After House Speaker Paul Ryan pulled the American Health Care Act (AHCA) bill, there are questions as to whether the Patient Protection and Affordable Care Act (PPACA) will ever be repealed or reformed. The AHCA legislation, which did not entirely match President Trump's campaign promises regarding the PPACA, managed to alienate both liberals and conservatives.
Over two dozen Congressional Republicans opposed the AHCA because it did not sufficiently repeal existing law. Tom Price, MD, a former orthopedist and the new Secretary of Health and Human Services, is likewise opposed to government interference in the health insurance system.
While in Congress, Price advocated repeal of the PPACA, but he is now hesitant to embrace a strategy of repealing the PPACA entirely.
To understand the Republican bill, it is essential to organize its contents into the static and dynamic -- what the AHCA would change, and what it would not.
What the AHCA Will Change.
The AHCA would repeal the tax penalty for not having the minimum essential coverage (the individual mandate), but it would apply a late enrollment penalty for individuals buying non-group coverage who have not maintained uninterrupted 12-month continuous coverage. Retroactive to January 1, 2016, the AHCA reduces the tax penalty for large employers not providing health benefits to zero. The AHCA would also repeal tax credits for low-wage small employers, effective January 1, 2020.
It does not repeal premium subsidies. Instead, the AHCA would modify PPACA premium tax credits for FY 2018-FY 2019 to the amount for younger adults and reduce the amount for older adults, which also will apply to coverage sold outside of exchanges and to catastrophic policies. In 2020, the AHCA would replace income-based tax credits with flat tax credits based on age, and the eligibility for new tax credits phases out at income levels between $75,000 and $115,000.
Proposed changes to Medicaid under the AHCA would likely have the most significant impact on Alabama Medicaid. Since the Alabama General Assembly and Gov. Bentley have been steadfast in expanding Medicaid, these proposed changes are particularly important. First, as of January 1, 2020, the incentive for Alabama to expand Medicaid would likely removed: the AHCA would eliminate enhanced match for Medicaid expansion except for individuals enrolled through expansion as of December 31, 2019 who did not have a break in eligibility of more than one month. For those states that already expanded Medicaid, the AHCA will limit the enhanced match rate transition to the CY 2017 levels of 80 percent, instead of phasing up the match equal to the PPACA enhanced match rate.
The impact on Alabama's pending move to Medicaid Regional Care Organizations (RCOs) is likewise significant. The AHCA would convert federal Medicaid financing to a per capita cap beginning in FY 2020. This block grant system, endorsed by Secretary Price, may lessen or eliminate the need for Alabama to seek a CMS waiver for its RCO system.
What the AHCA Would Not Change.
Though there are crucial changes proposed in the new AHCA, a number of policies of the Obama Administration would be untouched. The PPACA's requirement to cover ten essential health benefit categories was unchanged. Likewise, a list of popular insurance requirements and prohibitions would remain intact, including the requirement for maximum out-of-pocket limit on cost sharing, the requirement for individual and group plans to cover preventative benefits with no cost sharing, as well as the requirement to provide dependent coverage for children up to age 26 for all policies, group and individual.
In addition to these requirements remaining from the PPACA to the AHCA, there are a number of prohibitions that will remain in place, including the prohibition on lifetime and annual dollar limits, the prohibition on pre-existing condition exclusion periods as well as the pre-existing exclusions of those periods for pregnancy, prior C-section, and history of domestic violence. Lastly, the prohibition on gender rating will remain unaffected by the AHCA. Finally, the PPACA no-cost preventative benefits available to Medicare enrollees, reductions to Medicare provider payments, and increase of Medicare premiums for higher-income beneficiaries all remain unchanged by the proposed AHCA.
It is easy to see why both conservative Republicans and liberal Democrats joined forces in opposing the bill. The AHCA cut many aspects of the PPACA to the dismay of Democrats, but substantial elements of the PPACA remain to the disappointment of Republicans. Whether or not the two parties can come together and forge a consensus remains to be seen.
Rich Sanders is President of The Sanders Law Firm, P.C. which represents healthcare providers in corporate and regulatory matters.