Repeal and Replace

Repeal and Replace

The Latest – July 28, 2017

Around 1:30 a.m. Friday, the U.S. Senate voted on the most recent proposal to repeal and replace the Affordable Care Act (ACA). The Health Care Freedom Act (HCFA), also referred to as skinny repeal, failed to get the necessary 51 votes to pass. Senators McCain (R-AZ), Murkowski (R-AK), and Collins (R-ME) voted against the measure along with all 48 democrats.

The text of the HCFA was released around 10 p.m. Thursday evening. As written it would:

  • Repeal Individual Mandate effective December 31, 2015
  • Repeal Employer Mandate effective December 31, 2015, reinstating on January 1, 2025
  • Extend moratorium on medical device tax through 2020
  • Increase HSA contribution limit to the amount of deductible and out-of-pocket limit on insurance policy for three years, 2018-2020
  • 1-year prohibition on federal funds to Planned Parenthood or similar clinic
  • Repeal the Prevention and Public Health Fund after 2018
  • Increase Community Health Center Funding by $422 million for 2017
  • Amend Section 1332 of ACA regarding innovation waivers to
    • Add $2 billion to pass through funding
    • Require determination within 45 days (previously 180 days)
    • Extend waiver length to 8 years (was 5 years), prohibits secretary from canceling within 8-year period, and allows for unlimited 8-year renewal periods
    • Maintain ACA “comprehensive coverage” requirements for applications

The Congressional Budget Office (CBO) scored the bill shortly after its release. An estimated 15 million Americans would lose their health insurance coverage next year, increasing to 16 million by 2026. Healthcare premiums would be expected to rise 20% under HCFA compared to current law.

July 25, 2017

The Senate voted to begin debate on the proposal to repeal-and-replace the Affordable Care Act (ACA) this afternoon with Vice President Pence serving as the tie-breaker after a 50-50 vote in the Senate. Two republicans, Senators Collins (R-ME) and Murkowski (R-AK), voted against the Motion to Proceed. It is still unclear on what the Senate will vote after debate and amendments have been offered. 

Reconciliation rules limit debate on the measure to 20 hours, followed by a nearly unlimited number of amendments offered by both democrats and republicans - 'vote-a-rama'. 

Majority Leader McConnell struggled over the past few weeks to garner enough support for any particular repeal or replace measure in the Senate. The most recently discussed plan included the possibility of a vote on each of the many versions of the Better Care Reconciliation Act of 2017 (BCRA), a vote on many amendments discussed by members including South Carolina's Senator Graham, and a vote on the 2015 repeal bill passed by Congress and vetoed by then-President Obama. It is unclear if any one plan has enough support to receive 51 votes. 

July 14, 2017

Senate members returned to the Capitol after the 4th of July recess prepared to unveil their revised version of BCRA. The original, released in mid-June, received much criticism from republican senators. Revisions are an attempt by leadership to gain support from right-wing conservative members like Senators Ted Cruz (R-TX) and Mike Lee (R-UT), and many of the changes were suggested by Cruz. 

Revisions would:

  • Allow insurance companies to sell plans that do not meet the essential health benefit (EHB) requirements as long as they also sell a plan that does. Non-compliant plans would not count toward continue coverage for an individual.
  • Require non-compliant high-deductible plans to cover three primary care visits per year and maintain some protections to limit out-of-pocket costs for individuals
  • Retain the net investment tax, additional Medicare Health Insurance tax, and the remuneration tax on executive compensation for health insurance executives.
  • Include an additional $70 billion to help states lower the cost of insurance for their residents
  • Allow individuals to pay for healthcare premiums with money from a health savings account (HSA) for plans not purchased with an employer or government subsidy.
  • Exclude declared public health emergency areas from Medicaid federal allocation caps for the duration of the emergency.

 

BCRA as revised would still result in a significant increase in the number of uninsured individuals and lead to premium spikes for older adults and sick individuals. 

June 30, 2017

Majority Leader Mitch McConnell (R-KY) had planned to hold a vote on BCRA prior to leaving for the 4th of July recess this week. He announced earlier this week that the vote would be delayed, signaling a lack of support among Republican Senators. 

June 26, 2017

The U.S. Senate last week revealed their own version of a repeal-and-replace bill. Their version, titled Better Care Reconciliation Act of 2017 (BCRA), made some adjustments to the House bill but maintained many of the worrisome provisions we opposed during the debate over AHCA. 

Some amendments to the legislation have already been added to secure more votes for the Majority Leader. In its current form, BCRA:

  • Repeals the individual and employer mandates, replacing them with a six-month “lock-out” that delays the effective date of coverage for those who sign new policies after a coverage gap.
  • Phases-out the ACA’s Medicaid expansion beginning in 2020 and concluding after 2023.
  • Targets premium supports (tax credits) toward a lower-income population (0-350% FPL for BCRA vs. 100-400% for ACA), but diminishes the value of these support by lowering the benchmark plan from 70% actuarial value under ACA to 58% AV under BCRA.
  • Changes the general funding model for Medicaid from one in which the state and federal government split costs to one in which states receive a per-capita allocation for Medicaid enrollees that varies based on eligibility categories of children, adults, elderly, and disabled.
  • Eliminates the ACA’s Medicaid DSH cuts for non-expansion states.
  • Creates a State Stability and Innovation Program to fund state reinsurance programs, high-risk pools, cost-sharing subsidies, and direct payments to providers - $112B in federal funds, with state match beginning in 2022.
  • Lowers the threshold for states to obtain Section 1332 waivers to redesign their approaches to coverage, but also potentially to weaken Essential Health Benefits.
  • Preserves ACA’s option to keep dependents under age 26 on their parents’ policy.
  • Keeps ACA’s requirement that insurers offer coverage to those with preexisting conditions, along with its elimination of annual/lifetime limits.


The impact of this bill, according to the Congressional Budget Office (CBO), would include 22 million fewer individuals with health insurance by 2026, with an estimated 250,000 fewer covered South Carolinians.

The legislation would cut Medicaid by $772 billion over 10 years through a re-design to a per capita capped funding model. This model would be extremely detrimental to South Carolina, a non-expansion state with low per-enrollee spending, and would lock in disparities between state Medicaid programs into perpetuity. The growth rate included in BCRA for annual increase in funding caps is tied to the medical component of the Consumer Price Index (CPI-M), or CPI-M +1% in some cases until 2025 and would then be reduced to CPI-Urban, a lower factor. Current medical spending growth and actual Medicaid per-enrollee spending growth exceeds CPI-M. The unrealistically low growth factor will create huge state budget issues over the next several years.

The Majority Leader can only afford to lose two Republican Senators to pass BCRA with a tie-breaker by Vice President Pence. 

May 4, 2017

The U.S. House of Representatives passed the American Health Care Act (AHCA) by a vote of 217-213 this afternoon. This vote came nearly seven weeks after AHCA was pulled from consideration after four hours of debate. 

Republican leadership from Congress and the White House have been working diligently over the last several weeks on amendments to AHCA to secure votes, as recently as last night. One amendment would add $8 billion over five years for states granted a waiver from community rating standards meant to offset the increased cost of coverage for individuals with pre-existing conditions. The amendment was enough to gain the votes of two key Republicans, Fred Upton (R-MI) and Billy Long (R-MO), but the funds would not be enough to cover the increased cost. 

In its current form, AHCA has not received a score from CBO. The last draft of AHCA that received a score was projected to save the federal government $150 billion cumulatively over the next decade, but resulted in 24 million fewer Americans having health coverage. The subsequent amendments likely have other adverse impacts on overall coverage and certainly reduce federal savings, possibly to the point where this bill would increase the federal budget deficit. 

Now AHCA will head to the Senate where it will undergo significant changes for both policy and political reasons. 

April 27, 2017

Nearly six weeks after a vote that failed to happen on the American Health Care Act, talk of another vote is circling. An amendment to the bill - dubbed the MacArthur Amendment - seemed to be the trick to gaining the support of a majority of the Freedom Caucus. However, it illicits real concern from the moderates in the Republican party who remain opposed to the bill. If all members of the House of Representatives are present, House leadership can only afford to lose 23 votes for the needed 216 for passsage. 

The government is funded through midnight Friday, April 28, 2017, so avoiding a government shutdown is a priority for both the House and Senate as the week draws to an end, but it is possible House Speaker Paul Ryan could bring the American Health Care Act, as amended, up for a vote if he is confident the votes for passage exist. Leadership has been wary of bringing up a vote again after the embarrassment that occurred during the first attempt. 

According to sources in Washington, DC, the votes are close right now. Waiting to vote until next week would give the Speaker and White House more time to secure votes but would also present more time for groups opposed to the bill to court the 'no' votes needed to kill the bill. 

The amendment would allow states to apply for limited waivers for two portions of the law: essential health benefits and community ratings. Waiving community ratings would likely make health insurance unaffordable for individuals with pre-existing conditions, allowing insurance companies to charge much higher rates for a plan. The original bill left millions without health insurance and this amendment appears to be even worse. SCHA remains opposed to this legislation.

March 24, 2017

The U.S. House of the Represenatives recessed around 3:30pm Friday afternoon without voting after four hours of debate on the American Health Care Act, indicating there were not enough votes to pass it. No more than 22 Republicans could vote against the bill for a successful passage in the House. 

The bill was amended twice this week as leadership and White House officials made concessions to gain support from the House Freedom Caucus. The move to not vote on the legislation signals they did not move enough far-right conservatives to the 'yes' column. 

Speaker Paul Ryan spoke after the House adjourned. He discussed the disappointment today's outcome is to the Republican party and what it might mean for the future of healthcare in America. He noted that the country will be living with Obamacare as the law for the forseeable future. A video of the statements can be found on the Speaker's website.

March 23, 2017

Republican leadership released an amendment to the American Health Care Act this week as they delayed a Thursday night vote until Friday. 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
  • Gives responsibility to states to establish essential health benefit requirements for plan
  • Adds $15 billion to the Patient and State Stability Fund for maternity and mental health services

The changes were meant to appease both the conservative and moderate factions, but it is unclear if the votes are there to pass the bill. Debate on the bill began around 11:20am and is limited to four hours. A vote is expected this afternoon. President Trump has indicated that this is the only vehicle for repeal and replace, and vowed to move on to other priorities and leave Obamacare as law if this bill fails to pass.

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.

Better Care Reconciliation Act of 2017 - A bill proposed by the U.S. Senate Leadership in June 2017. This legislation is the Senate's response to the House-passed American Health Care Act and is subject to reconcilation requirements and procedures. 

Health Care Freedom Act - The 'skinny repeal' effort from the Senate to pass something in order to proceed to a conference committee with the House of Representatives. 

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