Just over four weeks after the Congressional Budget Office (CBO) released its score of the American Healthcare Act (AHCA), the bill passed by a narrow margin in the U.S. House of Representatives, the U.S. Senate released ‘The Better Care Reconciliation Act of 2017’. Upon initial review, we are providing a quick overview of this proposed legislation. 

The bill:

  • Unwinds the Medicaid expansion that was in the Affordable Care Act (ACA). The expanded Medicaid program will continue until 2020, when it will enter a three-year phase-out period. This is a longer timeline than that proposed by the House in May. However, the Senate bill also makes much larger cuts to Medicaid overall. The formula for federal funding to states will be altered, the effect of which will be fewer dollars to the states for Medicaid recipients. The bill also attempts to implement work requirements for Medicaid recipients.
  • Repeals the .9% tax (by 2022) on those making more than $250,000 per year. It also retroactively repeals a 3% tax on investment income going back to 2016.
  • Defunds Planned Parenthood, and it also restricts any offered tax credits from being used to pay for insurance that covers abortions.
  • Keeps in place a version of the individual marketplace. However, while the ACA provided subsidies to make insurance more affordable, the Senate Bill proposes tax credits based on income levels to subsidize individuals’ health insurance costs. The House bill gave a tax credit based on an individual’s age, thus creating a situation where senior citizens could have seen premiums rise by as much as 700%, according to the CBO. It should be noted that the Senate Bill does continue cost-sharing reduction payments to lower-income Americans through 2019 to assist in paying deductibles and co-payments under insurance plans.
  • Eliminates the individual mandate. Unlike the House bill, the Senate bill does not provide incentives for individuals to obtain coverage.
  • Eliminates the employer mandate.
  • Proposes an additional $15 billion per year through 2019, and then $10 billion per year in 2020 and 2021 to stabilize the insurance markets. This money would be paid to insurance companies to encourage them to stay in the marketplace to provide individual health insurance.
  • Continues to keep in place certain hallmark features of the ACA. For example, there are no changes in the Senate Bill to the provisions that protect individuals with pre-existing conditions. Additionally individuals up to age 26 will still be able to stay on their parents’ health insurance coverage.

This legislation is a rapidly moving target, with Senate Majority Leader Mitch McConnell planning a vote on the bill next week. We will continue to monitor developments and provide timely updates as warranted. If you have any questions regarding this blog entry, please contact the author.