A Snapshot of Where the AHCA Stands Today

May 8, 2017

Category: Compliance, Benefits

In March, the AHCA bill did not have enough support to pass the House and Speaker Paul Ryan and President Trump declared the Affordable Care Act the “law of the land.” Three weeks later, they decided to revive the AHCA. Here’s a snapshot on where we are now and what it means for you as business owners.

What Just Happened?

On May 4, 2017, the House of Representatives passed the revised American Health Care Act (the “AHCA”) by a vote of 217-213 to repeal the Affordable Care Act (the “ACA” or Obamacare).  

If the Senate approves the bill in its current form, the AHCA will:

  1. Allow states to decide if people with pre-existing conditions may be excluded from coverage, and
  2. Significantly cut back on Medicaid expansion, which will affect businesses with lower income workers
  3. Eliminate ACA tax penalties on individuals failing to maintain insurance
  4. Remove ACA employer mandate tax penalties

What Changed Since the Last Failed Attempt to Push Through New Legislation?

The Pre-existing Conditions Debate

The most inflammatory debate has been whether to change ACA’s requirement that insurance companies extend coverage to individuals with pre-existing conditions.  As the House has worked to build support for the bill, there has been increasing disagreement about whether this protection should remain or whether the cost is too exorbitant.

Previously, the Tuesday Group of moderate House Republicans had sought to retain protections for individuals with pre-existing conditions and other popular Medicaid expansion gains under the ACA in order to vote for the bill, while the far-right House Freedom Caucus had pushed for a more complete destruction of the ACA.  

The new bill lost one moderate vote (from 34 to 33) but picked up 23 Freedom Caucus votes (from 7 to 30) from the previous bill. There were two major changes to the previous bill that account for these changes.  First, to gain votes from the Freedom Caucus, the new bill added the MacArthur Amendment, which empowers states to opt-out of the requirement to cover individuals with pre-existing conditions and exempts plans from the requirement to cover essential health benefits  This change means that insurance companies can avoid the risk of covering certain patients with potentially expensive treatment requirements.  

Next, the bill added $8 billion to an existing pool of $115 billion that could be used to help cover costs for patients at high-risk of significant treatment needs.  Some analysts have determined that this pool would still be insufficient to meet the need, while the CBO has noted that the money would likely be diverted by some states to stabilize the individual market.

The Medicaid Cuts Debate

The ACA had implemented substantial expansion of Medicaid, the federal government’s healthcare program for low-income people. In Ohio, for example, over 702,000 previously uncovered residents gained coverage after the state expanded Medicaid in 2014.  The AHCA would curtail and eventually roll back the expansions, replacing existing Medicaid funding with a new per-participant formula or a block-grant, at each state’s election.  The AHCA would also permit states to require Medicaid recipients to verify employment to be eligible.  

These changes would lead to over $800 billion in federal government spending cuts over the next ten years, according to the CBO.  The cost-savings from these changes are central to the AHCA proponents’ arguments in favor of the bill.  The reduction in coverage availability from Medicaid would leave low-income workers with fewer options for healthcare.

What would it mean to eliminate ACA tax penalties on individuals and companies?

The first data from the year-over-year analysis of the individual mandate has shown that the number of people without care subject to the penalty has dropped, while the amount of the penalties paid has increased. Simply put, there has been an overall drop in uninsured individuals, but there’s also been an increase in penalties paid by those who aren’t insured.

Interestingly, the Congressional Budget Office projected that the first iteration of the AHCA would cause the number of uninsured to rise by fourteen million in one year and up to 24 million over the next ten years.  While the revised AHCA has not yet been scored by the CBO to determine cost savings or loss, and insurance coverage lost, the removal of the individual penalty, and the scoring of the previous iteration of the AHCA both indicate a likelihood that the number of people without coverage will increase substantially under the AHCA.

The bill now heads to the Senate, where complicated rules dictate how it can be handled prior to an up or down vote.  The revised bill made several changes to the previous, abandoned bill to garner enough votes for passage.  Any changes the Senate now makes could create additional roadblocks to the bill becoming law.

What Happens Next?

Now the AHCA moves to the Senate.  One of the first things expected to happen is a new score from the non-partisan CBO to assess the cost and impact of the new bill. This is likely to come in the next two weeks.  

Next, the Senate can look to pass the existing bill, make amendments to the bill, and send the amended-and-passed bill back to the House for a new vote, or build a new bill and negotiate with their House counterparts before each votes on the negotiated bill.  The Senate has created a 13-member panel, lead by Majority Leader Mitch McConnell and featuring influential conservatives including Ted Cruz and Tom Cotton as well as swing-state moderates Rob Portman, Pat Toomey, and Cory Gardner, to craft the Senate’s bill.

Typical legislation debated by the Senate can be filibustered – that is, delayed by prolonged debate – until a 60-vote block of Senators votes to close debate.  However, tax and spending provisions can be fast-tracked through the Senate Reconciliation process, which requires only a simple majority of 51 votes to pass.  Whether the AHCA and each provision of the bill meets the requirements for reconciliation is determined through a Senate process known informally as the Byrd Rule.  Under the Byrd Rule, Senators from both parties will present their arguments about each provision of the law and one non-partisan referee will determine whether each provision sufficiently meets the “fiscal impact” test established by the Byrd Rule.

The MacArthur Amendment in particular, in permitting waivers to the pre-existing condition coverage rule and the essential health benefits requirement, is expected to generate fierce debate about whether it has more than a merely incidental fiscal impact.  

Assuming the Senate crafts a bill that meets the reconciliation requirements, it would then need 51 votes to pass. Currently, there are 52 Republican senators and 48 Democrats.  If the vote were to be tied at 50-50, Vice President Mike Pence would cast the decisive vote.  

How Does it Impact Me?

Today, the ACA is *still* the law of the land. Reporting, penalties, and minimum requirements all remain in place. As do the tax credits, protections for individuals with pre-existing conditions, and limitations on how much an employer can require employees to pay, among other ACA features.

There continues to be substantial speculation about what will happen next, but the simple truth is that we do not yet know.  The Republican majority has made healthcare reform a priority, largely because the budget savings they hope to achieve with healthcare reform will be used to offset expected revenue losses related to their next goal: tax code reform.  But hurdles to the AHCA remain.  Popular support stood at just 17% in March and the recent changes are unlikely to increase public support.

For now, the AHCA is still a proposal, not the law. Having cleared passage of the House, the Senate will now take up the complicated issues as the American people look on.  However, the expectation is that the Senate will drastically change the bill, which means it will go back to the House! Stay tuned. And remember that until further notice, the ACA and its requirements and protections remain in effect.


Jordan Mazur is Legal Counsel at Zenefits. As the son of healthcare professionals and small business owners, he is committed to connecting small businesses and their employees with healthcare benefits and HR tools to make their work and lives easier. He is an avid runner and serves as sous-chef to his three-year-old daughter in her culinary experiments.

Category: Compliance, Benefits

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