House Republicans Unveil ACA Replacement, Not Repeal, Legislation: American Health Care Act

The evening of March 6th, the two House Committees with jurisdiction over the ACA repeal/replacement bill, the Ways and Means Committee and the Energy and Commerce Committee, released separate Budget Reconciliation bills, titled the American Health Care Act, which would serve as a replacement for the ACA.

The legislation addresses many consumer-directed healthcare industry issues, but is not a repeal of the ACA because taxes and mandates are not fully repealed. They are only delayed or “zeroed-out”. Here is an overview of the House Committee bills:

• Zero-out the penalty associated with the Individual and the Employer Shared Responsibility Requirements (individual & employer mandates) both retroactively effective to January 1, 2016
• Delay the effective date of the 40% excise tax on high-cost employer-sponsored health coverage (ie. the Cadillac Tax) through the end of 2024
• Preserve the current and favorable tax treatment of employer-sponsored healthcare coverage
• Repeal the prescription requirement for over the counter items for HSAs and FSAs as of January 1, 2018
• Repeal the Health FSA limit as of January 1, 2018
• Repeal the increased penalty tax for HSA distribution for non-eligible expenses as of January 1, 2018 – reducing it from 20% to 10%
• Includes many of the HSA and FSA provisions included in the Health Savings Act of 2017 (Hatch/Paulsen bill) that will make the accounts available to more Americans and easier to use beginning 2020

Medical-related provisions include:

• Repeal of the ACA's advanced premium tax credits that were awarded based on income level for individuals who are ineligible for Medicaid and are without an offer of minimum value affordable employer-sponsored insurance between 133-400% of the Federal Poverty Limit (FPL) beginning 2020
• Freeze the ACA Medicaid expansion provision which extended Medicaid eligibility to childless adults with income levels between 133-400% of FPL in 2020 and phasing it out over time
• Creation of an advancing premium tax credit that is means-tested (available to individuals below 300% FPL) and is determined by adjusted household income and the age of the individual or family members

Timing of ACA replacement legislation

The AHCA was voted on and passed by both Committees of jurisdiction in the House, was narrowly approved in the House Budget Committee on March 16th and is now being considered by the House Rules Committee. Once approved by the Rules Committee, a vote can be held on the House floor, where it will need to garner 216 votes to pass and move to the Senate. The Rules Committee is expected to amend the bill, possibly increasing the tax credits and changing the Medicaid provisions. Current reports state that the House could hold a floor vote by this Thursday, March 24th.

Once the bill is in the Senate, the Senate will need to debate and vote on the House bill, because this is a “Budget Reconciliation” bill that only requires a majority vote of 51 Senators. If the Senate makes no changes to the House legislation, then the vote could be held within a week of being sent to the Senate; however, if the Senate has any changes, the process could extend for another few weeks.

The fate of the AHCA remains uncertain, as Senate republicans balk at the current House version as being both too liberal and too conservative. There are six Senate republicans that have voiced concern that the House bill is too conservative: Rob Portman (OH), Shelly Moore Capito (WV), Cory Gardner (CO), Lisa Murkowski (AK), Dean Heller (NV), and Susan Collins (ME). And, that’s not the end of the problem in the Senate. There are also three Senators that oppose the bill for being too liberal (much like the House Freedom Caucus views): Rand Paul (KY), Mike Lee (UT), and Ted Cruz (TX).

Read our continuing coverage: GOP Healthcare Legislation Faces Long Debate before Vote