United States: Part VII: The Senate's Response To The American Health Care Act

Caveat: As of the date of this writing, there are indications that revisions to the Better Care Reconciliation Act of 2017 ("BCRA") are in the works and may be issued as soon as Friday, June 30, 2017. If a revised BCRA is issued, there will be a new CBO report generated with respect to the revised bill. We will continue to watch the progress of the BCRA and, as a result, we will post to this blog additional blog posts regarding BCRA revisions, if any, and the BCRA's advancement through the Senate, if any.

In Part VI of our blog series, Very Opaque to Slightly Transparent: Shedding Light on the Future of Healthcare, we outlined the "Macarthur Amendment" to the American Health Care Act ("AHCA"), which led to the bill's narrow passage in the House on May 4, 2017. Almost 50 days later, on June 22, 2017, Senate Majority Leader Mitch McConnell released a "discussion draft" of the Senate's response: the BCRA. While in large part similar to its House counterpart, there are some important changes, outlined below.

Like the AHCA, the Senate bill would not completely repeal the Affordable Care Act ("ACA"), but would roll back many of the law's key provisions. Also like the House, the Senate is operating under "budget reconciliation" rules, a process described in Part II of this series in greater detail. Essentially, these rules require that every provision of the bill primarily impact the federal budget. Under these rules, the GOP only needs a simple majority to pass the bill, and can prevent Democrats from effectively using a filibuster.

  • Medicaid. BCRA restructures Medicaid, narrows its eligibility, and likely would decrease its funding over time relative to current law. The bill funds Medicaid with a per capita amount or block grant. The per capita growth cap under the Senate bill is based on the state's Medicaid spending during eight consecutive quarters from 2015-2017. For Medicaid expansion states, the federal government would pay a smaller portion of the cost starting in 2021, and would stop enhanced federal payments for Medicaid expansion by 2023.
  • Mandates. BCRA eliminates the individual mandate. However, on Monday following the bill's release, Senate leaders added a provision to penalize consumers for not maintaining continuous coverage, by imposing a six-month long waiting period before they could re-enroll. BCRA also eliminates the "employer mandate" – which requires employers with over a certain number of employees to provide coverage for their employees.
  • Taxes and Funding. BCRA repeals most of the tax increases that the ACA put in place to pay for the increase in federal subsidies and Medicaid expansion and rolls back coverage and subsidies. The bill repeals the 3.8% investment tax, the 0.9% additional Medicare payroll tax, the excise tax on medical device manufacturers, and the health insurance premium tax. The Cadillac Tax (a 40% excise tax on employer-sponsored plans exceeding a certain high value per year) would be delayed in its implementation from 2020 to 2026
  • Subsidies and Tax Credits. BCRA would utilize refundable tax credits to lower the cost of obtaining coverage. The bill allows the amount of tax credits allotted to take income, geography, and age into account. The bill lowers the threshold for people who can receive financial assistance from 400% to 350% of the federal poverty level and changes the baseline plan that the cost subsidies are linked with from silver plans (with an average $3,500 deductible) to bronze plans (with an average $6,000 deductible)
  • Pre-existing Conditions and Essential Health Benefits. BCRA continues to require insurers to cover people with pre-existing medical conditions without raising their premiums. However, the bill allows states to waive the ACA's essential health benefits and the bar on insurers setting annual and lifetime limits.
  • Other Changes. BCRA would nearly double annual health savings account contribution limits and place a one-year Medicaid funding freeze on Planned Parenthood. The bill allocates $112 billion over 10 years to the stability fund to reimburse insurers' losses. Whereas the AHCA earmarked $15 billion over 10 years for substance abuse, mental health, and maternity care, the Senate version only provides $2 billion dollars to states in 2018 to address the national opioid crisis. Certain GOP senators had hoped this number would be much higher.

When BCRA was released it faced opposition from all 48 Democrats in the Senate. Six Republicans also voiced serious concerns with the bill. On Monday, the Congressional Budget Office ("CBO") released its report on the bill. It predicts that 15 million more people would become uninsured in the first year of the bill's enactment, and that the number would grow to 22 million people by 2026. The CBO also estimates the bill would reduce the deficit by $321 billion over a decade. Senate Republicans hold a 52-48 majority in the Senate, but with Democrats united against the bill, the Republicans can only afford to have two senators vote against the bill.

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