to the Budget Committee of their body, which constructs a single omnibus bill. In the Senate, a reconciliation bill is limited to 20 hours of debate and amendments are limited.

Committees instructed in the budget resolution vehicle to repeal the Affordable Care Act include:

The Byrd Rule, adopted in 1985, outlines which provisions reconciliation can be used for and which provisions cannot be done through this process. The Byrd Rule defines six cases which make a provision ineligible for reconciliation:

  1. It does not produce a change in outlays or revenues;
  2. It produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
  3. It is outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
  4. It produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provisions;
  5. It would increase the deficit for a fiscal year beyond those covered by the reconciliation measure; or
  6. It recommends changes in Social Security

In other words, reconciliation can only be used on provisions which affect federal spending or revenue. In the Affordable Care Act, there are many provisions that are eligible for reconciliation, but the provisions like extending dependent coverage to age 26 and non-discrimination for pre-existing conditions cannot be dealt with through reconciliation.

Only one reconciliation bill can be passed per budget year. The current vehicle for Affordable Care Act repeal is a resolution to the fiscal year 2017 budget, which goes through September 30, 2017. Another budget resolution and subsequent reconciliation bill could be constructed for other purposes when Congress is working on the fiscal year 2018 budget later this year.

Where We Stand

South Carolina hospitals are very concerned about the potential negative economic impacts for healthcare providers and the communities they serve if the ACA is repealed without a viable replacement plan. Healthcare providers were dealt steep cuts to Medicare and other payments with the idea that expanded health coverage would help mitigate those cuts. If the mechanisms of the ACA that expand coverage are repealed, we would urge that the ACA’s cuts to healthcare providers be restored.

As block grants and other capitated funding models are considered, we recognize that South Carolina would not receive equal benefits to the 31 states that expanded eligibility and coverage under the ACA. Under a capitated model, conservative states like South Carolina that chose not to expand Medicaid would be locked-in with less funding and resources that ultimately hurts our ability to compete with other states for economic development and jobs.

Repealing the healthcare benefits provided by the ACA without reinstating the cuts to Medicare, Medicaid, and uncompensated care funding would result in a $6.5 billion negative impact on South Carolina’s healthcare providers.

What You Can Do

Contact your members of Congress and ask them to support a plan that protects patient coverage and restores essential cuts to hospitals.

Join LEAd, SCHA’s grassroots advocacy group, for updates and action alerts on pending legislation.

Other Resources

American Hospital Association Resources

 

Documents and Resources