Health Care Alert: Republicans Release Plan to Replace Affordable Care Act: A Deeper Look into the Proposal

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On March 6, 2017, House Republicans released the American Health Care Act (AHCA), their plan to repeal and replace the Patient Protection and Affordable Care Act (ACA). If enacted as proposed, the plan would implement the following changes:

Insurance, Mandates, Penalties and Tax Credits

A family could receive up to $14,000 in credits. The credits would be available in full to individuals making $75,000 annually, or joint filers making $150,000 or less annually. For those incomes higher than these thresholds, the credit would phase out by $100 for every additional $1,000.

Medicaid, Expansion and Per Capita Caps

Risk Pools, Health Savings Accounts

(1) reduce the excise tax on non-medical withdrawals from 20% back to 10%;

(2) permit deposit of age-based tax credits into an HSA;

(3) significantly increase HSA contribution limits to the inflation-adjusted deductible/out-of-pocket maximum limits for high-deductible health plans (HDHPs);

(4) permit reimbursement of expenses incurred pre-HSA establishment, if HSA is established within 60 days of the date qualifying HDHP coverage commences; and

(5) permit both spouses to make catch-up contributions to an HSA.

Other Provisions

No Change to Several Popular Aspects

The proposal does not change the most popular aspects of the ACA, including: the prohibition on insurers denying coverage to those individuals with pre-existing conditions; the provision allowing children to remain on their parent’s health insurance plans until age 26; the ban on lifetime coverage caps; and, the establishment of the ACA’s essential health benefit package. As these provisions of the ACA do not directly affect government revenue, they cannot be modified through the budget reconciliation process.

Current Status of Proposal

The proposal was adopted by both the House Ways and Means and Energy and Commerce Committees. The analysis of the bill by the Congressional Budget Office was released on March 13. Supporters of the proposal have expressed their hope that the full House will be able to vote on the proposal prior to a Congressional break scheduled to begin on April 7, 2017.

Certain industry groups have stated concern that the proposed plan will harm low-income Americans. The American Medical Association sent an open letter to the two committees withholding their support of the AHCA due to the “expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations.” Major hospital organizations, including the American Hospital Association and the Federation of American Hospitals, and AARP, have also come out against the AHCA. However, a number of other medical, and health industry lobby groups have expressed support for the proposal.

The future of the proposal in the Senate is uncertain, as four Republican Senators from states that have expanded Medicaid under the ACA (Rob Portman, OH; Shelley Moore Capito, WV; Cory Gardner, CO; and Lisa Murkowski, AK) have already published a letter opposing the proposal, expressing, among other things, concern that it fails to adequately protect people in their states.

Vorys will continue to provide updates on the AHCA and other health care proposals as they evolve.