By Sara Wilensky, JD, PhD
Co-author of Essentials of Health Policy and Law, 3rd Edition
In a political surprise (how many have there been?), the House of Representatives passed a modified version of the American Health Care Act (AHCA) on May 4, 2017 by a vote of 217 to 213. Every Democrat and 20 Republicans voted against the bill. Most of AHCA remained the same as described in a previous post. While the original AHCA did not even make it to a vote, two amendments allowed the modified version to pass through the House with the support of the conservative Freedom Caucus as well as some moderate Republicans.
Rep. Tom MacArthur (R-NJ) jumpstarted the renewed effort with amendments that allow states to apply to the federal government for waivers to the Essential Health Benefit requirements, 1-to-5 rating band, and community rating requirements for individuals who do not maintain continuous coverage. The EHB waiver allows insurers to provide less generous coverage. The rating band waiver allows insurers to charge elderly consumers more as compared to young consumers than under the ACA’s 1-to-3 rating band. The community rating waiver allows insurers to charge premiums based on health status for one year for those who do not maintain continuous coverage as long as the state participates in a high-risk pool or the federal invisible risk sharing program (where insurers cede 90% of premiums of high-risk consumers to a federal risk pool and then share certain costs with the federal government for those consumers).1 While states would have to apply for a waiver, they would be granted as long as they reduced premiums or met other public policy goals and requirements. The assumption is that waivers would not have difficulty being approved by the Trump administration. Taken together, the goal of the amendments was to address conservative concerns that AHCA did not take sufficient steps to lower premiums.
While the MacArthur amendments garnered praise from conservative members, moderate Republicans in the House were concerned about rising costs for those with pre-existing conditions. Even though the MacArthur amendments did not allow insurers to exclude consumers with pre-existing conditions, insurers would be able to charge high-cost consumers premiums at rates that would effectively exclude them from the market.1 To address this concern, moderate Fred Upton (R-MI), offered an amendment to add $8 billion to the $130 billion fund for states that allow insurers to charge higher premiums to high-cost consumers with a gap in coverage. States could use these funds to create a high-risk pool or subsidize consumer premiums or cost-sharing. Despite agreement among experts that the funds falls well short of the money needed for such a purpose and the history of unsuccessful attempts at high-risk pools (usually because of lack of sufficient funds), the Upton amendment persuaded enough moderates to vote for the bill that it was approved.
While AHCA leaves in place much of the ACA, it includes significant changes to the law. The bill:
- Eliminates ACA taxes and tax increases,
- Phases out Medicaid expansion funding and includes block grant or per capita caps on Medicaid,
- Removes penalties for the individual and employer mandate,
- Changes the age rating band in the individual and small group market from 1-to-3 to 1-to-5 and allows states to ask for a waiver for higher rating bands,
- Allows states to waive EHB requirements,
- Penalizes individuals who do not maintain continuous coverage,
- Allows states to obtain a waiver to allow insurers to base premiums on health status for those who do not maintain continuous coverage,
- Creates a $138 billion fund to assist states with high-cost consumers, and
- Replaces ACA income-based subsidies with age based tax credits.1
The ACA repeal and replace effort now moves to the Senate where its fate is quite uncertain. A number of Republican Senators have indicated that they will start anew with their own bill instead of working to amend AHCA. In addition, there appears to be significant concerns about protections for those with pre-existing conditions, the quick rollback of Medicaid expansion, the fundamental change to the Medicaid program, the significant increase in the number of uninsured, the age-based tax credits that will leave many elderly paying significantly higher premiums, and the provision that defunds Planned Parenthood for a year. These issues are making headlines again as CBO just released its analysis of the revised AHCA legislation. Basically, the analysis of the revised legislation mirrors CBO’s analysis regarding the original bill. Millions will lose insurance (23 million under the revised bill), the elderly, low-income, and those with high health care needs will pay much higher premiums, and the young and healthy will pay lower premiums. In addition, CBO was clear that those with high health care costs will have difficulty finding affordable coverage under AHCA, stating:
[p]eople who are less healthy (including those with pre-existing conditions or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under the current law, if they could purchase it at all – despite the additional funding that would be available under H.R. 1628 to help reduce premiums.
Of course, any changes to address these concerns would make the health reform effort less conservative and risks losing key votes in the House. Furthermore, there are procedural concerns about whether the new amendments are allowed in a reconciliation bill, which is the vehicle the Senate plans to use for their legislation.
Whatever happens in the Senate, House Republicans and the Trump administration consider it a win that they were able to pass legislation to repeal key provisions of the ACA. While conservative Republicans held firm by rejecting the initial version of AHCA, many moderate Republicans were swayed to vote for the modified bill because they wanted to keep their promise to repeal the ACA. Democrats consider the Republican vote “political suicide” and think it will help them win seats in the 2018 mid-term elections. Democrats should be cautious about cheering the passage of AHCA, however, because it keeps alive the prospects of repealing and replacing the ACA, which they would consider to be a huge setback. Even though Senate Republicans have a difficult balancing act, at the moment no one is claiming health reform is “dead on arrival” and conservative and moderate factions have a seat at the negotiating table. Furthermore, Congressional Republicans and the Trump administration have been clear they intend to use savings from this effort to fund tax reform, further increasing their incentive to find a way to pass a bill. Finally, a bi-partisan group of Senators are meeting in the event that the partisan Republican effort fails, opening up another opportunity for changes to the ACA. All of this is to say, it is likely to be a lively few months for those watching the health reform debate.
Sara Wilensky is Special Services Faculty for Undergraduate Education in the Department of Health Policy and Management at the Milken Institute School of Public Health at the George Washington University. She is also the Director of the Undergraduate Program in Public Health. As both a teacher and a researcher, Dr. Wilensky concentrates on the financing, access and health care needs of the medically underserved, including low-income and uninsured individuals, farmworkers and patients with HIV and AIDS. She is the co-author of Essentials of Health Policy and Law from the Jones & Bartlett Learning Essential Public Health series.
 Jost T. House passes ACHA: How it happened, what it would do, and its uncertain Senate Future. Health Affairs Blog. May 4, 2014. Available http://healthaffairs.org/blog/2017/05/04/house-passes-ahca-how-it-happened-what-it-would-do-and-its-uncertain-senate-future/. Accessed May 24, 2017.
 Congressional Budget Office. H.R. 1628 American Health Care Act of 2017 – Cost Estimate. P.5. May 24, 2017. Available https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr1628aspassed.pdf. Accessed May 25, 2017.