The Next Republican ACA Repeal/Replace Proposal

Following last month’s failure to repeal/replace the Affordable Care Act (ACA), Senate Republicans are looking towards a proposal by Sens. Lindsey Graham (R-SC), Bill Cassidy (R-LA) and Dean Heller (R-NV) as a possible path forward to achieve the promise of repeal and replace. This proposal was first introduced as an amendment to the Senate’s failed Better Care Reconciliation Act, but never received a vote.

As currently drafted, the proposed bill:

• Eliminates the individual and employer mandates by zeroing-out the penalties
• Repeals the medical device tax
• Caps federal Medicaid funding to the states, and creates block grants to provide States more flexibility
• Maintains protections for people with pre-existing conditions
• Includes most, but not all, of the CDH industry supported provisions from the previous House and Senate ACA reform bills

In order to build support for this proposal, Sen. Cassidy has been meeting with President Trump and his aides, as well as Health and Human Services (HHS) Secretary Tom Price and the Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma.

CDH provisions included in the current version

• Section 109: Repeals the tax on over-the-counter medications and the prescription requirement for OTC medications for all account types.
• Section 110: Repeals the increased penalty/tax on of tax on non-qualified HSA purchases back to the pre-ACA amount of 10%, from the current 20%. For Archer MSAs, that tax is reduced to 15% from the current 20%.
• Section 115: The maximum contribution limit to HSAs increases to the out-of-pocket limit set by the IRS for HSA-qualified plans ($6,650 for singles and $13,300 for families in 2018).
• Section 116: Ease the administrative burden by allowing both spouses to make catch-up contributions to the same HSA.
• Section 117: Special rule for certain medical expenses incurred 60 days prior to establishing an HSA to be considered eligible expenses.

CDH provisions not currently included

• The repeal, modification, or delay of the Cadillac Tax on employee health insurance premiums and health plan benefits. The excise tax is not addressed in this bill due to the impact a repeal of this tax would have on the budget. In addition, a repeal or delay of the tax has nearly unanimous bipartisan support; it could be passed as a stand-alone bill with support from both sides of the aisle or it could be included in tax reform legislation this fall.
• The repeal of the annual $2500 FSA contribution limit. The bill is focused on the GOP’s priority of HSA expansion. The CDH industry will continue to advocate for this provision to be added.

Timing of a vote, and can it pass under Budget Reconciliation?

At this time, the proposed bill is still undergoing revisions and has not yet been officially introduced and given a bill number. Therefore, it remains unclear if the bill will gain enough support in the Senate for it to be brought to the floor for a vote. But, it is widely seen as the best – if not only – path forward for Republicans to attempt another ACA repeal/replace vote without Democratic support this year.

As currently written, this bill is unlikely to garner the Democratic support needed to pass with 60 votes in the Senate; it does include cuts to Medicaid. This means Republicans would once again attempt to pass an ACA repeal/replace bill under Budget Reconciliation, allowing them to pass it with only 51 votes. However, under Senate rules a bill cannot be passed under Budget Reconciliation until it has been “scored” by the CBO. This will delay the Senate’s vote until the end of September, if it is held at all.

Learn more from Senator Graham.