It is now reported that the full House will vote on the American Health Care Act on Friday, March 24, 2017. Late on March 23, a further manager’s amendment was offered (summary here), apparently to pick up extra Republican votes.
The bill would first delay the repeal of the Affordable Care Act’s additional Medicare tax on the wages of taxpayers exceeding $250,000 a year ($200,000 for single filers) from 2017 to 2022, and repeal a transition rule applying to the withholding of this tax by employers for 2017. This measure would raise about $50 billion in revenue.
Second, the bill would make a number of changes to the AHCA’s Patient and State Stability Fund. Under the amendment, states would be able to use the fund for reducing the cost of insurance coverage in the individual and small group market for individuals who have high health insurance costs due to the low population density of states where they reside. The fund would also be available for maternity and newborn care and for prevention, treatment, or recovery support services for people with mental illness or substance abuse disorders. The mental health and substance use disorder funds could be focused on inpatient or outpatient clinical care and/or on early identification and intervention of children and young adults with serious mental illness. The bill also appropriates $15 billion for 2020 for the Patient and State Stability Fund for maternity, mental health, and substance abuse purposes.
Changes Regarding Essential Health Benefits
Finally, the bill changes the ACA definition of essential health benefits (EHB). First, it strikes from the definition of “essential health benefits package,” the current provision that the EHB package is to include EHB as defined, “by the Secretary” (of Health and Human Services). The EHB package, however, includes the EHB “under subsection (b).” The amendment changes the definition of EHB—which currently reads “Subject to paragraph (2), the Secretary shall define the essential health benefits” to cover the ten ACA EHB categories—to say “subject to paragraph (2) and (6), the Secretary shall define the essential health benefits,” to include the ten mandatory categories. Paragraph 2 provides that EHB must be equivalent in scope to a typical employer plan.
The amendment next adds a new paragraph 6, stating:
(6) ESSENTIAL HEALTH BENEFITS FOR PLAN AND TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 2018.—For plan years and taxable years beginning on or after January 1, 2018, each State shall define the essential health benefits with respect to health plans offered in such State, for the purposes of section 36B of the Internal Revenue Code of 1986
All plans in the individual and small group markets that are not grandfathered (or grandmothered) must cover the EHB package. The ACA also prohibits applying annual and lifetime limits to EHB and caps out-of-pocket spending for EHB. Under the amendment, HHS would apparently continue to define the EHB for these purposes, and EHB as defined by HHS must continue to cover the ten required services and be equivalent to the typical employer plan.
For the limited purpose, however, of determining premium tax credits, states would be required to define EHB. How they would do so (by legislation, regulation, or guidance), and whether they would be capable of doing so by January of 2018, is an open question. Also, EHB are only relevant to the AHCA’s premium tax credits through 2019 in any event, because as of 2020, tax credits would be available for any plan a state considers to be a qualified health plan. In the interim, states would apparently be encouraged to increase state mandates, because any service a state considers to be EHB will be qualified for premium tax credits. Under the ACA, states had to pay for services mandated above.
The amendment could raise questions under the Tenth Amendment, which has been interpreted as prohibiting the federal government from “commandeering” state governments for federal government programs. It says “each state shall define” and, unlike the ACA’s provisions with respect to exchanges, does not provide an alternative for the federal government to step in if a state chooses not to comply with the command..
It is hard to believe that this is what the drafters intended, as the whole purpose of redefining the EHB was to reduce the services covered by health plans and thus their costs. The amendment does make sense, however, in terms of a provision that could survive the Byrd rule in the Senate.
CBO Updates AHCA Score
Also on March 23, the Congressional Budget Office released another AHCA cost estimate taking into account amendments made to the bill through the manager’s amendment filed on March 20 and subsequent technical amendments. It does not take into account the March 23 amendment just discussed.
The CBO report projects that as amended by the manager’s amendment, the AHCA would reduce the deficit by $150.3 billion over ten years, $186.2 billion less than the original AHCA, which CBO estimated would reduce the budget deficit by $336.5 billion. The increased cost is due to
- reducing the threshold for medical expense deductions from 7.5 to 5.8 percent of income ($90 billion),
- moving up and otherwise changing the effective date of tax cuts ($48 billion),
- changes in the Medicaid program ($41 billion, primarily attributable to increasing the inflation adjusters for aged, blind, and disabled recipients, with that increase offset in part by reducing per capital allotments to New York, allowing states to impose a work requirement, and adding a block grant option), and
- other smaller changes. ($8 billion).
Despite the manager amendment’s significant sacrifice in deficit reduction, CBO projects that its changes will not expand coverage. CBO continues to expect that the AHCA as amended will cause 14 million more to be uninsured by 2018 and 24 million more to be uninsured by 2026, just as under the original AHCA. The nongroup market may be slightly larger in some years, but overall the numbers are the same. Similarly, AHCA as amended would have the same effect on health insurance premiums in the nongroup market as the original AHCA, increasing them by 15 to 20 percent in the short run but reducing them by 10 percent in the long run (for less comprehensive coverage.)
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2n0tWwb
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