Source: AAFP Washington, DC, office
Early on March 8, the House Ways and Means Committee completed a mark-up of draft recommendations to the House Budget Committee as part of the Affordable Care Act (ACA) “repeal and replace” process. After 16 hours of review and debate, the panel approved the Republican American Health Care Act (AHCA) draft on a party-line vote. The American Academy of Family Physicians sent a letter expressing concerns about the legislation. In brief, the legislation does the following:
- Repeals many of the ACA subsidies, taxes, and mandates
- Repeals ACA tax penalties for not having minimum essential health coverage (for example, the individual mandate and the employer mandate)
- Repeals ACA taxes (for example, excise tax on medical devices, tax on tanning services, 3.8% tax on high-income earners, tax on brand drug makers, tax on health insurers, and others)
- Repeals ACA tax credits beginning January 2020. During an interim period (2018-19), any excess tax credits will be recaptured, and the use of tax credits is expanded to some off-exchange coverage
- Delays start date of excise tax on high-cost health plans “Cadillac tax” to January 2025
- The Joint Committee on Taxation valued these cuts at $600 billion over ten years
- Establishes a new system of tax credits to help Americans purchase health insurance
- The tax credit will apply to all Americans in the individual market (for example, those who lack health coverage through employer or public programs like Medicare or Medicaid)
- The tax credit will range from $2,000 to $4,000 per year based on age. The credits can be added together, up to $14,000 per family.
- The IRS would administer the credit in the form of advance payments to eligible health plans (both on and off exchanges). Any excess payment could roll over to a health savings account (HSA).
- Those with annual income of $75,000 or less (or $150,000 for joint filers) would receive the full tax credit; the credit phases down gradually for those with higher incomes.
- Expands the role of Health Savings Accounts.
- Effective January 2018, contribution limits for HSAs increase from $2,250 to $6,550 (for self-only coverage) and $4,500 to $13,100 (family coverage) to allow HSA enrollees to use HSA dollars for all out-of-pocket expenses up to the limit of a high-deductible plan.
- Adds incidental rules facilitating the establishment and use of HSAs, e.g. (1) allowing both spouses to make catch-up contributions, (2) removing requirement to get a prescription to use HSA funds to buy over the counter products (the AAFP supports this provision) and (3) repealing the ACA tax increase on HSA distributions.
On March 9, the House Energy and Commerce Committee approved provisions in its jurisdiction for the draft of the AHCA making recommendations for the ACA replacement. The Committee held 28 hours of debate before voting 31-23 to send the recommendations to the House Budget Committee for the next step in the reconciliation process. The AAFP sent a letter expressing concerns about the bill’s potential to reduce coverage and negatively impact patients. The draft bill includes the following provisions:
- Eliminates the law’s individual mandate penalty
- Removes the ACA’s insurance coverage penalty for employers
- Ends the individual subsidy and replaces it with an income-based tax credit
- Repeals the Public Health and Prevention Fund’s mandatory funding
- Transitions Medicaid from an entitlement program with a higher (90%) ACA federal match rate to a financing model where states are reimbursed based on a limited, fixed amount per Medicaid enrollee (per capita cap)
- Repeals ACA Medicaid Disproportionate Share Hospital payment cuts
- Provides $10 billion over 5 years (2018-22) to non-expansion states in safety-net funding
- Removes the Essential Health Benefits mandate for Medicaid Alternative Benefit Plans
- Allows health plans to impose a 30% surcharge on individuals who do not have health insurance coverage for more than 63 days
- Repeals the actuarial value standards for ACA metal-level plans (platinum, gold, silver, and bronze).
Later this week, the AAFP will launch a Speak Out campaign, giving AAFP members the chance to voice concerns and perspectives directly to their elected officials. The AAFP is deeply concerned that the AHCA, as currently configured, will result in millions of currently-insured patients losing that coverage.