In May, the House recently passed the American Health Care Act (AHCA), which would partially repeal and replace the Affordable Care Act. The bill is now in the Senate. It is believed that changes will be made or the Senate will draft their own version of the bill.
Regardless, because the bill is being considered under a fiscal 2017 budget resolution it must comply with the Byrd Rule, meaning it would likely need to be signed into law by the end of September. But first, it will need to head back to the House for approval if modified in any way.
Breaking Down the ACHA
The bill in its current form repeals much of the ACA’s taxes and fees (its funding mechanisms), and the “Cadillac” tax on high-value employer-sponsored health plans would be delayed. Additionally, several aspects of the current law would be replaced under new provisions. Most notably, Medicaid expansion would be phased out and the program would shift to a per capita or block funding grant on federal spending.
How well do you know Medicaid? We welcome you to learn about it by reading this article, Medicaid’s Unique Role in the Healthcare System, and for even more, stay up to date with our Medicaid Expansion Map.
From Subsidies to Tax Credits
Other aspects of the bill would affect need-based premium support for people shopping on the exchanges. These income-based, cost-sharing subsidies and premium tax credits would be replaced with age-based, income-restricted tax credits.
Replacement of the Individual Mandate
The individual mandate would also be replaced by a continuous coverage provision that would place a 30% premium surcharge for one year for gaps in coverage of more than 63 days in a previous 12-month period.
Changes to Essential Health Benefits and Premiums
Additionally, insurers would be permitted to seek waivers from federal regulations on essential health benefits and age-based rating bands limits if the intent is to expand coverage, increase choice or lower costs. An amendment to the bill would also allow insurers to set premiums for some people based on health status.
For more information on how premiums are set, read this guest blog on the Healthcare Trends Institute website, How Insurers Set Premiums.
Whether the federal government repeals, replaces or repairs the ACA, healthcare organizations need to be able to react quickly and make changes necessary to operate in the new environment. New market opportunities may be available for current insurers as well as new entrants who offer efficiencies and less costly healthcare solutions.
PwC’s complete analysis of the AHCA can be found here.