US House Passes American Health Care Act 

Well, it happened. House Republicans got the votes to send the AHCA on to the Senate. The bill will face tough challenges in the Senate, so this is far from a done deal. For now, it is business as usual under the ACA.

Highlights of what is in HR 1628

• The “Cadillac” tax remains, although delayed from 2020 to 2026
• Employer and individual mandate penalties eliminated for 2016 and later years
• Age-based tax credits starting in 2020. Credits phase out for those making more than $75,000 per year ($150,000 joint filers). No credits for those offered employer coverage
• Most other ACA taxes are repealed for years beginning after 2016
• HSA enhancements – Increase limits to max deductible/out-of-pocket limits for HDHPs (Based on Mercer estimates, $6,650 single/$13,300 family for 2018)
• No additional states can expand Medicaid after March 1, 2017 and Medicaid funding significantly changed with per enrollee capped payments, option for block grants
• Employer’s ACA reporting not repealed (this would need separate legislation or regulatory action); after 2019 offers of coverage would be reported via W-2
• Subject to certain requirements, states could opt out of essential health benefits, aspects of community rating and age banding requirements
• Most recent amendment provides additional $8B to help states pay for pre-existing condition claims

The Congressional Budget Office has not scored the version of the bill passed by the House. Earlier, they projected the number of uninsured would increase by 14M in 2018, 21M in 2020 and then 24M in 2026 relative to projections under the ACA. CBO has not released revised numbers to reflect the most recent changes. The combination of more people without coverage and cuts in Medicaid funding could potentially result in cost shifting to employer-sponsored plans. Another concern is that employers may have less ability to transition certain populations (early retirees, part-time employees) to individual coverage as a design option.

Important context of this bill in the process of becoming a law

The bill faces significant hurdles in the Senate. The Senate requirements for what qualifies for reconciliation legislation are expected to result in some trimming of provisions that don’t have an impact on the federal budget, and GOP senators will want to make other changes, including more generous tax credits and more time to unwind the ACA’s Medicaid expansion.  A Senate-passed bill may be difficult to pass again in a conservative House – both chambers will need to agree on the final version before it can be sent to President Trump.

We will continue to track and provide updates.